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If you are a nonresident alien with income from U.S. sources, you may be entitled to reduce or even eliminate U.S. tax on that income. This is possible under a tax treaty between your home country and the United States. To take advantage of this benefit, however, you need an Individual Taxpayer Identification Number (ITIN) and that’s where Form W-7, box “a” comes in.
Who Is a Nonresident Alien?
In simple terms:
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A nonresident alien is someone who is not a U.S. citizen and does not meet the IRS “substantial presence test” for being treated as a U.S. resident.
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You are considered a nonresident alien if you live outside the U.S. but have U.S. income (from investments, royalties, services, or scholarships).
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Examples include:
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A freelancer in India working for a U.S. client.
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A Canadian student receiving a U.S. scholarship.
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A German investor earning dividends from U.S. companies.
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In short, if you don’t live in the U.S. as a resident but still earn from U.S. sources, you’re likely a nonresident alien.
What Does “Point A” on Form W-7 Mean?
When you check box “a” (Nonresident alien required to get an ITIN to claim tax treaty benefit), you are telling the IRS that:
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You are not a U.S. citizen or resident alien.
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You receive income from a U.S. source (like dividends, royalties, scholarships, or business income).
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You want to apply a tax treaty benefit to lower the amount of tax withheld.
Because tax treaties are country-specific, you must also complete box h to provide details such as:
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The treaty country (your country of residence).
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The treaty article number that applies to your type of income.
When Should You Choose Box A?
You should select box a if:
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You are a nonresident alien investor earning dividends, interest, or capital gains from U.S. companies.
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You are a foreign freelancer or consultant providing services to U.S. clients, and a treaty reduces withholding.
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You are a student or researcher receiving a scholarship or grant covered under your country’s tax treaty with the U.S. (note: this may also overlap with box f, but box a applies when the primary reason is claiming treaty benefits).
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You receive royalties or licensing income from U.S. publishers or businesses.
Example: A resident of the U.K. receives book royalties from a U.S. publisher. Under the U.S.-U.K. tax treaty, royalties may be taxed at 0% or a reduced rate. To apply this benefit, the individual needs an ITIN.
Documents You’ll Need
To support your W-7 application under point a, prepare:
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Proof of identity and foreign status: usually a valid passport (preferred by the IRS).
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Tax treaty reference: the specific article and country written in box h.
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Supporting income document: such as a letter from the withholding agent, a scholarship grant letter, or a Form 1042-S showing expected income.
How to Complete Box H Alongside Point A
After checking box a, you must:
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Enter your treaty country (for example, “Canada”).
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Enter the specific article number in the treaty that covers your income type (e.g., “Article 12 – Royalties”).
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Provide any additional information requested in the instructions (such as income type and U.S. withholding agent details).
Common Mistakes to Avoid
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Not including a federal tax return: For box a, you typically must attach a U.S. tax return unless you qualify for an exception (e.g., you already have a withholding agent requiring your ITIN to apply treaty benefits at source).
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Forgetting box h: Leaving box h blank can cause delays or rejection.
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Incorrect treaty article: Make sure you reference the correct treaty and article. Each country’s treaty is unique.
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Submitting copies instead of originals: The IRS only accepts originals or certified copies of documents (unless applying through a Certified Acceptance Agent).
Why an ITIN Matters for Treaty Benefits
Without an ITIN, U.S. payers are required to withhold tax at the default 30% rate on your U.S. income. With a valid ITIN and the right treaty claim:
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You may reduce withholding to 0% or a lower treaty rate.
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You can claim a refund for any overpaid tax when filing your U.S. return.
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You ensure compliance with both IRS and your home country’s tax authorities.
Final Thoughts
Form W-7, box a, is the key for nonresident aliens who want to claim tax treaty benefits. By properly filling in both box a and box h, attaching the right documents, and referencing the correct treaty article, you can unlock significant tax savings and stay IRS-compliant.
If you’re unsure which treaty article applies, it’s wise to seek help from a tax professional or Certified Acceptance Agent (CAA) who can guide you through the process and avoid costly mistakes.
