For use in preparing Returns
For the latest information about developments related to Pub. 519, such as legislation enacted after it was published, go to IRS.gov/Pub519.
For tax purposes, an alien is an individual who is not a U.S. citizen. Aliens are classified as nonresident aliens and resident aliens. This publication will help you determine your status and give you information you will need to file your U.S. tax return. Resident aliens are generally taxed on their worldwide income, the same as U.S. citizens. Nonresident aliens are taxed only on their income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States. The information in this publication is not as comprehensive for resident aliens as it is for nonresident aliens. Resident aliens are generally treated the same as U.S. citizens and can find more information in other IRS publications at IRS.gov/Forms. Table A provides a list of questions and the chapter or chapters in this publication where you will find the related discussion. Answers to frequently asked questions are presented in the back of the publication.
Comments and suggestions. We welcome your comments about this publication and suggestions for future editions. You can send us comments through IRS.gov/FormComments. Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Do not send tax questions, tax returns, or payments to the above address.
Credits for sick and family leave for certain self-employed individuals. The Families First Coronavirus Response Act (FFCRA) helped self-employed individuals affected by coronavirus by providing paid sick leave and paid family leave credits equivalent to those that employers are required to provide their employees for qualified sick leave wages and qualified family leave wages. The COVID-related Tax Relief Act of 2020 extended the period during which self-employed individuals can claim these credits from April 1, 2020, through March 31, 2021. For more information, see IRS.gov/COVID-19-Related-Tax-Credits. Extension and expansion of credits for sick and family leave. The American Rescue Plan Act of 2021 (the ARP), enacted on March 11, 2021, provides that certain self-employed individuals can claim credits for up to 10 days of “paid sick leave,” and up to 60 days of “paid family leave,” if they are unable to work or telework due to circumstances related to coronavirus. Self-employed individuals may claim these credits for the period beginning on April 1, 2021, and ending September 30, 2021. For more information, see Form 7202 and its instructions. COVID-19 Medical Condition Travel Exception. For tax year 2021, individuals cannot claim the COVID-19 Medical Condition Travel Exception to exclude any days of presence in the United States for the purpose of the “substantial presence test.” However, days of presence in the United States in 2020 that were excluded for tax year 2020 may impact the application of the “substantial presence test” for tax year 2021. For more information, see Substantial Presence Test, later. Also, see Revenue Procedure 2020-20, available at IRS.gov/irb/2020-20_IRB#REV-PROC-2020-20, and the instructions for Forms 8843 and 8233.
Charitable contributions. Students or business apprentices eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty who have elected to use the standard deduction may qualify to take a deduction for charitable contributions of up to $300. For more information, see chapter 5. Form 1040-NR-EZ discontinued. Beginning with tax year 2020, Form 1040-NR-EZ is no longer available. Nonresident alien taxpayers should use Form 1040-NR. Redesigned Form 1040-NR. Beginning with tax year 2020, nonresident alien taxpayers will file a redesigned Form 1040-NR, which is similar to the Form 1040. Attach Form 1040-NR Schedules OI, A, and NEC to Form 1040-NR as necessary. Filers may also be required to attach Form 1040 Schedules 1, 2, or 3 to Form 1040-NR. For more information, see Form 1040-NR and its instructions. Disaster tax relief. Disaster tax relief is available for those impacted by certain Presidentially declared disasters in 2021 (see IRS.gov/DisasterTaxRelief). Aliens who are required to file a U.S. income tax return may be affected. For more information, see the Instructions for Form 1040, or the Instructions for Form 1040-NR. Multilevel marketing. For clarification regarding the characterization and source of income received from multilevel marketing companies by distributors (upper-tier distributors) that are based on the sales or purchases of persons whom they have recruited and sponsored (lower-tier distributors), see Multilevel marketing under Personal Services in chapter 2. Additional Medicare Tax. You may be required to pay Additional Medicare Tax. Also, you may need to report Additional Medicare Tax withheld by your employer. For more information, see Additional Medicare Tax under Social Security and Medicare Taxes and Self-Employment Tax in chapter 8. For more information on Additional Medicare Tax, go to IRS.gov/ADMT. Premium tax credit. You may be eligible to claim the premium tax credit if you, your spouse, or a dependent enrolled in health insurance through the Health Insurance Marketplace (Marketplace). See Form 8962 and its instructions for more information. Advance payments of the premium tax credit. Advance payments of the premium tax credit may have been made to the health insurer to help pay for the insurance coverage of you, your spouse, or your dependent. If advance payments of the premium tax credit were made, you must file a 2021 tax return and Form 8962. If you enrolled someone who is not claimed as a dependent on your tax return or for more information, see the Instructions for Form 8962. Form 1095-A. If you, your spouse, or a dependent enrolled in health insurance through the Marketplace, you should have received a Form 1095-A. If you receive a Form 1095-A for 2021, save it. It will help you figure your premium tax credit. If you did not receive a Form 1095-A, contact the Marketplace. U.S. federal estate and gift tax. An individual (or deceased person) who is (or was) a nonresident noncitizen of the United States for estate and gift tax purposes may still have U.S. estate and gift tax filing and payment obligations. The determination of whether an individual is a nonresident noncitizen for U.S. estate and gift tax purposes is different than the determination of whether an individual is a nonresident alien for U.S. federal income tax purposes. Estate and gift tax considerations are outside of the scope of this publication, but you should consult with the information available on IRS.gov to determine whether any U.S. estate or gift tax considerations may apply to your situation. Further information on U.S. federal estate tax considerations for nonresident noncitizens is available at Estate Tax for Nonresidents not Citizens of the United States and Frequently Asked Questions on Estate Taxes for Nonresidents not Citizens of the United States. Further information on U.S. federal gift tax considerations for nonresidents noncitizens of the United States is available at Gift Tax for Nonresidents not Citizens of the United States and Frequently Asked Questions on Gift Taxes for Nonresidents not Citizens of the United States. Refunds of certain withholding tax delayed. Refund requests for tax withheld and reported on Form 1042-S, Form 8288-A, or Form 8805 may require additional time for processing. Allow up to 6 months for these refunds to be issued. Third-party designee. You can check the “Yes” box in the “Third-Party Designee” area of your return to authorize the IRS to discuss your return with a friend, a family member, or any other person you choose. This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. It also allows your designee to perform certain actions such as asking the IRS for copies of notices or transcripts related to your return. Also, the authorization can be revoked. See your income tax return instructions for details. Change of address. If you change your mailing address, be sure to notify the IRS using Form 8822. Photographs of missing children. The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
You should first determine whether, for income tax purposes, you are a nonresident alien or a resident alien. If you are both a nonresident and resident in the same year, you have a dual status. See Dual-Status Aliens, later. Also see Nonresident Spouse Treated as a Resident and some other special situations explained later in the chapter. This chapter discusses:
Form (and Instructions)
See chapter 12 for information about getting these forms.
If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of the two tests described under Resident Aliens below.
You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for calendar year 2021 (January 1–December 31). Even if you do not meet either of these tests, you may be able to choose to be treated as a U.S. resident for part of the year. See First-Year Choice under Dual-Status Aliens, later.
You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year 2021. (However, see Dual-Status Aliens, later.) This is known as the green card test. You are a lawful permanent resident of the United States at any time if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services (USCIS) (or its predecessor organization) has issued you an alien registration card, also known as a green card. You continue to have resident status under this test unless the status is taken away from you or is administratively or judicially determined to have been abandoned.
Resident status abandoned. An administrative or judicial determination of abandonment of resident status may be initiated by you, the USCIS, or a U.S. consular officer. If you initiate the determination, your resident status is considered to be abandoned when you file either of the following documents with your USCIS Alien Registration Receipt Card (green card) attached with the USCIS or a U.S. consular officer.
. If the USCIS or U.S. consular officer initiates this determination, your resident status will be considered to be abandoned when the final administrative order of abandonment is issued. If you are granted an appeal to a federal court of competent jurisdiction, a final judicial order is required. Under U.S. immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status. .
You are a resident for tax purposes if you meet the substantial presence test for calendar year 2021. To meet this test, you must be physically present in the United States on at least:
Example. You were physically present in the United States on 120 days in each of the years 2021, 2020, and 2019. To determine if you meet the substantial presence test for 2021, count the full 120 days of presence in 2021, 40 days in 2020 (1/3 of 120), and 20 days in 2019 (1/6 of 120). Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2021. The term “United States” includes the following areas.
You are treated as present in the United States on any day you are physically present in the country at any time during the day. However, there are exceptions to this rule. Do not count the following as days of presence in the United States for the substantial presence test.
Regular commuters from Canada or Mexico. Do not count the days on which you commute to work in the United States from your residence in Canada or Mexico if you regularly commute from Canada or Mexico. You are considered to commute regularly if you commute to work in the United States on more than 75% (0.75) of the workdays during your working period. For this purpose, “commute” means to travel to work and return to your residence within a 24-hour period. “Workdays” are the days on which you work in the United States or Canada or Mexico. “Working period” means the period beginning with the first day in the current year on which you are physically present in the United States to work and ending on the last day in the current year on which you are physically present in the United States to work. If your work requires you to be present in the United States only on a seasonal or cyclical basis, your working period begins on the first day of the season or cycle on which you are present in the United States to work and ends on the last day of the season or cycle on which you are present in the United States to work. You can have more than one working period in a calendar year, and your working period can begin in one calendar year and end in the following calendar year.
Example. Maria Perez lives in Mexico and works for Compañía ABC in its office in Mexico. She was assigned to her firm's office in the United States from February 1 through June 1. On June 2, she resumed her employment in Mexico. For 69 workdays, Maria commuted each morning from her home in Mexico to work in Compañía ABC's U.S. office. She returned to her home in Mexico on each of those evenings. For 7 workdays, she worked in her firm's Mexico office. For purposes of the substantial presence test, Maria does not count the days she commuted to work in the United States because those days equal more than 75% (0.75) of the workdays during the working period (69 workdays in the United States divided by 76 workdays in the working period equals 90.8%).
For more information on determining resident alien or nonresident alien status under the substantial presence test as a result of having applied the COVID-19 Medical Condition Travel Exception to exclude days of presence in the United States in 2020, see Revenue Procedure 2020-20, 2020-20 I.R.B. 801, available at IRS.gov/irb/2020-20_IRB#REV-PROC-2020-20, and the instructions for Form 8843.
Foreign government-related individuals. A foreign government-related individual is an individual (or a member of the individual's immediate family) who is temporarily present in the United States:
You are considered temporarily present in the United States regardless of the actual amount of time you are present in the United States. An international organization is any public international organization that the President of the United States has designated by Executive Order as being entitled to the privileges, exemptions, and immunities provided for in the International Organizations Act. An individual is a full-time employee if his or her work schedule meets the organization's standard full-time work schedule. An individual is considered to have full-time diplomatic or consular status if he or she:
Members of the immediate family include the individual's spouse and unmarried children (whether by blood or adoption) but only if the spouse's or unmarried children's visa statuses are derived from, and dependent on, the exempt individual's visa classification. Unmarried children are included only if they:
Generally, if you are present in the United States under an “A” or “G” class visa, you are considered a foreign government-related individual (with full-time diplomatic or consular status). None of your days count for purposes of the substantial presence test.
Teachers and trainees. A teacher or trainee is an individual, other than a student, who is temporarily in the United States under a “J” or “Q” visa and substantially complies with the requirements of that visa. You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are prohibited by U.S. immigration laws and could result in the loss of your visa status. Also included are immediate family members of exempt teachers and trainees. See the definition of “immediate family,” earlier, under Foreign government-related individuals. You will not be an exempt individual as a teacher or trainee in 2021 if you were exempt as a teacher, trainee, or student for any part of 2 of the 6 preceding calendar years. However, you will be an exempt individual if all of the following conditions are met.
If you qualify to exclude days of presence as a teacher or trainee, you must file a fully completed Form 8843 with the IRS. See Form 8843, later.
Example. Carla was temporarily in the United States during the year as a teacher on a “J” visa. Her compensation for the year was paid by a foreign employer. Carla was treated as an exempt teacher for the previous 2 years, but her compensation was not paid by a foreign employer. She will not be considered an exempt individual for the current year because she was exempt as a teacher for at least 2 of the past 6 years. If her compensation for the past 2 years had been paid by a foreign employer, she would be an exempt individual for the current year.
