Foreign source income (non-U.S. source income) paid to a nonresident alien is normally not subject to U.S. tax under either chapter 3 or 4. Income from sources outside of the United States is exempt from NRA withholding under Internal Revenue Code Section 1441(a). It is normally not required to be reported on an information return. If you choose to report the income item on a Form 1042-S, use Exemption Code 03, Income is not from U.S. sources, when entering an amount for information reporting purposes. For more information about the income sourcing rules which apply to the income of nonresident aliens, please refer to the discussion about "Source of Income" in Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, and IRC sections 861 through 865. Also, refer to Nonresident Aliens - Source of Income. Related Pay for Personal Services Performed Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.
