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U.S. Income Tax Treaties — Provisions Relating Only to Individuals (943)

Product Code: TPOR 43
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U.S. Income Tax Treaties — Provisions Relating Only to Individuals , focuses on the treatment in U.S. income tax treaties of income derived by an individual in his or her capacity as an independent worker or employee, government worker, director, artist or athlete, or student or business apprentice, and income realized in the form of pensions, social security benefits, annuities, alimony, or child support. Many of the treaty rules operate to provide a resident of one of the countries with tax benefits in the other country, e.g., by exempting income from tax in that other country. In some situations an individual may be entitled to tax benefits under a treaty in his or her home country (whether country of residence or country of citizenship), depending on the treaty's “saving clause.”

Emphasis in this Portfolio is on provisions in income tax treaties relating only to individuals and, where possible, the policy considerations that explain the variations from treaty to treaty. Particular attention is paid to widely-held notions of international tax fairness as reflected in the various model treaties and to the provisions of the various tax treaties to which the United States is a party. The ultimate goal of this Portfolio is to educate practitioners about the benefits available under provisions in U.S. income tax treaties that relate only to individuals, and the practical contexts in which they arise.
Other income tax treaty issues of interest to individuals, e.g., issues relating to permanent establishments (“PEs”), profits attributable to a PE, and income not attributable to a PE (other than income covered in this Portfolio), are (or will be) covered in other Portfolios in this series. In addition, a separate Portfolio will deal with special foreign tax credit rules and Mutual Agreement/Competent Authority procedures provided in treaties for the resolution of problems not specifically addressed in order to avoid inconsistent taxation of taxpayers that otherwise could result, e.g., from inconsistent tax residency rules, inconsistent sourcing rules, or inconsistent applications of rules.
With respect to estate and gift tax treaties, see 837 T.M., Non-Citizens — Estate, Gift and Generation-Skipping Taxation (Estates, Gifts, & Trusts Series), and 939 T.M., Bilateral Transfer Tax Treaties.

This Portfolio is part of the Foreign Income Portfolios Library, a comprehensive series containing more than 100 Portfolios, which covers critical transactions and issues in international taxation. This highly-regarded resource library offers commentary on a wide range of foreign income topics including: Foreign Tax Credit, Business Operations in Italy, Business Operations in Puerto Rico, Branch ProfitsTax, Source of Income Rules, Subpart F (Controlled Foreign Corporations), Foreign Partnerships and Partners, Transfer Pricing, and more.

Portfolio Description

Authors

Technical Advisors

Description

Detailed Analysis

I. Introduction

II. Residency Tie-Breaker Rules and Saving Clause

A. Overview

B. Residency Tie-Breaker Rules

1. In General

2. Model Treaties

3. Treaties Actually in Force

C. Saving Clause

1. In General

2. Saving Clause Under U.S. Model Treaty

a. General Rule

b. Exceptions

(1) Exceptions Available to All U.S. Citizens and Residents

(2) Additional Exceptions Available to Temporary U.S. Residents

3. Treaties Actually in Force

III. Provisions Relating Only to Individuals

A. Overview

B. Independent Workers and Employees

1. In General

2. Independent Workers

a. Model Treaties

b. Treaties Actually in Force

3. Employees

a. Comparison to Independent Worker Rules

b. Model Treaties

c. Treaties Actually in Force

C. Government Workers

1. In General

2. Model Treaties

3. Treaties Actually in Force

D. Directors

1. In General

2. Model Treaties

3. Treaties Actually in Force

E. Artists and Athletes

1. In General

2. Model Treaties

3. Treaties Actually in Force

F. Students, Business Apprentices, Teachers, and Researchers

1. In General

2. Model Treaties

3. Treaties Actually in Force

G. Pensions and Social Security Benefits

1. In General

2. Model Treaties

3. Treaties Actually in Force

H. Annuities

1. In General

2. Model Treaties

3. Treaties Actually in Force

I. Alimony and Child Support

1. In General

2. Model Treaties

3. Treaties Actually in Force

IV. Summary and Conclusion

Working Papers

Table of Worksheets

Content

Worksheet 1 2006 U.S. Model Treaty

Worksheet 2 German Consular Employees MAP Agreement, Ann. 2010-2, 2010-2 I.R.B. 271

Worksheet 3 Election Procedure for U.S. Citizens and U.S. Residents Participating in Canadian Plans, Rev. Proc. 2002-23, 2002-1 C.B. 744

Bibliography

OFFICIAL

Statutes:

Treasury Regulations:

Treaties:

Model Treaties

Treasury Rulings:

Cases:

UNOFFICIAL

Articles:

1963

1981

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1983

1986

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2010

R. Mark Williamson
 B.M., cum laude, Louisiana State University (1981); M.M., North Texas State University (now University of North Texas) (1983); J.D., with highest honors, Florida State University (1991); Order of the Coif; Executive Editor, Florida State University Law Review; Adjunct Professor of Law, Georgia State University (2006); Adjunct Professor of Law, University of Wisconsin-Madison (1995); Member, Wisconsin and Georgia Bars; Faculty, State Bar of Georgia Estate Planning Institute, State Bar of Georgia Fiduciary Law Institute, State Bar of Georgia Basic Fiduciary Practice Seminar, Georgia Federal Tax Conference; Recipient, 1997 Trusts & Estates Magazine “Best Young Author” Award (for “Economics of Prepaying Wealth Transfer Taxes” with Jeffrey Pennell); Trustee, Georgia Federal Tax Conference; Board of Directors, Atlanta Estate Planning Council; Past Chair, Atlanta Bar Association Estate Planning and Probate Section; Past Chair, State Bar of Georgia Fiduciary Law Section; President and Board Chair, Georgia Lawyers for the Arts; Fellow, American College of Trust and Estate Counsel.