Students. A student is any individual who is temporarily in the United States on an “F,” “J,” “M,” or “Q” visa and who substantially complies with the requirements of that visa. You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are prohibited by U.S. immigration laws and could result in the loss of your visa status. Also included are immediate family members of exempt students. See the definition of “immediate family,” earlier, under Foreign government-related individuals. You will not be an exempt individual as a student in 2021 if you have been exempt as a teacher, trainee, or student for any part of more than 5 calendar years unless you meet both of the following requirements.
The facts and circumstances to be considered in determining if you have demonstrated an intent to reside permanently in the United States include, but are not limited to, the following. If you qualify to exclude days of presence as a student, you must file a fully completed Form 8843 with the IRS. See Form 8843, later. Attach Form 8843 to your 2021 income tax return. If you do not have to file a return, send Form 8843 to the following address. Department of the Treasury Internal Revenue Service CenterAustin, TX 73301-0215 You must file Form 8843 by the due date for filing Form 1040-NR. The due date for filing is discussed in chapter 7. If you are required to file Form 8843 and you do not timely file Form 8843, you cannot exclude the days you were present in the United States as a professional athlete or because of a medical condition that arose while you were in the United States. This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing requirements and significant steps to comply with those requirements.
Dual residents. The rules given here to determine if you are a U.S. resident do not override tax treaty definitions of residency. If you are a dual-resident taxpayer, you can still claim the benefits under an income tax treaty. A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. The income tax treaty between the two countries must contain a provision that provides for resolution of conflicting claims of residence (tiebreaker rule). If you are treated as a resident of a foreign country under a tax treaty, you are treated as a nonresident alien in figuring your U.S. income tax. For purposes other than figuring your tax, you will be treated as a U.S. resident. For example, the rules discussed here do not affect your residency time periods, as discussed under Dual-Status Aliens, later.
You can be both a nonresident alien and a resident alien during the same tax year. This usually occurs in the year you arrive in, or depart from, the United States. Aliens who have dual status should see chapter 6 for information on filing a return for a dual-status tax year.
If you are a U.S. resident for the calendar year, but you were not a U.S. resident at any time during the preceding calendar year, you are a U.S. resident only for the part of the calendar year that begins on the residency starting date. You are a nonresident alien for the part of the year before that date.
If you do not meet either the green card test or the substantial presence test for 2020 or 2021 and you did not choose to be treated as a resident for part of 2020, but you meet the substantial presence test for 2022, you can choose to be treated as a U.S. resident for part of 2021. To make this choice, you must:
When counting the days of presence in (1) and (2) above, do not count the days you were in the United States under any of the exceptions discussed earlier under Days of Presence in the United States. If you make the first-year choice, your residency starting date for 2021 is the first day of the earliest 31-day period (described in (1) above) that you use to qualify for the choice. You are treated as a U.S. resident for the rest of the year. If you are present for more than one 31-day period and you satisfy condition (2) above for each of those periods, your residency starting date is the first day of the first 31-day period. If you are present for more than one 31-day period but you satisfy condition (2) above only for a later 31-day period, your residency starting date is the first day of the later 31-day period.
You do not have to be married to make this choice.
Example 1. Juan DaSilva is a citizen of the Philippines. He came to the United States for the first time on November 1, 2021, and was here on 31 consecutive days (from November 1 through December 1, 2021). Juan returned to the Philippines on December 1 and came back to the United States on December 17, 2021. He stayed in the United States for the rest of the year. During 2022, Juan is a resident of the United States under the substantial presence test. Juan can make the first-year choice for 2021 because he was in the United States in 2021 for a period of 31 days in a row (November 1 through December 1) and for at least 75% (0.75) of the days following (and including) the first day of his 31-day period (46 total days of presence in the United States divided by 61 days in the period from November 1 through December 31 equals 75.4% (0.754)). If Juan makes the first-year choice, his residency starting date will be November 1, 2021.
Example 2. The facts are the same as in Example 1, except that Juan was also absent from the United States on December 24, 25, 29, 30, and 31. He can make the first-year choice for 2021 because up to 5 days of absence are considered days of presence for purposes of the 75% (0.75) requirement.
If you are a dual-status alien, you can choose to be treated as a U.S. resident for the entire year if all of the following apply.
If you are single at the end of the year, you cannot make this choice. If you make this choice, the following rules apply.
A similar choice is available if, at the end of the tax year, one spouse is a nonresident alien and the other spouse is a U.S. citizen or resident. See Nonresident Spouse Treated as a Resident, later. If you previously made that choice and it is still in effect, you do not need to make the choice explained here.
If you were a U.S. resident in 2021 but are not a U.S. resident during any part of 2022, you cease to be a U.S. resident on your residency termination date. Your residency termination date is December 31, 2021, unless you qualify for an earlier date as discussed later.
If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident. This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year. If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire tax year. Neither you nor your spouse can claim under any tax treaty not to be a U.S. resident. You are both taxed on worldwide income. You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years. .
Example. Bob and Sharon Williams are married and both are nonresident aliens at the beginning of the year. In June, Bob became a resident alien and remained a resident for the rest of the year. Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return. Bob and Sharon must file a joint return for the year they make the choice, but they can file either joint or separate returns for later years.
Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. It should contain the following information.
The choice to be treated as a resident alien is suspended for any tax year (after the tax year you made the choice) if neither spouse is a U.S. citizen or resident alien at any time during the tax year. This means each spouse must file a separate return as a nonresident alien for that year if either meets the filing requirements for nonresident aliens discussed in chapter 7.
Example. Dick Brown was a resident alien on December 31, 2018, and married to Judy, a nonresident alien. They chose to treat Judy as a resident alien and filed joint 2018 and 2019 income tax returns. On January 10, 2020, Dick became a nonresident alien. Judy had remained a nonresident alien throughout the period. Dick and Judy could have filed joint or separate returns for 2020 because Dick was a resident alien for part of that year. However, because neither Dick nor Judy is a resident alien at any time during 2021, their choice is suspended for that year. If either meets the filing requirements for nonresident aliens discussed in chapter 7, they must file separate returns as nonresident aliens for 2021. If Dick becomes a resident alien again in 2022, their choice is no longer suspended.
Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier under Suspending the Choice) or ended in one of the following ways. If the choice is ended in one of the following ways, neither spouse can make this choice in any later tax year.
If you are a nonresident alien in the United States and a bona fide resident of American Samoa or Puerto Rico during the entire tax year, you are taxed, with certain exceptions, according to the rules for resident aliens of the United States. For more information, see Bona Fide Residents of American Samoa or Puerto Rico in chapter 5. If you are a nonresident alien from American Samoa or Puerto Rico who does not qualify as a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you are taxed as a nonresident alien. Resident aliens who formerly were bona fide residents of American Samoa or Puerto Rico are taxed according to the rules for resident aliens.
After you have determined your alien status, you must determine the source of your income. This chapter will help you determine the source of different types of income you may receive during the tax year. This chapter discusses:
This chapter also discusses special rules for married individuals who are domiciled in a country with community property laws.
A resident alien's income is generally subject to tax in the same manner as a U.S. citizen. If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U.S. tax return. You must report these amounts from sources within and outside the United States.
Nonresident aliens are taxed only on their income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States (see chapter 4). The general rules for determining U.S. source income that apply to most nonresident aliens are shown in Table 2-1. The following discussions cover the general rules as well as the exceptions to these rules. .
Generally, U.S. source interest income includes the following items.
The place or manner of payment is immaterial in determining the source of the income. A substitute interest payment made to the transferor of a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as the interest on the transferred security.
In most cases, dividend income received from domestic corporations is U.S. source income. Dividend income from foreign corporations is usually foreign source income. An exception to the second rule is discussed later. A substitute dividend payment made to the transferor of a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as a distribution on the transferred security.
Dividend equivalent payments. U.S. source dividends also include dividend equivalent payments. Dividend equivalent payments include:
A payment of a dividend equivalent amount includes any gross amount that references a U.S. source dividend and that is used to compute any net amount transferred to or from the taxpayer under a contract, if the taxpayer is the long party under the contract. As a result, a taxpayer may be treated as having received a dividend equivalent payment even if the taxpayer makes a net payment or no amount is paid because the net amount is zero. In 2021, an NPC or ELI will generally be a specified NPC or specified ELI, respectively, if the contract is a delta one transaction. Generally, delta is the ratio of change in the fair market value of an NPC or ELI to a small change in the fair market value of the number of shares of the stock referenced by the contract. Generally, the amount of a dividend equivalent for a specified NPC or specified ELI is the per share dividend amount multiplied by the number of shares of stock referenced by the contract multiplied by the delta of the contract. Special rules apply to complex contracts. See Regulations section 1.871-15 and Notice 2018-72, 2018-40 I.R.B., available at IRS.gov/irb/2018-40_IRB#NOT-2018-72, for additional information.
Amounts received directly or indirectly, for the provision of a guarantee of indebtedness issued after September 27, 2010, are U.S. source income if they are paid by:
All wages and any other compensation for services performed in the United States are considered to be from sources in the United States. The only exceptions to this rule are discussed in Employees of foreign persons, organizations, or offices, later, and in Crew members, earlier. If you are an employee and receive compensation for labor or personal services performed both inside and outside the United States, special rules apply in determining the source of the compensation. Compensation (other than certain fringe benefits) is sourced on a time basis. Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Or, you may be permitted to use an alternative basis to determine the source of compensation. See Alternative Basis, later.
Use a time basis to figure your U.S. source compensation (other than the fringe benefits discussed in Geographical Basis). Do this by multiplying your total compensation (other than the fringe benefits sourced on a geographical basis) by the following fraction. You can use a unit of time less than a day in the above fraction, if appropriate. The time period for which the compensation is made does not have to be a year. Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate.
Example 1. Christina Brooks, a resident of the Netherlands, worked 240 days for a U.S. company during the tax year. She received $80,000 in compensation. None of it was for fringe benefits. Christina performed services in the United States for 60 days and performed services in the Netherlands for 180 days. Using the time basis for determining the source of compensation, $20,000 ($80,000 × 60/240) is her U.S. source income.
Example 2. Rob Waters, a resident of South Africa, is employed by a corporation. His annual salary is $100,000. None of it is for fringe benefits. During the first quarter of the year, he worked entirely within the United States. On April 1, Rob was transferred to Singapore for the remainder of the year. Rob is able to establish that the first quarter of the year and the last 3 quarters of the year are two separate, distinct, and continuous periods of time. Accordingly, $25,000 of Rob's annual salary is attributable to the first quarter of the year (0.25 × $100,000). All of it is U.S. source income because he worked entirely within the United States during that quarter. The remaining $75,000 is attributable to the last three quarters of the year. During those quarters, he worked 150 days in Singapore and 30 days in the United States. His periodic performance of services in the United States did not result in distinct, separate, and continuous periods of time. Of this $75,000, $12,500 ($75,000 × 30/180) is U.S. source income.
If you are an employee, you can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your compensation than the time or geographical basis. If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your compensation. Also, if your total compensation from all sources is $250,000 or more, check “Yes” to both questions on line K of Schedule OI (Form 1040-NR), and attach a written statement to your tax return that sets forth all of the following.
Transportation income is income from the use of a vessel or aircraft or for the performance of services directly related to the use of any vessel or aircraft. This is true whether the vessel or aircraft is owned, hired, or leased. The term “vessel or aircraft” includes any container used in connection with a vessel or aircraft. All income from transportation that begins and ends in the United States is treated as derived from sources in the United States. If the transportation begins or ends in the United States, 50% of the transportation income is treated as derived from sources in the United States. For transportation income from personal services, 50% of the income is U.S. source income if the transportation is between the United States and a U.S. possession. For nonresident aliens, this only applies to income derived from, or in connection with, an aircraft. For information on how U.S. source transportation income is taxed, see chapter 4.
Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. However, see Activities to be performed outside the United States, later. For example, payments for research or study in the United States made by the United States, a noncorporate U.S. resident, or a domestic corporation are from U.S. sources. Similar payments from a foreign government or foreign corporation are foreign source payments even though the funds may be disbursed through a U.S. agent. Payments made by an entity designated as a public international organization under the International Organizations Immunities Act are from foreign sources.
