TAX TREATY EXEMPTED INCOME QUESTION

Forum|Forum|4 years ago
September 8, 2021
1 reply
14 views

Hi Everyone,

I have a quick question...am trying to help someone to finish their 1040NR return without charging them.

This person has a contract job, net profit is $1700, but the Tax Treaty benefit will not automatically calculate on the online software (sprintax.com) that she is using. I played around with it for a while, and just can't find an option to activate the tax treaty income exemption rule. So, I am wondering if China tax treaty (20) exemption - does it exempt only W-2 income but not 1099-NEC income??

Thank you for your help in advance!

SW

ProSeries Basic

This topic has been closed for replies.

Best answer by sjrcpa

Sounds like the 1099-NEC income is for personal services and would qualify for the treaty exemption.

Is there a dollar limit for this exemption, and if yes, are the earnings below it?

sjrcpa

Level 15

Have you read the treaty?

The more I know the more I don’t know.

S

swongtaxAuthor

Level 5

Yes! I have read the Treaty many times, and I have prepared Form 1040NR forms in the past with issues (with W-2 income only). We all know that the tax language can be unclear.

According to the Tax Treaty language, I do believe 1099 income qualifies for Income Tax Treaty exemption (wages or compensation for personal services provided in the US), and it is the client's tax software that is having issues.

Thanks!

SW

S

swongtaxAuthor

Level 5

"without issues"

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