A nonresident alien (NRA) generally is subject to U.S. income tax only on income that is U.S. sourced. The general rules for determining the source of income that apply to most NRAs are shown below:
See Chapter Two of Publication 519, U.S. Tax Guide for Aliens for additional details.
Summary of source rules for income of nonresident aliens
| Item of income | Factor determining source |
|---|---|
|
Salaries, wages, other compensation |
Where services performed |
| Business income: Personal services | Where services performed |
| Business income: Sale of inventory -purchased | Where sold |
|
Business income: Sale of inventory -produced |
Where produced (Allocation may be necessary) |
|
Interest |
Residence of payer |
|
Dividends |
Whether a U.S. or foreign corporation * |
|
Rents |
Location of property |
| Royalties:
Natural resources |
Location of property |
|
Royalties: Patents, copyrights, etc. |
Where property is used |
|
Sale of real property |
Location of property |
|
Sale of personal property |
Seller's tax home (but see Personal Property, in Chapter 2 of Publication 519, for exceptions) |
|
Pensions |
Where services were performed that earned the pension |
| Scholarships - Fellowships | Generally, the residence of the payer |
|
Sale of natural resources |
Allocation based on fair market value of product at export terminal. For more information, see IRC section 1.863–1(b) of the regulations. |
Related
- Source of income - Personal service income
- Income subject to NRA withholding
- Pay for personal services performed