If you receive a pension from a domestic trust for services performed both in and outside the United States, part of the pension payment is from U.S. sources. That part is the amount attributable to earnings of the pension plan and the employer contributions made for services performed in the United States. This applies whether the distribution is made under a qualified or nonqualified stock bonus, pension, profit-sharing, or annuity plan (whether or not funded). If you performed services as an employee of the United States, you may receive a distribution from the U.S. Government under a plan, such as the Civil Service Retirement System, that is treated as a qualified pension plan. Your U.S. source income is the otherwise taxable amount of the distribution that is attributable to your total U.S. Government basic pay other than tax-exempt pay for services performed outside the United States.
Your U.S. source income includes rent and royalty income received during the tax year from property located in the United States or from any interest in that property. U.S. source income also includes rents or royalties for the use of, or for the privilege of using, in the United States, intangible property such as patents, copyrights, secret processes and formulas, goodwill, trademarks, franchises, and similar property.
Real property is land and buildings and generally anything built on, growing on, or attached to land. Gross income from sources in the United States includes gains, profits, and income from the sale or other disposition of real property located in the United States.
Personal property is property, such as machinery, equipment, or furniture, that is not real property. Gain or loss from the sale or exchange of personal property generally has its source in the United States if you have a tax home in the United States. If you do not have a tax home in the United States, the gain or loss is generally considered to be from sources outside the United States.
Depreciable property. To determine the source of any gain from the sale of depreciable personal property, you must first figure the part of the gain that is not more than the total depreciation adjustments on the property. You allocate this part of the gain to sources in the United States based on the ratio of U.S. depreciation adjustments to total depreciation adjustments. The rest of this part of the gain is considered to be from sources outside the United States. For this purpose, “U.S. depreciation adjustments” are the depreciation adjustments to the basis of the property that are allowable in figuring taxable income from U.S. sources. However, if the property is used predominantly in the United States during a tax year, all depreciation deductions allowable for that year are treated as U.S. depreciation adjustments. But there are some exceptions for certain transportation, communications, and other property used internationally. Gain from the sale of depreciable property that is more than the total depreciation adjustments on the property is sourced as if the property were inventory property, as discussed above. A loss is sourced in the same way as the depreciation deductions were sourced. However, if the property was used predominantly in the United States, the entire loss reduces U.S. source income. The basis of property usually means the cost (money plus the fair market value of other property or services) of property you acquire. Depreciation is an amount deducted to recover the cost or other basis of a trade or business asset. The amount you can deduct depends on the property's cost, when you began using the property, how long it will take to recover your cost, and which depreciation method you use. A depreciation deduction is any deduction for depreciation or amortization or any other allowable deduction that treats a capital expenditure as a deductible expense.
Intangible property. Intangible property includes patents, copyrights, secret processes or formulas, goodwill, trademarks, trade names, or other like property. The gain from the sale of amortizable or depreciable intangible property, up to the previously allowable amortization or depreciation deductions, is sourced in the same way as the original deductions were sourced. This is the same as the source rule for gain from the sale of depreciable property. See Depreciable property, earlier, for details on how to apply this rule. Gain in excess of the amortization or depreciation deductions is sourced in the country where the property is used if the income from the sale is contingent on the productivity, use, or disposition of that property. If the income is not contingent on the productivity, use, or disposition of the property, the income is sourced according to your tax home (discussed earlier). If payments for goodwill do not depend on its productivity, use, or disposition, their source is the country in which the goodwill was generated.
Sales through offices or fixed places of business. Despite any of the earlier rules, if you do not have a tax home in the United States, but you maintain an office or other fixed place of business in the United States, treat the income from any sale of personal property (including inventory property) that is attributable to that office or place of business as U.S. source income. However, this rule does not apply to sales of inventory property for use, disposition, or consumption outside the United States if your office or other fixed place of business outside the United States materially participated in the sale. If you have a tax home in the United States but maintain an office or other fixed place of business outside the United States, income from sales of personal property, other than inventory, depreciable property, or intangibles, that is attributable to that foreign office or place of business may be treated as U.S. source income. The income is treated as U.S. source income if an income tax of less than 10% of the income from the sale is paid to a foreign country. This rule also applies to losses if the foreign country would have imposed an income tax of less than 10% had the sale resulted in a gain.
If you are married and you or your spouse is subject to the community property laws of a foreign country, U.S. state, or U.S. possession, you must generally follow those laws to determine the income of yourself and your spouse for U.S. tax purposes. But you must disregard certain community property laws if:
Resident and nonresident aliens are allowed exclusions from gross income if they meet certain conditions. An exclusion from gross income is generally income you receive that is not included in your U.S. income and is not subject to U.S. tax. This chapter covers some of the more common exclusions allowed to resident and nonresident aliens. This chapter discusses:
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Resident aliens may be able to exclude the following items from their gross income.
If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. The exclusion is $108,700 in 2021. In addition, you may be able to exclude or deduct certain foreign housing amounts. You may also qualify if you are a bona fide resident of a foreign country and you are a citizen or national of a country with which the United States has an income tax treaty. For more information, see Pub. 54.
Nonresident aliens can exclude the following items from their gross income.
If you were paid by a foreign employer, your U.S. source income may be exempt from U.S. tax, but only if you meet one of the situations discussed next.
Employees of foreign persons, organizations, or offices. Income for personal services performed in the United States as a nonresident alien is not considered to be from U.S. sources and is tax exempt if you meet all three of the following conditions.
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. To find if your pay is more than $3,000, do not include any amounts you get from your employer for advances or reimbursements of business travel expenses, if you were required to and did account to your employer for those expenses. If the advances or reimbursements are more than your expenses, include the excess in your pay for these services. A “day” means a calendar day during any part of which you are physically present in the United States.
Example 1. During 2021, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U.S. partnership. Henry, who uses the calendar year as his tax year, was temporarily present in the United States for 60 days during 2021 performing personal services for the overseas office of the partnership. That office paid him a total gross salary of $2,800 for those services. During 2021, he was not engaged in a trade or business in the United States. The salary is not considered U.S. source income and is exempt from U.S. tax.
Example 2. The facts are the same as in Example 1, except that Henry's total gross salary for the services performed in the United States during 2021 was $4,500. He received $2,875 in 2021, and $1,625 in 2022. During 2021, he was engaged in a trade or business in the United States because the compensation for his personal services in the United States was more than $3,000. Henry's salary is U.S. source income and is taxed under the rules in chapter 4.
Students and exchange visitors. Nonresident alien students and exchange visitors present in the United States under “F,” “J,” or “Q” visas can exclude from gross income pay received from a foreign employer. This group includes bona fide students, scholars, trainees, teachers, professors, research assistants, 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 the alien. A nonresident alien temporarily present in the United States under a “J” visa includes an alien individual entering the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961.
You can exclude from your gross income winnings from legal wagers initiated outside the United States in a pari-mutuel pool with respect to a live horse or dog race in the United States.
If you sold your main home, you may be able to exclude up to $250,000 of the gain on the sale of your home. If you are married and file a joint return, you may be able to exclude up to $500,000. For information on the requirements for this exclusion, see Pub. 523. .
Resident and nonresident aliens are taxed in different ways. Resident aliens are generally taxed in the same way as U.S. citizens. Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U.S. trade or business. The following discussions will help you determine if income you receive during the tax year is effectively connected with a U.S. trade or business and how it is taxed. This chapter discusses:
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Resident aliens are generally taxed in the same way as U.S. citizens. This means that their worldwide income is subject to U.S. tax and must be reported on their U.S. tax return. Income of resident aliens is subject to the graduated tax rates that apply to U.S. citizens. Resident aliens use the Tax Table or Tax Computation Worksheets located in the Instructions for Form 1040, which apply to U.S. citizens.
A nonresident alien's income that is subject to U.S. income tax must be divided into two categories.
The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. These are the same rates that apply to U.S. citizens and residents. Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. .
Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. Whether you are engaged in a trade or business in the United States depends on the nature of your activities. The discussions that follow will help you determine whether you are engaged in a trade or business in the United States.
If you perform personal services in the United States at any time during the tax year, you are usually considered engaged in a trade or business in the United States. .
COVID-19 relief for certain nonresident alien individuals temporarily performing services or other activities in the United States. Due to COVID-19, you may be eligible to choose an uninterrupted period of up to 60 calendar days, beginning on or after February 1, 2020. and on or before April 1, 2020, during which your services or other activities conducted in the United States will not be taken into account in determining whether you were engaged in a trade or business in the United States. To be eligible, you must have been temporarily present in the United States while performing these activities, and but for COVID-19, you would not have performed these activities in the United States. You were temporarily present in the United States if, in 2020, you were a nonresident alien (taking into account the COVID-19 Medical Condition Travel Exception), or a U.S. citizen or lawful permanent resident who had a tax home outside the United States in 2019 and reasonably expected to have a tax home outside the United States in 2020. Your income earned during this 60-day period will not be subject to the 30% tax discussed later in this chapter solely because you were not treated as having a U.S. trade or business. For more information, see FAQs for Nonresident Alien Individuals and Foreign Businesses with Employees or Agents Impacted by COVID-19 Emergency Travel Disruptions, available at IRS.gov/newsroom/FAQs-for-Nonresdient-Alien-Individuals-and-Foreign-Businesses-with-Employees-or-Agents-Impacted-by-COVID-19-Emergency-Travel-Disruptions. Also, see Personal Services under Tax Treaty Benefits in chapter 9, later.
Other examples of being engaged in a trade or business in the United States follow.
Trading in stocks, securities, and commodities. If your only U.S. business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U.S. resident broker or other agent, you are not engaged in a trade or business in the United States. For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. This discussion does not apply if you have a U.S. office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities.
Trading for a nonresident alien's own account. You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U.S. business activity. This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities.
If you are engaged in a U.S. trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. Two tests, described under Investment Income, later, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. For a discussion of these rules, see Foreign Income, later.
Investment income from U.S. sources that may or may not be treated as effectively connected with a U.S. trade or business generally falls into the following three categories.
Use the two tests described next to determine whether an item of U.S. source income falling in one of the three categories above and received during the tax year is effectively connected with your U.S. trade or business. If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax, later, in this chapter.
You are usually engaged in a U.S. trade or business when you perform personal services in the United States. Personal service income you receive in a tax year in which you are engaged in a U.S. trade or business is effectively connected with a U.S. trade or business. Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. The income may be paid to you in the form of cash, services, or property. If you are engaged in a U.S. trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets, are generally not effectively connected with your trade or business. However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected.
Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions.
If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. See Transportation Tax, later in this chapter.
All profits or losses from U.S. sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. A share of U.S. source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States.
If you are a direct or indirect foreign partner in a U.S. or foreign partnership that is engaged (or is treated as engaged) in a trade or business within the United States and you directly or indirectly dispose of that interest, then the gain or loss from the disposition of that partnership interest may affect your federal tax liability. Under section 864(c)(8), your gain or loss from the sale, exchange, or other disposition of that partnership interest is treated as effectively connected with the conduct of a trade or business within the United States (“effectively connected gain” or “effectively connected loss”). However, the amount of effectively connected gain or effectively connected loss is limited to the portion of what your distributive share of effectively connected gain or loss would have been had the partnership sold all of its assets at fair market value as of the date of the disposition. Section 864(c)(8) applies to sales, exchanges, or other dispositions occurring on or after November 27, 2017. On November 6, 2020, final regulations under section 864(c)(8) were issued applicable to transfers occurring on or after December 26, 2018.
You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if:
An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. The three kinds of foreign source income are listed below.
Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U.S. trade or business. For example, foreign source interest and dividend equivalents are treated as U.S. effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States.
Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U.S. citizens and residents. Generally, you can receive effectively connected income only if you are a nonresident alien engaged in a trade or business in the United States during the tax year. However, if you receive payments from the sale or exchange of property, the performance of services, or any other transaction during a tax year in which you are not engaged in a U.S. trade or business, but such payments would have been treated as effectively connected income in the year the transaction took place or you performed the services, then they are treated as effectively connected income in the tax year you received them.
Example. Ted Richards entered the United States in August 2020 to perform personal services in the U.S. office of his overseas employer. He worked in the U.S. office until December 25, 2020, but did not leave this country until January 11, 2021. On January 8, 2021, he received his final paycheck for services performed in the United States during 2020. All of Ted's income during his stay here is U.S. source income. During 2020, Ted was engaged in the trade or business of performing personal services in the United States. Therefore, all amounts paid to him in 2020 for services performed in the United States during 2020 are effectively connected with that trade or business during 2020. The salary payment Ted received in January 2021 is U.S. source income to him in 2021. It is effectively connected income because he performed the services that earned the income in the United States in 2020 and, therefore, he would have been treated as engaged in a trade or business in the United States during 2020.
Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U.S. sources but only if the items are not effectively connected with your U.S. trade or business.
The 30% (or lower treaty) rate applies to the gross amount of U.S. source fixed or determinable annual or periodic gains, profits, or income. Income is fixed when it is paid in amounts known ahead of time. Income is determinable whenever there is a basis for figuring the amount to be paid. Income can be periodic if it is paid from time to time. It does not have to be paid annually or at regular intervals. Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Other items of income, such as royalties, may also be subject to the 30% tax. .
In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U.S. trade or business and is not exempted by treaty. However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U.S. trade or business.
A nonresident alien must include 85% of any U.S. social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U.S. source fixed or determinable annual or periodic income. Social security benefits include monthly retirement, survivor, and disability benefits. This income is exempt under some tax treaties. See Table 1 in the Tax Treaty Tables, available at IRS.gov/Individuals/International-Taxpayers/Tax-Treaty-Tables for a list of tax treaties that exempt U.S. social security benefits from U.S. tax. For more information, see Pub. 915.
These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. They apply even if you are engaged in a trade or business in the United States. These rules do not apply to the sale or exchange of a U.S. real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. See Real Property Gain or Loss, earlier, under Effectively Connected Income. A capital asset is everything you own except:
A capital gain is a gain on the sale or exchange of a capital asset. A capital loss is a loss on the sale or exchange of a capital asset. If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U.S. currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. You can use Pub. 544 to determine what is a sale or exchange of a capital asset, or what is treated as such. Specific tax treatment that applies to U.S. citizens or residents generally does not apply to you. The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later.
Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U.S. trade or business. See Income From Real Property, later.
If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. You can make this choice only for real property income that is not otherwise effectively connected with your U.S. trade or business. If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. This choice does not treat a nonresident alien, who is not otherwise engaged in a U.S. trade or business, as being engaged in a trade or business in the United States during the year.
Example. You are a nonresident alien and are not engaged in a U.S. trade or business. You own a single-family house in the United States that you rent out. Your rental income for the year is $10,000. This is your only U.S. source income. As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. You do not have to file a U.S. tax return (Form 1040-NR) because your U.S. tax liability is satisfied by the withholding of tax. If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. (See Pub. 527.) Any resulting net income is taxed at graduated rates. If you make this choice, report the rental income and expenses on Schedule E (Form 1040). Enter the net rental income or loss from Schedule E (Form 1040) on Schedule 1 (Form 1040), Part I, line 5. Attach Schedule 1 (Form 1040) and Schedule E (Form 1040) to Form 1040-NR. For the first year you make the choice, also attach the statement discussed next.
You can file your Form 1040-X electronically beginning with the 2019 tax year. For more information, see IR-2020-107.
A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income. If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 23c of Form 1040-NR. Attach a statement to your return that includes the following information (if applicable).
This 4% tax applies to your U.S. source gross transportation income. This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. For transportation income from personal services, the transportation must be between the United States and a U.S. possession. For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft.
You are subject to tax under a special rule if you interrupt your period of U.S. residence with a period of nonresidence. The special rule applies if you meet all of the following conditions.
Under this special rule, you are subject to tax on your U.S. source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under section 871 (rules that normally apply to taxation of a nonresident alien’s income, discussed earlier) after taking into account any applicable treaty benefit. For information on how to figure the special tax, see Expatriation Tax, later.
Example. John Willow, a citizen of New Zealand, entered the United States on April 1, 2016, as a lawful permanent resident. On August 1, 2018, John ceased to be a lawful permanent resident and returned to New Zealand. During his period of residence, he was present in the United States for at least 183 days in each of 3 consecutive years (2016, 2017, and 2018). He returned to the United States on October 5, 2021, as a lawful permanent resident. He became a resident before the close of the third calendar year (2021) beginning after the end of his first period of residence (August 1, 2018). Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2018, through October 4, 2021) if it is more than the tax that would normally apply to him as a nonresident alien.
The expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and LTRs who have ended their residency. The following section describes the expatriation rules under section 877A, which applies to individuals who expatriated on or after June 17, 2008. See Expatriation After June 16, 2008, later. If you expatriated before June 17, 2008, refer to Expatriation After June 3, 2004, and Before June 17, 2008 in chapter 4 of the 2018 Pub. 519, and the 2018 Instructions for Form 8854. .
After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Resident aliens should get publications, forms, and instructions for U.S. citizens because the information for filing returns for resident aliens is generally the same as for U.S. citizens. If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. This chapter discusses:
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You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. If you have not previously established a fiscal tax year, your tax year is the calendar year. A calendar year is 12 consecutive months ending on December 31. If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52-53 week year) and are considered to be a U.S. resident for any calendar year, you will be treated as a U.S. resident for any part of your fiscal year that falls within that calendar year.
A taxpayer identification number (TIN) must be furnished on returns, statements, and other tax-related documents. For an individual, this is a social security number (SSN). If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. You must furnish a TIN if you are:
Individual taxpayer identification number (ITIN). If you already have an ITIN, enter it wherever an SSN is required on your tax return. If you do not have and are not eligible to get an SSN, you must apply for an ITIN. For details on how to do so, see Form W-7 and its instructions. If you qualify for an ITIN and your application is complete, you will receive a letter from the IRS assigning your tax identification number usually within 7 weeks. If you have not received your ITIN or other correspondence 7 weeks after applying, call the IRS toll-free number at 800-829-1040 to request the status of your application if you are in the United States. If you are outside the United States, call 267-941-1000 (not a toll-free number). An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration status under U.S. law. In addition to those aliens who are required to furnish a TIN and are not eligible for an SSN, a Form W-7 must be filed for alien spouses or dependents who qualify for an allowable tax benefit and are not eligible for an SSN. Additional information on obtaining an ITIN is available in the Instructions for Form W-7 and at IRS.gov/ITIN.
The amount of your tax depends on your filing status. Your filing status is important in determining whether you can take certain deductions and credits. The rules for determining your filing status are different for resident aliens and nonresident aliens.
Resident aliens can use the same filing statuses available to U.S. citizens. See your form instructions or Pub. 501 for more information on filing status.
Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit (EIC). In that case, you will not be entitled to the credit. See Pub. 596 for more information.
You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. For resident aliens, this includes income from sources both within and outside the United States. For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U.S. sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate).
Resident and nonresident aliens can claim similar deductions on their U.S. tax returns. However, nonresident aliens can generally claim only deductions related to income that is effectively connected with their U.S. trade or business.
You can claim the same deductions allowed to U.S. citizens if you are a resident alien for the entire tax year. While the discussion under Nonresident Aliens, later, contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. You should get the Instructions for Form 1040 for more information on how to claim your allowable deductions.
You can claim deductions to figure your effectively connected taxable income. You generally cannot claim deductions related to income that is not connected with your U.S. business activities. Except for certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income.
Individual retirement arrangement (IRA). If you made contributions to a traditional IRA for 2021, you may be able to take an IRA deduction. But you must have taxable compensation effectively connected with a U.S. trade or business to do so. A Form 5498 should be sent to you by May 31, 2022, that shows all contributions to your traditional IRA for 2021. If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc.) at work or through self-employment, your IRA deduction may be reduced or eliminated. But you can still make contributions to a traditional IRA even if you cannot deduct them. If you made nondeductible contributions to a traditional IRA for 2021, you must report them on Form 8606. For more information, see Pub. 590-A.
Resident aliens can claim their dependents in the same way as U.S. citizens. However, only nonresident aliens who are U.S. nationals; residents of Canada, Mexico, and South Korea; or residents of India who were students or business apprentices can have a qualifying dependent. See Nonresident Aliens, later. In general, a dependent is a qualifying child or a qualifying relative. However, the following exceptions apply.
You must show the SSN (or ITIN) of any dependent you list in the Dependents section of your Form 1040-NR. .
If you are a resident alien, a qualifying dependent includes your qualifying child or qualifying relative. Five tests must be met for a child to be your qualifying child. Four tests must be met for a person to be your qualifying relative. For more information, see the Instructions for Form 1040. You must show the SSN (or ITIN) of any dependent you list in the Dependents section of your Form 1040 or 1040-SR. .
See Pub. 501 for more information.
Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U.S. trade or business. There may be limitations that impact the amount of itemized deductions you can claim on Schedule A. See the Instructions for Schedule A (Form 1040) or Instructions for Schedule A, Itemized Deductions in the Instructions for Form 1040-NR.
You can claim the same itemized deductions as U.S. citizens using Schedule A (Form 1040). See the Instructions for Schedule A (Form 1040) for more information. If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. For further information, see the Instructions for Form 1040.
You can deduct certain itemized deductions if you receive income effectively connected with your U.S. trade or business. You can generally only include deductions and losses that are properly allocated and apportioned to income effectively connected with a U.S. trade or business. You cannot include deductions and/or losses that relate to exempt income or to income that is not effectively connected with a U.S. trade or business. However, you can deduct certain charitable contributions and casualty and theft losses even if they do not relate to your effectively connected income. Use Schedule A (Form 1040-NR) to claim itemized deductions. See the Instructions for Form 1040-NR for more information.
This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens.
Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U.S. citizens. The following items are some of the credits you may be able to claim.
Child tax credit and the additional child tax credit. You may be able to take these credits if you have a qualifying child under the age of 18 and meet other requirements. The maximum amount of the credit per qualifying child is $3,600 for a qualifying child under age 6 and up to $3,000 for a qualifying child over age 5 and under age 18. The enhanced credit amount begins to phase out where modified adjusted gross income exceeds $150,000 in the case of a qualifying widow(er) and $75,000 in all other cases. If you lived in the United States for more than half the year, the child tax credit will be fully refundable even if you don't have earned income. If you don't meet this residency requirement, your child tax credit will be a combination of a nonrefundable child tax credit and a refundable additional child tax credit, as was the case in 2020. The credit for other dependents has not been enhanced and is figured as it was in 2020. “Qualifying child,” for purposes of the child tax credit and the additional child tax credit, is a child who:
An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption. If you did not have an SSN (or ITIN) issued on or before the due date of your 2021 return (including extensions), you cannot claim the child tax credit on either your original or an amended 2021 return. If your child did not have an SSN valid for employment issued before the due date of the 2021 return (including extensions), you cannot claim the child tax credit for this child but may be able to claim the credit for other dependents for this child. See Credit for other dependents, discussed below. Use Schedule 8812 (Form 1040) and its instructions to figure the credits.
Earned income credit (EIC). The EIC, or earned income tax credit (EITC), is a benefit for working people with low to moderate income. To qualify for the EIC, you must have earned income from working for someone or from running or owning a business or farm and meet basic rules. Also, you must either meet additional rules for workers without a qualifying child or have a child who meets all the qualifying child rules. The EIC reduces the amount of tax you owe and may give you a refund. For more information, go to IRS.gov/EIC. If you did not have an SSN issued on or before the due date of the 2021 return (including extensions), you cannot claim the EIC on either your original or an amended 2021 return. Also, if a child did not have an SSN issued on or before the due date of your return (including extensions), you cannot count that child as a qualifying child in figuring the EIC on either your original or an amended 2021 return. . To find out if you are eligible for the EIC, go to IRS.gov/EITCAssistant.
You can claim some of the same credits that resident aliens can claim. You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income.
Credits are allowed only if you receive effectively connected income. You may be able to claim some of the following credits.
Child and dependent care credit. You may qualify for this credit if you pay someone to care for your dependent qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. For definitions of these terms, see Pub. 503. Married nonresident aliens can claim the credit only if they choose to file a joint return with a U.S. citizen or resident spouse as discussed in How To Make the Choice in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Pub. 503). The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Earned income generally means wages, salaries, and professional fees for personal services performed. For more information, see Pub. 503.
Child tax credit and the additional child tax credit. You may be able to take these credits if you have a qualifying child under the age of 18 and meet other requirements. The maximum amount of the credit per qualifying child is $3,600 for a qualifying child under age 6 and up to $3,000 for a qualifying child over age 5 and under age 18. . “Qualifying child,” for purposes of the child tax credit and the additional child tax credit, is a child who:
An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption. If you did not have an SSN (or ITIN) issued on or before the due date of your 2021 return (including extensions), you may not claim the child tax credit on either your original or an amended tax return. If your child did not have an SSN valid for employment issued before the due date of the 2021 return (including extensions), you cannot claim the child tax credit for this child but may be able to claim the credit for other dependents for this child. See Credit for other dependents, discussed below. Use Schedule 8812 (Form 1040) and its instructions to figure the credits. .
