Foreign tax redetermination Generally foreign source income received by a nonresident alien is not subject to U.S. taxation. Refer to Source of Income for more information. U.S. source interest income that is not connected with a U.S. trade or business is excluded from income if it is from: Deposits (including certificates of deposit) with persons in the banking business, Deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law (if the interest paid or credited can be deducted by the association), Amounts held by an insurance company under an agreement to pay interest on them, Interest on obligations of a state or political subdivision, the District of Columbia, or a U.S. possession, generally is not included in income. However, interest on certain private activity bonds, arbitrage bonds, and certain bonds not in registered form is included in income, or U.S. source interest income that is not connected with a U.S. trade or business and that is portfolio interest on obligations issued after July 18, 1984, in registered form is excluded from income. For a discussion of portfolio interest, refer to "Portfolio interest exempt from chapter 3 withholding" in Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Employees of foreign persons, organizations or offices If three conditions exist, income for personal services performed in the United States as a nonresident alien is not considered to be from U.S. sources and is not subject to U.S. taxation. If you do not meet all three conditions, your income from personal services performed in the United States is U.S. source income and is taxed. The three conditions are: You perform personal services as an employee of or under a contract with a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in a trade or business in the United States; or you work for an office or place of business maintained in a foreign country or possession of the United States by a U.S. corporation, a U.S. partnership, or a U.S. citizen or resident. You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year. Your pay for these services is not more than $3,000. NOTE: If your pay for these services is more than $3,000, the entire amount is income from a trade or business within the United States and is subject to U.S. taxation. Students and exchange visitors Nonresident alien students and exchange visitors present in the United States on "F," "J," "M" or "Q" visas can exclude from gross income, pay received from a foreign employer. A foreign employer is: A nonresident alien individual, foreign partnership, or foreign corporation. An office or place of business maintained in a foreign country or in a U.S. possession by a domestic corporation, a domestic partnership, or an individual who is a citizen or resident of the United States. Note: The term "foreign employer" does not include a foreign government. This group includes bona fide students, scholars, trainees, teachers, professors, researchers, specialists, or leaders in a field of specialized knowledge or skill, or persons of similar description. It also includes the alien's spouse and minor children if they come with the alien or come later to join him or her under same visa categories (i.e., F-2, J-2, or M-2). Q nonimmigrant classification does not have a provision for any spouse or children to accompany or follow to join a Q-1 nonimmigrant. Q-1 spouse or children coming to U.S. must qualify independently for a nonimmigrant classification and cannot exclude income unless they also come under F, J, M or Q visa categories. Crew members of foreign vessels Compensation for personal services paid to nonresident alien individuals who are temporarily present in the United States as regular crew members of a foreign vessel engaged in transportation between the United States and a foreign country, or a possession of the United States, shall not be subject to U.S. taxation. Income affected by treaties Income of any kind that is exempt from U.S. tax under a treaty to which the United States is a party may be excluded from your gross income. Income on which the tax is limited or reduced by treaty is included in gross income but taxed at a lower rate. Tax treaty provisions are not automatic and must be elected by the taxpayer. Refer to Tax Treaties for additional information. Related Publication 519, U.S. Tax Guide for Aliens Taxation of Nonresident Aliens
