Nobody sends a bill. When US-source income of the ordinary recurring kinds is paid to a non-resident, the law makes the payer deduct thirty percent before the money moves — so the first anybody knows of it is the amount that arrives. A treaty can lower the rate, but that is something arranged in advance, not something that happens on its own.
The statute requires that ALL PERSONS, IN WHATEVER CAPACITY ACTING, having control, receipt, custody, disposal or payment of the covered items, SHALL DEDUCT AND WITHHOLD FROM SUCH ITEMS A TAX EQUAL TO 30 PERCENT THEREOF. The duty is the payer's, not the recipient's. Nobody is asked and nothing is assessed: the money is reduced on the way out, which is why the first anybody knows of it is the amount that arrives.
The items named are INTEREST, DIVIDENDS, RENT, SALARIES, WAGES, PREMIUMS, ANNUITIES, COMPENSATIONS, REMUNERATIONS, EMOLUMENTS, OR OTHER FIXED OR DETERMINABLE ANNUAL OR PERIODICAL GAINS, PROFITS, AND INCOME. That last catch-all is the part that surprises people: the list is not closed, and the test is whether the payment is fixed or determinable and annual or periodical rather than whether it appears by name.
A reduced rate of 14 PERCENT applies to certain scholarship and fellowship income received by a non-resident alien student temporarily present under the F, J, M or Q categories. It is a lower rate, not an exemption, and it applies to a narrow class of payment rather than to everything a student receives — which is why a student seeing a deduction should establish which rule produced it before assuming either figure is right.
Where a treaty gives a lower rate on a category of income, that is the rate that ultimately applies. But the payer withholds under the statute unless it has what it needs to apply the treaty, so the reduction is something ARRANGED IN ADVANCE rather than something that happens automatically. The gap between the two is the money already gone — recoverable, but through a filing and a wait rather than by having it not happen.
This page does not name the form that claims a reduced treaty rate. One exists and the process is well known, but it was not read from a primary source when this page was verified, and naming the wrong form to somebody whose money has already gone wastes the time they have least of — ask the institution that made the payment, which handles this constantly. It also says nothing about whether a particular payment is US-source. Sourcing is its own body of rules and it is where these questions are actually won or lost. What rate a treaty gives on a category of income is in the treaty rulebooks here — for a pension, at The Pension Question.
We already computed the public version — it is complete and stays free. Keep your accounts and payers in one place: Join DesiSquare and the Square remembers your dates, re-runs this when the rules change, and puts a credentialed human one message away.