Earned income credit (EIC). If you are a nonresident alien for any part of the tax year, you generally cannot get the EIC. However, if you are married and choose to file a joint return with a U.S. citizen or resident spouse, as discussed in Nonresident Spouse Treated as a Resident in chapter 1, you may be eligible for the credit. You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim the EIC. You cannot claim the EIC using an ITIN. If you did not have an SSN issued on or before the due date of the 2021 return (including extensions), you cannot claim the EIC on either your original or an amended 2021 return. Also, if a child did not have an SSN issued on or before the due date of your return (including extensions), you cannot count that child as a qualifying child in figuring the EIC on either your original or an amended 2021 return. . See Pub. 596 for more information on the credit.
You can claim the tax withheld during the year as a payment against your U.S. tax. You claim it on lines 25a through 25g of Form 1040-NR. The tax withheld reduces any tax you owe with Form 1040-NR.
Tax withheld on gain from the sale or exchange of certain partnership interests. If you are a direct or indirect foreign partner in a U.S. or foreign partnership that is engaged (or is treated as engaged) in a trade or business within the United States and you directly or indirectly dispose of that interest for a gain, then for transfers occurring after 2017, the transferee will generally withhold and pay into the IRS on your behalf a tax equal to 10% of the amount realized on the sale. The rules for withholding and paying over this amount are similar to sales of U.S. real property interests. You will receive a Form 8288-A reflecting the amount withheld that you may then claim on line 25f of your Form 1040-NR as a credit against the tax you owe on the gain. You may be able to provide certain information to the transferee to reduce or eliminate withholding. For example, if a nonrecognition provision of the Internal Revenue Code applies to all of the gain realized on a transfer, the transferee does not need to withhold if you provide a notice describing the application of a nonrecognition provision. If you are a transferee that failed to withhold, under section 1446(f)(4) the partnership may withhold on distributions to you. On November 30, 2020, final regulations under section 1446(f) were issued which are generally applicable to transfers of non-PTP interests that occur on or after January 29, 2021. Notice 2018-29 applies to transfers of non-PTP interests that occurred before the applicability date of the final regulations, or, under certain circumstances, taxpayers may apply the proposed regulations to transfers of non-PTP interests during this time. The requirements for transfers of PTP interests and withholding under section 1446(f)(4) are suspended for transfers occurring before January 1, 2022. For more information, see Pub. 515. For more information, see Treasury Decision 9926 on page 1602 of I.R.B. 2020-51, available at IRS.gov/irb/2020-51_IRB#TD-9926. Also, see the final regulations as published in the Federal Register at govinfo.gov/content/pkg/FR-2020-11-30/pdf/2020-22619.pdf.
If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you are generally taxed the same as resident aliens. You should file Form 1040 or 1040-SR and report all income from sources both in and outside the United States. However, you can exclude the income discussed in the following paragraphs. For tax purposes other than reporting income, however, you will be treated as a nonresident alien. For example, you are not allowed the standard deduction, you cannot file a joint return, and you cannot claim a dependent unless that person is a citizen or national of the United States. There are also limits on what deductions and credits are allowed. See Nonresident Aliens under Deductions, Itemized Deductions, and Tax Credits and Payments in this chapter.
Residents of Puerto Rico. If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). If you report income on a calendar year basis and you do not have wages subject to withholding for 2021, file your return and pay your tax by June 15, 2022. You must also make your first payment of estimated tax for 2022 by June 15, 2022. You cannot file a joint income tax return or make joint payments of estimated tax. However, if you are married to a U.S. citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. If you earn wages subject to withholding, your U.S. income tax return is due by April 18, 2022. You must also make your first payment of estimated tax for 2022 by April 18, 2022. For information on withholding and estimated tax, see chapter 8.
You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year. Dual status does not refer to your citizenship; it refers only to your resident status in the United States. In determining your U.S. income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. The most common dual-status tax years are the years of arrival and departure. See Dual-Status Aliens in chapter 1. If you are married and choose to be a nonresident spouse treated as a resident, as explained in chapter 1, the rules of this chapter do not apply to you for that year. This chapter discusses:
Publication
Form (and Instructions)
See chapter 12 for information about getting these publications and forms.
You must file your tax return on the basis of an annual accounting period called a tax year. If you have not previously established a fiscal tax year, your tax year is the calendar year. A calendar year is 12 consecutive months ending on December 31. If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December, or a 52-53 week year) and are considered to be a U.S. resident for any calendar year, you will be treated as a U.S. resident for any part of your fiscal year that falls within that calendar year.
For the part of the year you are a resident alien, you are taxed on income from all sources. Income from sources outside the United States is taxable if you receive it while you are a resident alien. The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year. For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources and on certain foreign source income treated as effectively connected with a U.S. trade or business. The rules for treating foreign source income as effectively connected are discussed in chapter 4 under Foreign Income. Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien. The income is not taxable even if you earned it while you were a resident alien or if you became a resident alien or a U.S. citizen after receiving it and before the end of the year. Income from U.S. sources is taxable whether you receive it while a nonresident alien or a resident alien unless specifically exempt under the Internal Revenue Code or a tax treaty provision. Generally, tax treaty provisions apply only to the part of the year you were a nonresident. In certain cases, however, treaty provisions may apply while you were a resident alien. See chapter 9 for more information. When determining what income is taxed in the United States, you must consider exemptions under U.S. tax law as well as the reduced tax rates and exemptions provided by tax treaties between the United States and certain foreign countries. For a further discussion of tax treaties, see chapter 9.
As a dual-status taxpayer, you may be able to claim a dependent on your tax return. In general, a dependent is a qualifying child or a qualifying relative. You may be entitled to claim additional deductions and credits if you have a qualifying dependent. See the Instructions for Form 1040 or the Instructions for Form 1040-NR for more information. If you were a U.S. national or a resident of Canada or Mexico, you can claim a dependent on the same terms as U.S. citizens. If you are a resident of South Korea or India, see chapter 5.
When you figure your U.S. tax for a dual-status year, you are subject to different rules for the part of the year you are a resident and the part of the year you are a nonresident.
All income for your period of residence and all income that is effectively connected with a trade or business in the United States for your period of nonresidence, after allowable deductions, are added and taxed at the rates that apply to U.S. citizens and residents. Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate. You cannot take any deductions against this income. Use the Social Security Benefits Worksheet in the Instructions for Form 1040 to help you figure the taxable part of your social security and equivalent tier 1 railroad retirement benefits for the part of the year you were a resident alien. If you received U.S. social security benefits while you were a nonresident alien, the SSA will send you Form SSA-1042S showing your combined benefits for the entire year and the amount of tax withheld. You will not receive separate statements for the benefits received during your periods of U.S. residence and nonresidence. Therefore, it is important for you to keep careful records of these amounts. You will need this information to properly complete your return and figure your tax liability. If you received railroad retirement benefits while you were a nonresident alien, the U.S. Railroad Retirement Board (RRB) will send you Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, and/or Form RRB-1099-R, Annuities or Pensions by the Railroad Retirement Board. If your country of legal residence changed or your rate of tax changed during the tax year, you may receive more than one form.
This discussion covers tax credits and payments for dual-status aliens.
As a dual-status alien, you can generally claim tax credits using the same rules that apply to resident aliens. There are certain restrictions that may apply. These restrictions are discussed here, along with a brief explanation of credits often claimed by individuals. .
Child tax credit and the additional child tax credit. You may be able to take these credits if you have a qualifying child under the age of 18 and meet other requirements. Depending on modified adjusted gross income, you may receive an enhanced credit amount of up to $3,600 for a qualifying child under age 6 and up to $3,000 for a qualifying child over age 5 and under age 18. The enhanced credit amount begins to phase out where modified adjusted gross income exceeds $150,000 in the case of a qualifying widow(er) and $75,000 in all other cases. “Qualifying child,” for purposes of the child tax credit and the additional child tax credit, is a child who:
An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption. If you did not have an SSN (or ITIN) issued on or before the due date of your 2021 return (including extensions), you may not claim the child tax credit on either your original or an amended 2021 return. If your child did not have an SSN valid for employment issued before the due date of the 2021 return (including extensions), you cannot claim the child tax credit for this child but may be able to claim the credit for other dependents for this child. See Credit for other dependents, discussed below. Use Schedule 8812 (Form 1040) and its instructions to figure the credits.
You can report as payments against your U.S. income tax liability certain taxes you paid, are considered to have paid, or that were withheld from your income. These include:
The U.S. income tax return you must file as a dual-status alien depends on whether you are a resident alien or a nonresident alien at the end of the tax year.
If you are a resident alien on the last day of your tax year and report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year (but see the TIP, later). If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. In either case, file your return with the address for dual-status aliens shown on the back of the Instructions for Forms 1040 and 1040-SR. If you are a nonresident alien on the last day of your tax year and you report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year if you receive wages subject to withholding. If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. If you did not receive wages subject to withholding and you report your income on a calendar year basis, you must file no later than June 15 of the year following the close of your tax year. If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 6th month following the close of your tax year. In any case, mail your return to: Department of the Treasury Internal Revenue ServiceAustin, TX 73301-0215 If enclosing a payment, mail your return to: Internal Revenue Service P.O. Box 1303Charlotte, NC 28201-1303 .
This chapter provides the basic filing information that you may need. This chapter discusses:
Forms (and Instructions)
See chapter 12 for information about getting these forms.
What return you must file as well as when and where you file that return, depend on your status at the end of the tax year as a resident or a nonresident alien.
Resident aliens should file Form 1040 or 1040-SR at the address shown in the Instructions for Form 1040. The due date for filing your return and paying any tax due is April 15 of the year following the year for which you are filing a return (but see the TIP, earlier). Under U.S. immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status.
Extensions of time to file. You can get an automatic 6-month extension (October 15 for calendar year taxpayers) if, no later than the date your return is due, you file Form 4868. For more information, see Form 4868. . You are allowed an automatic extension to file until June 15 if your main place of business and the home you live in are outside the United States and Puerto Rico on April 15. If you need more time by the end of the 2-month period, you can get an additional 4 months until October 15 if, no later than June 15, you file Form 4868. In addition to the 6-month extension, taxpayers who are out of the country (as defined in the Instructions for Form 4868) can request a discretionary 2-month additional extension of time to file their returns (December 15 for calendar year taxpayers). To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address. Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 You will not receive any notification from the IRS unless your request is denied for being untimely. The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350 (for U.S. citizens and resident aliens abroad who expect to qualify for special tax treatment). . .
Nonresident aliens who are required to file an income tax return should use Form 1040-NR. If you are any of the following, you must file a return.
You must also file if you want to:
.
If you are an employee and you receive wages subject to U.S. income tax withholding, you will generally file by the 15th day of the 4th month after your tax year ends. For the 2021 calendar year, file your return by April 18, 2022. If you are not an employee who receives wages subject to U.S. income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. For the 2021 calendar year, file your return by June 15, 2022.
Extensions of time to file. If you cannot file your return by the due date, file Form 4868 or use one of the electronic filing options explained in the Instructions for Form 4868. For the 2021 calendar year, this will extend the due date to October 17, 2022. You must file the extension by the regular due date of your return. . You are allowed an automatic extension to file until June 15 if your main place of business and the home you live in are outside the United States and Puerto Rico on April 15. If you need more time by the end of the 2-month period, you can get an additional 4 months until October 15 if, no later than June 15, you file Form 4868. In addition to the 6-month extension to October 15, taxpayers whose main place of business is outside the United States and Puerto Rico and who live outside those jurisdictions can request a discretionary 2-month extension of time to file their returns (to December 15 for calendar year taxpayers). To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address. Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 You will not receive any notification from the IRS unless your request is denied for being untimely.
. Austin, TX 73301-0215 .If enclosing a payment, mail your return to: Internal Revenue Service P.O. Box 1303Charlotte, NC 28201-1303
If you find changes in your income, deductions, or credits after you mail your return, file Form 1040-X. Also use Form 1040-X if you should have filed Form 1040 or 1040-SR instead of Form 1040-NR, or vice versa. If you amend Form 1040-NR or file the correct return, enter “Amended” across the top, and attach the corrected return (Form 1040, 1040-SR, or 1040-NR) to Form 1040-X. Ordinarily, an amended return claiming a refund must be filed within 3 years from the date your return was filed or within 2 years from the time the tax was paid, whichever is later. A return filed before the final due date is considered to have been filed on the due date.
