Yes, a CWA (Central Withholding Agreement) will take into account payments less than the amount excluded by a tax treaty for an individual performance. According to the IRS FAQ, if a tax treaty excludes a certain amount of U.S. income from withholding on payments made to a nonresident alien athlete or entertainer, the CWA will consider payments below that threshold for an individual performance. This means that the CWA will recognize the treaty-based exemption and adjust the withholding accordingly, ensuring that the nonresident alien athlete or entertainer is not subject to withholding on amounts that are exempt under the tax treaty.
Sources:
Publication 519 (2023)
Instructions for Form 8233 (10/2021)
Rev. Proc. 89-47
Publication 515 (2024)
