@skaufmann , i was wrong ( and slightly right ). The confusion is this that if you ignore the tax treaty assertions/conditions, then you let US tax you at the rate it does and then mitigate double taxation by claiming foreign tax credit / deduction as usual ( the former using form 1116 and "passive category" , the latter using itemized deduction and with current SALT limitations ).
What the treaty does is also puts in an additional constraint on the US to not tax this income at a rate higher than dictated by the treaty -- mostly at 15%. This gets complicated and may or may not be of sufficient benefit for the additional work involved ( note that form 1116 allowable credit limitation still applies ). What I have been searching for is if this additional benefit is mandatory --- sections 865 and 904 are the pertinent sections of code . Pub 514 uses the word "should" and "may" and the above code sections also do not indicate any mandatory nature . Therefore my conclusion is that you are free not to use / assert treaty benefits.
Does this help ? or am I additing to the confusion ?
pk