You can file your Form 1040-X electronically for the 2019 tax year. For more information, see IR-2020-107. .
You may be required to file information returns to report certain foreign income or assets, or monetary transactions.
You may have to file Form 8938 to report the ownership of a specified foreign financial asset(s) if you are one of the following individuals.
You must file Form 8938 if the total value of those assets exceeds an applicable threshold (the “reporting threshold”). The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U.S. person. You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. More information about filing Form 8938 can be found in the Instructions for Form 8938.
The law provides penalties for failure to file returns or pay taxes as required.
You may be subject to criminal prosecution (brought to trial) for actions such as:
This chapter discusses how to pay your U.S. income tax as you earn or receive income during the year. In general, the federal income tax is a pay-as-you-go tax. There are two ways to pay as you go.
Publication
Form (and Instructions)
See chapter 12 for information about getting these publications and forms.
You must let your employer know whether you are a resident or a nonresident alien so your employer can withhold the correct amount of tax from your wages. If you are a resident alien under the rules discussed in chapter 1, you must file Form W-9 or a similar statement with your employer. If you are a nonresident alien under those rules, you must furnish to your employer Form 8233 or Form W-8BEN, establishing that you are a foreign person, or Form W-4, establishing that your compensation is subject to graduated withholding at the same rates as resident aliens or U.S. citizens. If you are a resident alien and you receive income other than wages (such as dividends and royalties) from sources within the United States, file Form W-9 or similar statement with the withholding agent (generally, the payer of the income) so the agent will not withhold tax on the income at the 30% (or lower treaty) rate. If you receive this type of income as a nonresident alien, file Form W-8BEN with the withholding agent so that the agent will withhold tax at the 30% (or lower treaty) rate. However, if the income is effectively connected with a U.S. trade or business, file Form W-8ECI instead.
The following discussion generally applies only to nonresident aliens. Tax is withheld from resident aliens in the same manner as U.S. citizens. Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U.S. citizens. Therefore, your compensation, unless it is specifically excluded from the term “wages” by law, or is exempt from tax by treaty, is subject to graduated withholding.
If you are an employee and you receive wages subject to graduated withholding, you will be required to fill out a Form W-4. Also fill out Form W-4 for a scholarship or fellowship grant to the extent it represents payment for past, present, or future services and for which you are not claiming a tax treaty withholding exemption on Form 8233 (discussed later under Income Entitled to Tax Treaty Benefits). These are services you are required to perform as an employee and as a condition of receiving the scholarship or fellowship (or tuition reduction). Nonresident aliens must follow the special instructions in Notice 1392 when completing Form W-4 for compensation paid as employees performing dependent personal services in the United States. Compensation for dependent personal services includes amounts paid as wages, salaries, fees, bonuses, commissions, compensatory scholarships, fellowship income, and similar designations for amounts paid to an employee. To see if you need to have your withholding increased or decreased, use the IRS Tax Withholding Estimator. See Withholding on Scholarships and Fellowship Grants, later, for how to fill out Form W-4 if you receive a U.S. source scholarship or fellowship grant that is not a payment for services.
Wages that are exempt from U.S. income tax under an income tax treaty are generally exempt from withholding. For information on how to claim this exemption from withholding, see Income Entitled to Tax Treaty Benefits, later. Wages paid to aliens who are residents of American Samoa, Canada, Mexico, Puerto Rico, or the U.S. Virgin Islands may be exempt from withholding. The following paragraphs explain these exemptions.
If you receive a pension distribution from the United States, the payment is generally subject to the 30% (or lower treaty) rate of withholding. You may, however, have tax withheld at graduated rates on the portion of the pension that arises from the performance of services in the United States after 1986. You must fill out Form W-8BEN or Form 8233 and give it to the withholding agent or payer before the income is paid or credited to you.
Tips you receive during the year for services performed in the United States are subject to U.S. income tax. Include them in taxable income. In addition, tips received while working for one employer, amounting to $20 or more in a month, are subject to graduated withholding.
If there is no employee-employer relationship between you and the person for whom you perform services, your compensation is subject to the 30% (or lower treaty) rate of withholding. However, if you are engaged in a trade or business in the United States during the tax year, your compensation for personal services as an independent contractor (independent personal services) may be entirely or partly exempt from withholding if you reach an agreement with the IRS on the amount of withholding required. An agreement that you reach with the IRS regarding withholding from your compensation for independent personal services is effective for payments covered by the agreement after it is agreed to by all parties. You must agree to timely file an income tax return for the current tax year.
Central withholding agreements (CWA). If you are a nonresident alien entertainer or athlete performing or participating in athletic events in the United States, you may be able to enter into a CWA with the IRS for reduced withholding, provided certain requirements are met. Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability. Use Form 13930 to apply for a CWA, for a nonresident alien entertainer or athlete that has calendar year-to-date U.S. gross income of at least $10,000. Form 13930 must be mailed to the address listed below. . A request for a CWA must be received by the IRS at least 45 days before the agreement is to take effect to ensure it is in place before the tour begins or the first event occurs, and it must contain all supporting documentation specified in the instructions, or no consideration will be given to entering into a CWA. Exceptions will be considered on a case-by-case basis. Central Withholding Agreement Program Internal Revenue Service 850 Trafalgar Ct., Suite 200 Maitland, FL 32751-4153
Final payment exemption. Your final payment of compensation during the tax year for independent personal services may be entirely or partly exempt from withholding. This exemption is available only once during your tax year and applies to a maximum of $5,000 of compensation. To obtain this exemption, you or your agent must give the following statements and information to the Commissioner or his delegate.
If satisfied with the information, the IRS will determine the amount of your tentative income tax for the tax year on gross income effectively connected with your trade or business in the United States. Ordinary and necessary business expenses can be taken into account if proven to the satisfaction of the Commissioner or his delegate. The Commissioner or his delegate will send you a letter, directed to the withholding agent, showing the amount of the final payment of compensation that is exempt from withholding and the amount that can be paid to you because of the exemption. You must give two copies of the letter to the withholding agent and must also attach a copy of the letter to your income tax return for the tax year for which the exemption is effective. For more information, see Pub. 515.
Other income subject to 30% withholding generally includes fixed or determinable income such as interest (other than portfolio interest), dividends, pensions and annuities, and gains from certain sales and exchanges, discussed in chapter 4. It also includes 85% of social security benefits paid to nonresident aliens.
If you are a foreign partner in a U.S. or foreign partnership, the partnership will withhold tax on your share of ECTI from the partnership. Your partnership may be able to reduce withholding on your share of ECTI by considering certain partner-level deductions. Generally, you must submit Form 8804-C for this purpose. For more information, see the Instructions for Form 8804-C. The withholding rate on your share of effectively connected income is generally the highest rate of tax specified under section 1 (37%). However, the partnership may withhold at the highest rate that applies to a particular type of income allocable to you if you gave the partnership the appropriate documentation. Long-term capital gain is an example of a particular type of income to which the highest tax rate applies. Claim the tax withheld as a credit on your 2021 Form 1040-NR. The partnership will give you a statement on Form 8805 showing the tax withheld. A partnership that is publicly traded will withhold tax on your actual distributions of effectively connected income. In this case, the partnership will give you a statement on Form 1042-S.
Tax withheld on gain from the sale or exchange of certain partnership interests. If you are a direct or indirect foreign partner in a U.S. or foreign partnership that is engaged (or is treated as engaged) in a trade or business within the United States and you directly or indirectly dispose of that interest for a gain, then for transfers occurring after 2017 the transferee will generally withhold and pay to the IRS on your behalf a tax equal to 10% of the amount realized on the sale. The rules for withholding and paying over this amount are similar to the rules for sales of U.S. real property interests. You will receive a Form 8288-A reflecting the amount withheld that you may then claim on line 25f of your Form 1040-NR as a credit against the tax you owe on the gain. You may be able to provide certain information to the transferee to reduce or eliminate withholding. For example, if a nonrecognition provision of the Internal Revenue Code applies to all of the gain realized on a transfer, the transferee does not need to withhold if you provide a notice describing the application of a nonrecognition provision. If you are a transferee that failed to withhold, under section 1446(f)(4) the partnership may withhold on distributions to you. On November 30, 2020, final regulations under section 1446(f) were issued which are generally applicable to transfers of non-PTP interests that occur on or after January 29, 2021. Notice 2018-29 applies to transfers of non-PTP interests that occurred before the applicability date of the final regulations, or, under certain circumstances, taxpayers may apply the proposed regulations to transfers of non-PTP interests during this time. The requirements for transfers of PTP interests and withholding under section 1446(f)(4) are suspended for transfers occurring before January 1, 2022. For more information, see Pub. 515. For more information, see Treasury Decision 9926 on page 1602 of I.R.B. 2020-51, available at IRS.gov/irb/2020-51_IRB#TD-9926. Also, see the final regulations as published in the Federal Register at govinfo.gov/content/pkg/FR-2020-11-30/pdf/2020-22619.pdf.
There is no withholding on a qualified scholarship received by a candidate for a degree. See chapter 3. If you are a nonresident alien student or grantee with an “F,” “J,” “M,” or “Q” visa and you receive a U.S. source grant or scholarship that is not fully exempt, the withholding agent (usually the payer of the scholarship) withholds tax at 14% (or lower treaty rate) of the taxable part of the grant or scholarship that is not a payment for services. However, if you are not a candidate for a degree and the grant does not meet certain requirements, tax will be withheld at the 30% (or lower treaty) rate. Any part of a scholarship or fellowship grant that is a payment for services is subject to graduated withholding, as discussed earlier under Withholding on Wages.
Your withholding agent may choose to use an alternate procedure by asking you to fill out Form W-4. See below for items that may reduce your withholding. After the withholding agent has accepted your Form W-4, tax will be withheld on your scholarship or grant at the graduated rates that apply to wages. The gross amount of the income is reduced by the applicable amount(s) on Form W-4, and the withholding tax is figured on the remainder. You will receive a Form 1042-S from the withholding agent (usually the payer of your grant) showing the gross amount of your taxable scholarship or fellowship grant less any withholding allowance amount, the tax rate, and the amount of tax withheld. Use this form to prepare your annual U.S. income tax return. For more information, go to IRS.gov/FormW4.
If a tax treaty between the United States and your country of residence provides an exemption from, or a reduced rate of, tax for certain items of income, you should notify the payer of the income (the withholding agent) of your foreign status to claim a tax treaty withholding exemption. Generally, you do this by filing either Form W-8BEN or Form 8233 with the withholding agent. File Form W-8BEN for income that is not personal services income. File Form 8233 for personal services income, as discussed next. .
Students, teachers, and researchers. Students, teachers, and researchers must attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of this publication to the Form 8233 and give it to the withholding agent. For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties. If you received a scholarship or fellowship grant, as well as personal services income, from the same withholding agent, use Form 8233 to claim an exemption from withholding based on a tax treaty for both types of income. . . The amount realized is the sum of:
If the property transferred was owned jointly by U.S. and foreign persons, the amount realized is allocated between the transferors based on the capital contribution of each transferor. A distribution by a QIE to a nonresident alien shareholder that is treated as gain from the sale or exchange of a U.S. real property interest by the shareholder is subject to withholding at 21%. Withholding is also required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. These rules are covered in Pub. 515 and in the Instructions for Form 8288. For information on the tax treatment of dispositions of U.S. real property interests, see Real Property Gain or Loss in chapter 4. If you are a partner in a domestic partnership, and the partnership disposes of a U.S. real property interest at a gain, the partnership will withhold tax on the amount of gain allocable to its foreign partners. Your share of the income and tax withheld will be reported to you on Form 8805 or Form 1042-S (in the case of a PTP). Withholding is not required in the following situations.
The certifications in (3) and (4) must be disregarded by the buyer if the buyer or qualified substitute has actual knowledge, or receives notice from a seller's or buyer's agent (or substitute), that they are false. This also applies to the qualified substitute's statement under (4).
