Publication 519, How to report income on your tax return. In
most cases, you will not need to report the income on your Form 1040 or 1040-SR because
the income will be exempt from U.S. tax under
the treaty. However, if the income has been reported as taxable income on a Form W-2, Form
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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Page 46 Chapter 9 Tax Treaty Benefits
1042-S, Form 1099, or other information return,
you should report it on the appropriate line of
Form 1040 or 1040-SR (for example, line 1 in
the case of wages, salaries, scholarships, or
fellowships). Enter the amount for which treaty
benefits are claimed in parentheses on line 8,
Schedule 1 (Form 1040 or 1040-SR). Next to
the amount write “Exempt income,” the name of
the treaty country, and the treaty article that provides the exemption. Combine this amount with
the amounts reported on lines 1 through 7 of
Part I, Schedule 1 (Form 1040 or 1040-SR), and
report the total on line 9. Enter this amount on
line 7a of Form 1040 or 1040-SR.
Example. Mr. Yu, a citizen of the People's
Republic of China, entered the United States as
a nonresident alien student on January 1, 2015.
He remained a nonresident alien through 2019
and was able to exclude his scholarship from
U.S. tax in those years under Article 20 of the
U.S.–People's Republic of China income tax
treaty. On January 1, 2020, he became a resident alien under the substantial presence test
because his stay in the United States exceeded
5 years. Even though Mr. Yu is now a resident
alien, the provisions of Article 20 still apply because of the exception to the saving clause in
paragraph 2 of the Protocol to the U.S.–People's Republic of China treaty dated April 30,
1984. Mr. Yu should submit Form W-9 and the
required statement to the payer.
