US TAX REPORTING REQUIREMENTS FOR NONRESIDENTS

By Don D. Nelson, International Tax Attorney

Over 35 years experience in US International Taxation

Nonresidents of the US must still file US tax returns to report their US source income even though they do not live in the United States.  They do get some benefits though. They do not have to report or pay tax on US Treasury Interest  and interest paid by banks and savings and loans.

Nonresidents file form 1040NR and if the income is sourced within a state (not passive intangible income) they may have to file a state tax return.  What types of income are taxable and require filing a US tax return?

• Rental Income
• Income Earned while working in the US
• Pension income from the US
• Dividend and Royalty Income
• Sale of US real property or other assets located in the USA.

Capital gains from the sale of US publicly traded corporations are exempt from taxation 

The US has tax treaties with many countries in which the nonresident may be a citizen which reduce or exempt US withholding on certain types of income.  It is important you review these treaties to determine if there might be a tax saving benefit.  The IRS generally will not correct your return if you fail to take the favorable treaty provisions into account on your tax return.

This is a complex area of taxation and guidance is essential. We can help. Email us with questions at ddnelson@gmail.com.