If you work as an employee in the United States, you must pay social security and Medicare taxes in most cases. Your payments of these taxes contribute to your coverage under the U.S. social security system. Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance (Medicare) benefits to individuals who meet certain eligibility requirements. In most cases, the first $142,800 of taxable wages received in 2021 for services performed in the United States is subject to social security tax. All taxable wages are subject to Medicare tax. Your employer deducts these taxes from each wage payment. Your employer must deduct these taxes even if you do not expect to qualify for social security or Medicare benefits. You can claim a credit for excess social security tax on your income tax return if you have more than one employer and the amount deducted from your combined wages for 2021 is more than $8,854. Use the appropriate worksheet in chapter 3 of Pub. 505 to figure your credit. If any one employer deducted more than $8,537.40, you cannot claim a credit for that amount. Ask your employer to refund the excess. If your employer does not refund the excess, you can file a claim for refund using Form 843. In general, U.S. social security and Medicare taxes apply to payments of wages for services performed as an employee in the United States, regardless of the citizenship or residence of either the employee or the employer. In limited situations, these taxes apply to wages for services performed outside the United States. Your employer should be able to tell you if social security and Medicare taxes apply to your wages. You cannot make voluntary payments if no taxes are due.
Additional Medicare Tax. In addition to the Medicare tax, a 0.9% (0.009) Additional Medicare Tax applies to Medicare wages, RRTA compensation, and self-employment income that are more than:
There are no special rules for nonresident aliens for purposes of Additional Medicare Tax. Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Your employer is responsible for withholding the 0.9% (0.009) Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in the calendar year. If you intend to file a joint return and you anticipate that you and your spouse's individual wages are not going to be more than $200,000 but your combined wages and self-employment income are going to be more than $250,000, you may want to request additional withholding on Form W-4 and/or make estimated tax payments. If you file Form 1040-NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (you checked the Married filing separately box at the top of page one of Form 1040-NR), or $200,000 if single or qualifying widow(er) (you checked the Single or Qualifying widow(er) box at the top of page one of Form 1040-NR). See Form 8959 and its instructions to determine whether you are required to pay Additional Medicare Tax. For more information on Additional Medicare Tax, go to IRS.gov/ADMT. Self-employed individuals may also be required to pay Additional Medicare Tax. See Self-Employment Tax, later.
Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if the services are performed to carry out the purpose for which you were admitted to the United States. This means that there will be no withholding of social security or Medicare taxes from the pay you receive for these services. These types of services are very limited and generally include only on-campus work, practical training, and economic hardship employment. Social security and Medicare taxes will be withheld from your pay for these services if you are considered a resident alien as discussed in chapter 1, even though your nonimmigrant classification (“F,” “J,” “M,” or “Q”) remains the same. Services performed by a spouse or minor child of nonimmigrant aliens with the classification of “F-2,” “J-2,” “M-2,” and “Q-3” are covered under social security.
If you are a nonresident alien temporarily admitted to the United States as a student, you are generally not permitted to work for a wage or salary or to engage in business while you are in the United States. In some cases, a student admitted to the United States in “F-1,” “M-1,” or “J-1” status is granted permission to work. Social security and Medicare taxes are not withheld from pay for the work unless the student is considered a resident alien. . The USCIS permits on-campus work for students in “F-1” status if it does not displace a U.S. resident. “On-campus work” means work performed on the school's premises. On-campus work includes work performed at an off-campus location that is educationally affiliated with the school. On-campus work under the terms of a scholarship, fellowship, or assistantship is considered part of the academic program of a student taking a full course of study and is permitted by the USCIS. Social security and Medicare taxes are not withheld from pay for this work unless the student is considered a resident alien. If services performed by a nonresident alien student are not considered as performed to carry out the purpose for which the student was admitted to the United States, social security and Medicare taxes will be withheld from pay for the services unless the pay is exempt under the Internal Revenue Code.
Exchange visitors are temporarily admitted to the United States under section 101(a)(15)(J) of the Immigration and Nationality Act. Social security and Medicare taxes are not withheld on pay for services of an exchange visitor who has been given permission to work and who possesses or obtains a letter of authorization from the sponsor unless the exchange visitor is considered a resident alien. If services performed by an exchange visitor are not considered as performed to carry out the purpose for which the visitor was admitted to the United States, social security and Medicare taxes are withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Nonresident aliens temporarily admitted to the United States as participants in international cultural exchange programs under section 101(a)(15)(Q) of the Immigration and Nationality Act may be exempt from social security and Medicare taxes. The employer must be the petitioner through whom the alien obtained the “Q” visa. Social security and Medicare taxes are not withheld from pay for this work unless the alien is considered a resident alien.
If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. If you are unable to get a full refund of the amount from your employer, file a claim for refund with the IRS on Form 843. Attach the following items to Form 843.
Send Form 843 (with attachments) to: Department of the Treasury Internal Revenue Service CenterOgden, UT 84201-0038 ..
Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. Nonresident aliens are not subject to self-employment tax unless an international social security agreement in effect determines that they are covered under the U.S. social security system. Residents of the U.S. Virgin Islands, Puerto Rico, Guam, the CNMI, or American Samoa are considered U.S. residents for this purpose and are subject to the self-employment tax. You can find more information about international social security agreements, later. Resident aliens must pay self-employment tax under the same rules that apply to U.S. citizens. However, a resident alien employed by an international organization, a foreign government, or a wholly owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States. Self-employment income you receive while you are a resident alien is subject to self-employment tax even if it was paid for services you performed as a nonresident alien.
Example. Bill Jones is an author. Bill had several books published in a foreign country while he was a citizen and resident of that country. During 2021, Bill entered the United States as a resident alien. After becoming a U.S. resident, he continued to receive royalties from his foreign publisher. Bill reports his income and expenses on the cash basis (he reports income on his tax return when received and deducts expenses when paid). Bill's 2021 self-employment income includes the royalties received after he became a U.S. resident even though the books were published while he was a nonresident alien. This royalty income is subject to self-employment tax.
Deferral of employment tax deposits and payments. Section 2302 of the CARES Act permits self-employed individuals to defer payment of a portion of their 2020 self-employment tax until 2021 and 2022. Specifically, the payment of 50% of the social security tax imposed on net earnings from self-employment earned during the period beginning on March 27, 2020, and ending December 31, 2020, may be deferred. Up to half of the maximum amount that can be deferred must be paid by December 31, 2021, and the remaining amount must be paid by December 31, 2022. The deferral is calculated and reported on Part III of Schedule SE (Form 1040). For more information, see Schedule SE (Form 1040) and its instructions.
Additional Medicare Tax. Self-employed individuals must pay a 0.9% (0.009) Additional Medicare Tax on self-employment income that exceeds one of the following threshold amounts (based on your filing status).
If you have both wages and self-employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. A self-employment loss should not be considered for purposes of this tax. If you file Form 1040-NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (you checked the Married filing separately box at the top of page one of Form 1040-NR), or $200,000 if single or qualifying widow(er) (you checked the Single or Qualifying widow(er) box at the top of page 1 of Form 1040-NR). See Form 8959 and its separate instructions to determine whether you are required to pay Additional Medicare Tax. For more information on Additional Medicare Tax, go to IRS.gov/ADMT.
No portion of the Additional Medicare Tax is deductible for self-employment tax.
The United States has entered into social security agreements, commonly referred to as “Totalization agreements,” with foreign countries to coordinate social security coverage and taxation of workers employed for part or all of their working careers in one of the countries. Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. The agreements generally make sure that social security taxes (including self-employment tax) are paid only to one country. For a list of current international social security agreements, go to SSA.gov/international/status.html. As agreements with additional countries enter into force, they will be posted on this website. For more information on international social security agreements, go to SSA.gov/international/totalization_agreements.html.
Self-employed individuals. Under most agreements, self-employed individuals are covered by the social security system of the country where they reside. However, under some agreements, you may be exempt from U.S. self-employment tax if you temporarily transfer your business activity to or from the United States. If you believe that your self-employment income is subject only to U.S. self-employment tax and is exempt from foreign social security taxes, request a Certificate of Coverage from the U.S. SSA or by writing to the address given earlier. This certificate will establish your exemption from foreign social security taxes. To request or submit the Certificate of Coverage online, go to OPTS.ssa.gov/. You can also request a Certificate of Coverage by fax at 410-966-1861 or by writing to the following address. Social Security Administration Office of Earnings and International Operations P.O. Box 17741 Baltimore, MD 21235-7741 To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U.S. self-employment tax, request a Certificate of Coverage from the appropriate agency of the foreign country. If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U.S. social security system. Request it from the U.S. SSA, at the address given earlier. Attach a photocopy of either statement to Form 1040 or 1040-SR each year you are exempt. Also enter “Exempt, see attached statement” on the line for self-employment tax. .
You may have income from which no U.S. income tax is withheld. Or, the amount of tax withheld may be less than the income tax you estimate you will owe at the end of the year. If so, you may have to pay estimated tax. Generally, you must make estimated tax payments for 2022 if you expect to owe at least $1,000 in tax and you expect your withholding and certain refundable credits to be less than the smaller of:
A nonresident alien should use Form 1040-ES (NR) to figure and pay estimated tax. If you pay by check, make it payable to "United States Treasury."
If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES or Formulario 1040-ES (PR).
A nonresident alien (and certain resident aliens) from a country with which the United States has an income tax treaty may qualify for certain benefits. Most treaties require that the nonresident alien be a resident of the treaty country to qualify in the year the benefit is claimed. However, in the case of certain students, trainees, teachers, or researchers, some treaties only require the nonresident alien to be a resident of the treaty country immediately prior to coming to the United States. You can generally arrange to have withholding tax reduced or eliminated on wages and other income that are eligible for tax treaty benefits. See Income Entitled to Tax Treaty Benefits in chapter 8. This chapter discusses:
Publication
Form (and Instructions)
See chapter 12 for information about getting these publications and forms.
A nonresident alien's treaty income is the gross income on which the tax is limited by a tax treaty. Treaty income includes, for example, dividends from sources in the United States that are subject to tax at a tax treaty rate not to exceed 15%. Nontreaty income is the gross income of a nonresident alien on which the tax is not limited by a tax treaty. Figure the tax on treaty income on each separate item of income at the reduced rate that applies to that item under the treaty. To determine tax on nontreaty income, figure the tax at either the flat 30% rate or the graduated rate, depending upon whether or not the income is effectively connected with your trade or business in the United States. Your tax liability is the sum of the tax on treaty income plus the tax on nontreaty income, but it cannot be more than the tax liability figured as if the tax treaty had not come into effect.
Example. Arthur Banks is a nonresident alien who is single and a resident of a foreign country that has a tax treaty with the United States. He received gross income of $25,900 during the tax year from sources within the United States, consisting of the following items. Arthur was engaged in business in the United States during the tax year. His dividends are not effectively connected with that business. He has no deductions. His tax liability, figured as though the tax treaty had not come into effect, is $3,164 determined as follows. Arthur's tax liability, figured by taking into account the reduced rate on dividend income as provided by the tax treaty, is $2,954 determined as follows. His tax liability, therefore, is limited to $2,954, the tax liability figured using the tax treaty rate on the dividends.
The following paragraphs briefly explain the exemptions that are available under tax treaties for personal services income, remittances, scholarships, fellowships, and capital gain income. The conditions for claiming the exemptions vary under each tax treaty. For more information about the conditions under a particular tax treaty, download the complete text of most U.S. tax treaties at IRS.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties-A-to-Z. Technical explanations for many of those treaties are also available at that site. Also see Pub. 901. Tax treaty benefits also cover income such as dividends, interest, rentals, royalties, pensions, and annuities. These types of income may be exempt from U.S. tax or may be subject to a reduced rate of tax. For more information, see Pub. 901 or the applicable tax treaty.
Under most income tax treaties, nonresident aliens from treaty countries and dual residents who tie break in favor of the treaty country (see chapter 1) who are temporarily present in the United States to perform services may be eligible to exempt some or all of their personal services income from U.S. tax if they meet the requirements of the applicable treaty article.
Under many income tax treaties, nonresident alien teachers or professors who temporarily visit the United States for the primary purpose of teaching at a university or other accredited educational institution are not subject to U.S. income tax on compensation received for teaching for the first 2 or 3 years after their arrival in the United States. Many treaties also provide an exemption for engaging in research. Generally, the teacher or professor must be in the United States primarily to teach, lecture, instruct, or engage in research. A substantial part of that person's time must be devoted to those duties. The normal duties of a teacher or professor include not only formal classroom work involving regularly scheduled lectures, demonstrations, or other student-participation activities, but also the less formal method of presenting ideas in seminars or other informal groups and in joint efforts in the laboratory. If you entered the United States as a nonresident alien, but are now a resident alien, the treaty exemption may still apply. See Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens, later, under Resident Aliens.
