November 18, 2012
US Tax Treaties May Allow Nonresidents to be Taxed at Lower Rates
Treaties rarely benefit US Citizens or Green Card Holders due to the savings clause contained in almost all treaties which state that the IRS can still continue to tax its US tax residents and Citizens under the regular tax law regardless of what a treaty might state. A US taxpayer residing in a treaty country may be able to use the treaty to avoid adverse tax consequences in that country. There is no standard treaty so each applicable treaty must be reviewed to determine its consequences. Unfortunately the language used in the treaties if often vague and unclear. The IRS has not done much to clear up the ambiguities and to explain those parts which are unclear.