How to claim a tax treaty on Form 1040-NR (tax year 2026)

How do I claim the treaty on my paychecks with Form 8233?

To claim a treaty exemption from income tax withholding on your pay, give your employer Form 8233, not Form W-4 (IRS). Attach your country's treaty statement from Appendix A of Publication 519, and give your employer a new Form 8233 each year.

1. Find your country's statement in Appendix A of Publication 519; it names the treaty article and says your pay qualifies. If your country is not listed, write a statement in a similar format.
2. Fill in Form 8233 using the Form 8233 instructions, one for each tax year and each employer, and give it to payroll with the statement.
3. Fill in a Form W-4 for any pay above your treaty's limit, following Notice 1392 for nonresident aliens.
4. For a scholarship or fellowship that is not payment for work, give your school Form W-8BEN instead (IRS). If the same school also pays you wages, ask payroll which form it wants.

Form 8233 changes only income tax withholding, not Social Security or Medicare tax, and claims nothing on your return: you still fill in Schedule OI and line 1k.

What do Form W-2 and Form 1042-S show?

If your employer applied the treaty, the exempt pay should be on Form 1042-S and only the taxable pay in W-2 box 1. If your employer did not apply it, all your pay is in W-2 box 1, and income tax was withheld from all of it.

Pay above the treaty limit stays on the W-2 (Publication 515; IRS). Box 1 of a 1042-S gives the income code (2026 Form 1042-S instructions). Code 16 is scholarships and fellowships, 18 dependent personal services, 19 teaching and 20 compensation during studying and training.

Wait for any 1042-S before you file; it is due to you by Monday, March 15, 2027. If W-2 box 1 plus 1042-S box 2 is more than you were paid, ask payroll whether the exempt pay was reported twice (Form 1042-S guide).

How do I fill in Schedule OI item L?

Item L asks for each treaty benefit's country, article, months claimed in earlier tax years and exempt amount this year. The total of the amounts goes on line 1(e) of item L and then on Form 1040-NR line 1k.

Column (c) counts months in earlier tax years only, not 2026: if you claimed the benefit for all of 2024 and 2025, enter 24. The count matters most for an article with a time limit, such as South Korea's 5 years.

Item L then asks whether another country taxed the same income, and whether you rely on a Competent Authority determination; with a Yes to that, attach the determination letter. These are the 2025 Schedule OI's items; check them against the 2026 version.

Where does the treaty amount go on Form 1040-NR?

The total from item L goes on Form 1040-NR line 1k and nowhere else on line 1. Schedule OI says: "Do not enter it anywhere else on line 1".

Line 1k is not added into line 1z or line 9, so the amount never reaches your adjusted gross income or taxable income. It is in the same place on the 2025 form and the 2026 draft Form 1040-NR. What goes on line 1a depends on whether your employer applied the treaty.

My employer withheld tax anyway. Can I still claim the treaty?

Yes. If treaty-exempt pay is inside W-2 box 1, you claim the treaty on your Form 1040-NR, and the extra tax withheld comes back to you.

Reduce line 1a by the exempt amount, complete item L and enter the amount on line 1k. The 2025 Form 1040-NR instructions give this route if you gave no Form 8233, or if your employer could not confirm you were eligible. Either way, attach a statement with the information Form 8233 would have given.

The China treaty guide covers who qualifies for Article 20. A treaty generally does not exempt pay from Social Security and Medicare tax (FICA refund guide).

Do I need to attach Form 8833?

Students and trainees claiming a treaty exemption for their pay or a taxable scholarship generally do not need Form 8833. The IRS lists treaty claims on the income of students, trainees and teachers among those that do not need it (IRS; Treasury Regulation 301.6114-1).

Schedule OI still says "Attach Form 8833 if required". Leaving off a required Form 8833 costs $1,000 for each failure, which does not usually apply to student and trainee claims (IRS).

Does my state return follow the treaty?

California does not follow federal tax treaties, so treaty-exempt wages are still taxable on Form 540NR. New York starts from federal adjusted gross income (2025 IT-203, line 19), which leaves out line 1k, so the exemption carries over.

Illinois also starts from federal AGI (2025 IL-1040, line 1), and the 2025 Schedule M lists no addition for treaty income. In Massachusetts, you subtract treaty pay included in your W-2 wages on 2025 Schedule Y, line 4b (Directive 87-4). Pay reported on a 1042-S is not in those wages, so there is nothing to subtract.

California's FTB instructions add treaty-exempt income back, so if Jun had worked there, all $16,000 would be taxable on his California return. Publication 515 says treaty-exempt wages can still appear in the W-2 state wages box when the state taxes them. The state tax guide explains which states you file in.

What to do next

1. Check that you are a nonresident alien for 2026 with the substantial presence test guide, and find your article and limit in the treaty guide by country.
2. Give payroll a Form 8233 with your Appendix A statement now for the rest of 2026, and a new one for 2027 before your first 2027 paycheck.
3. Collect your W-2 (due by Monday, February 1, 2027) and any 1042-S (due by Monday, March 15, 2027).
4. Fill in item L and line 1k. If the exempt pay is inside W-2 box 1, subtract it on line 1a and attach the statement (Form 1040-NR guide).
5. Attach Form 8843 and mail the return by Thursday, April 15, 2027 if you were paid wages subject to withholding, or by Tuesday, June 15, 2027 if not. If you are not sure which applies, we recommend April 15. Check where to mail Form 1040-NR.
6. File any state return separately, and in California report the treaty-exempt wages there too.

F1TaxReturn prepares Form 1040-NR and Form 8843 for free, applies the treaty exemption to your W-2 wages and fills in Schedule OI item L and line 1k. It does not take Form 1042-S, so exempt pay or a scholarship reported on a 1042-S needs another way to file. It will prepare 2026 returns once the IRS publishes the final 2026 forms, and you mail the signed paper return yourself. Start your return.