All treaties have provisions for the exemption of income earned by certain employees of foreign governments. However, a difference exists among treaties as to who qualifies for this benefit. Under many treaties, aliens who are U.S. residents do not qualify. Under most treaties, aliens who are not nationals or subjects of the foreign country do not qualify. Employees of foreign governments should read the pertinent treaty carefully to determine whether they qualify for benefits. Chapter 10 of this publication also has information for employees of foreign governments.
Under some income tax treaties, students, apprentices, and trainees are exempt from tax on remittances received from abroad for study and maintenance. Also, under some treaties, scholarship and fellowship grants, and a limited amount of compensation received by students, apprentices, and trainees, may be exempt from tax. If you entered the United States as a nonresident alien, but are now a resident alien, the treaty exemption may still apply. See Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens, later, under Resident Aliens.
Most treaties provide for the exemption of gains from the sale or exchange of personal property. Generally, gains from the sale or exchange of real property located in the United States are taxable.
Resident aliens may qualify for tax treaty benefits in the situations discussed below.
Resident aliens generally do not qualify for tax treaty benefits because most tax treaties contain a "saving clause" that preserves or "saves" the right of the United States to tax its citizens and residents as if the tax treaty had not come into effect. However, many tax treaties have exceptions to the saving clause, which may allow a resident alien to continue to claim treaty benefits. Some exceptions to the saving clause apply to all resident aliens (for example, under the United States-People's Republic of China treaty); others apply only to resident aliens who are not lawful permanent residents of the United States (green card holders). In most cases, you will also not need to report the income on your Form 1040 or 1040-SR because the income will be exempt from U.S. tax under the treaty. However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 or 1040-SR (for example, line 1 in the case of wages or salaries). Enter the amount for which treaty benefits are claimed on Schedule 1 (Form 1040), line 8z. Enter “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. Combine the amounts reported on lines 8a through 8z on Schedule 1 (Form 1040) and enter on line 9. Then, combine the totals from Schedule 1 (Form 1040), lines 1 through 7 and 9 and enter the total on line 10. Then, enter the total from Schedule 1 (Form 1040), line 10, on Form 1040 or 1040-SR, line 8. Also follow the above procedure for income that is subject to a reduced rate of tax, instead of an exemption, under the treaty. Attach a statement to Form 1040 or 1040-SR showing a computation of the tax at the reduced rate, the name of the treaty country, and the treaty article that provides for the reduced tax rate. Enter this tax on Form 1040 or 1040-SR, line 16. Check box 3 and enter "Tax from attached statement."
Example. Jacques Dubois, who is a resident of the United States under Article 4 of the United States-France income tax treaty, receives French social security benefits. Under Article 18(1) of the treaty, French social security benefits are not taxable by the United States. Benefits conferred by Article 18(1) are excepted from the saving clause under Article 29(3) of the treaty. Mr. Dubois is not required to file a Form 8833 for his French social security benefits or report the benefits on Form 1040 or 1040-SR.
Under income tax treaties with Canada and Germany, if a U.S. resident receives social security benefits from Canada or Germany, those benefits are treated for U.S. income tax purposes as if they were received under the social security legislation of the United States. If you receive social security benefits from Canada or Germany, include them on line 1 of your Social Security Benefits Worksheet in the Instructions for Form 1040, for purposes of determining the taxable amount to be reported on Form 1040 or 1040-SR, line 6b. You are not required to file a Form 8833 for those benefits.
Generally, you must be a nonresident alien student, apprentice, trainee, teacher, professor, or researcher in order to claim a tax treaty exemption for remittances from abroad for study and maintenance in the United States, for scholarship, fellowship, and research grants, and for wages or other personal service compensation. Once you become a resident alien, you can generally no longer claim a tax treaty exemption for this income. However, if you entered the United States as a nonresident alien, but you are now a resident alien for U.S. tax purposes, the treaty exemption will continue to apply if the tax treaty's saving clause (explained earlier) provides an exception for it and you otherwise meet the requirements for the treaty exemption (including any time limit for claiming treaty exemptions, explained below). This is true even if you are a nonresident alien electing to file a joint return, as explained in chapter 1. If you qualify under an exception to the treaty's saving clause, you can avoid income tax withholding by giving the payer a Form W-9 with the statement required by the Form W-9 instructions.
How to report income on your tax return. In most cases, you will not need to report the income on your Form 1040 or 1040-SR because the income will be exempt from U.S. tax under the treaty. However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 or 1040-SR (for example, line 1 in the case of wages, salaries, scholarships, or fellowships). Enter the amount for which treaty benefits are claimed on Schedule 1 (1040), line 8z. Enter “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. Combine the amounts reported on lines 8a through 8z on Schedule 1 (Form 1040) and enter on line 9. Then, combine the totals from Schedule 1 (Form 1040), lines 1 through 7 and 9 and enter the total on line 10. Then, enter the total from Schedule 1 (Form 1040), line 10, on Form 1040 or 1040-SR, line 8.
Example. Mr. Yu, a citizen of the People's Republic of China, entered the United States as a nonresident alien student on January 1, 2017. He remained a nonresident alien through 2021 and was able to exclude his scholarship from U.S. tax in those years under Article 20 of the U.S.-People's Republic of China income tax treaty. On January 1, 2022, he became a resident alien under the substantial presence test because his stay in the United States exceeded 5 years. Even though Mr. Yu is now a resident alien, the provisions of Article 20 still apply because of the exception to the saving clause in paragraph 2 of the Protocol to the U.S.–People's Republic of China treaty dated April 30, 1984. Mr. Yu should submit Form W-9 and the required statement to the payer.
If you claim treaty benefits that override or modify any provision of the Internal Revenue Code, and by claiming these benefits your tax is, or might be, reduced, you must attach a fully completed Form 8833 to your tax return. See Exceptions below for the situations where you are not required to file Form 8833.
Employees of foreign governments (including foreign political subdivisions) may be able to exempt their foreign government wages from U.S. income tax if they satisfy the requirements of any one of the following.
Employees of international organizations may be able to exempt their wages under a provision, if one exists, in the international agreement creating the international organization, or by satisfying the requirements for obtaining an exemption for such wages under U.S. tax law. An “international organization” is an organization designated by the President of the United States through Executive Order to qualify for the privileges, exemptions, and immunities provided in the International Organizations Immunities Act. The exemption discussed in this chapter applies only to pay received for official services performed for a foreign government or international organization. Other U.S. source income received by persons who qualify for this exemption may be fully taxable or given favorable treatment under an applicable tax treaty provision. The proper treatment of this kind of income (interest, dividends, etc.) is discussed earlier in this publication.
This chapter discusses:
Form (and Instructions)
See chapter 12 for information about getting these forms.
If you are included in one of the following categories, you do not have to get a sailing or departure permit before leaving the United States. If you are in one of these categories and do not have to get a sailing or departure permit, you must be able to support your claim for exemption with proper identification or give the authority for the exemption. .
If you do not fall into one of the categories listed earlier under Aliens Not Required To Obtain Sailing or Departure Permits, you must obtain a sailing or departure permit. To obtain a permit, file Form 1040-C or Form 2063 (whichever applies) with your local IRS office before you leave the United States. See Forms To File, later. You must also pay all the tax shown as due on Form 1040-C and any taxes due for past years. See Paying Taxes and Obtaining Refunds, later.
The following discussion covers how to get your sailing permit.
To get a certificate of compliance, you must go to an IRS office at least 2 weeks before you leave the United States and file either Form 2063 or Form 1040-C and any other required tax returns that have not been filed. The certificate may not be issued more than 30 days before you leave. If both you and your spouse are aliens and both of you are leaving the United States, both of you must go to the IRS office. To find an IRS office, go to IRS.gov/Help/Contact-Your-Local-IRS-Office, click on the Taxpayer Assistance Center Office Locator, and find “Services Provided” at the nearest Taxpayer Assistance Center (TAC) to see if the Alien Clearance (Sailing Permits) service is available at that office. Please note that all TACs operate by appointment. Services are limited and not all services are available at every TAC office. .
Getting your sailing or departure permit will go faster if you bring to the IRS office documents and papers related to your income and your stay in the United States. Bring the following records with you if they apply.
If you are married and reside in a community property state, also bring the above-listed documents for your spouse. This applies whether or not your spouse requires a permit.
If you must get a sailing or departure permit, you must file Form 2063 or Form 1040-C. Employees in the IRS office can assist in filing these forms. Both forms have a “certificate of compliance” section. When the certificate of compliance is signed by an agent of the Field Assistance Area Director, it certifies that your U.S. tax obligations have been satisfied according to available information. Your Form 1040-C copy of the signed certificate, or the one detached from Form 2063, is your sailing or departure permit.
This is a short form that asks for certain information but does not include a tax computation. The following departing aliens can get their sailing or departure permits by filing Form 2063.
Aliens in either of these categories who have not filed an income tax return or paid income tax for any tax year must file the return and pay the income tax before they can be issued a sailing or departure permit on Form 2063. The sailing or departure permit detached from Form 2063 can be used for all departures during the current year. However, the IRS may cancel the sailing or departure permit for any later departure if it believes the collection of income tax is jeopardized by that later departure.
If you must get a sailing or departure permit and you do not qualify to file Form 2063, you must file Form 1040-C. Ordinarily, all income received, or reasonably expected to be received, during the tax year up to and including the date of departure must be reported on Form 1040-C, and the tax on it must be paid. When you pay any tax shown as due on the Form 1040-C, and you file all returns and pay all tax due for previous years, you will receive a sailing or departure permit. However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years. See Bond To Ensure Payment, later. The sailing or departure permit issued under the conditions in this paragraph is only for the specific departure for which it is issued.
Returning to the United States. If you furnish the IRS with information showing, to the satisfaction of the IRS, that you intend to return to the United States and that your departure does not jeopardize the collection of income tax, you can get a sailing or departure permit by filing Form 1040-C without having to pay the tax shown on it. You must, however, file all income tax returns that have not yet been filed as required, and pay all income tax that is due on these returns. Your Form 1040-C must include all income received, and reasonably expected to be received, during the entire year of departure. The sailing or departure permit issued with this Form 1040-C can be used for all departures during the current year. However, the IRS may cancel the sailing or departure permit for any later departure if the payment of income tax appears to be in jeopardy.
You must pay all tax shown as due on the Form 1040-C at the time of filing it, except when a bond is furnished, or the IRS is satisfied that your departure does not jeopardize the collection of income tax. You must also pay any taxes due for past years. If the tax computation on Form 1040-C results in an overpayment, there is no tax to pay at the time you file that return. However, the IRS cannot provide a refund at the time of departure. If you are due a refund, you must file Form 1040-NR at the end of the tax year.
Usually, you must pay the tax shown as due on Form 1040-C when you file it. However, if you pay all taxes due that you owe for prior years, you can furnish a bond guaranteeing payment instead of paying the income taxes shown as due on the Form 1040-C or the tax return for the preceding year if the period for filing that return has not expired. The bond must equal the tax due plus interest to the date of payment as figured by the IRS. Information about the form of bond and security on it can be obtained from your IRS office.
Form 1040-C is not an annual U.S. income tax return. If an income tax return is required by law, that return must be filed even though a Form 1040-C has already been filed. Chapter 5 and chapter 7 discuss filing an annual U.S. income tax return. The tax paid with Form 1040-C should be taken as a credit against the tax liability for the entire tax year on your annual U.S. income tax return.
Assistance for overseas taxpayers is available in the U.S and certain foreign locations.
This section answers tax-related questions commonly asked by aliens. What is the difference between a resident alien and a nonresident alien for tax purposes? What is the difference between the taxation of income that is effectively connected with a trade or business in the United States and income that is not effectively connected with a trade or business in the United States? I am a student with an F-1 visa. I was told that I was an exempt individual. Does this mean I am exempt from paying U.S. tax? I am a resident alien. Can I claim any treaty benefits? I am a nonresident alien with no dependents. I am working temporarily for a U.S. company. What return do I file? I came to the United States on June 30th of last year. I have an H-1B visa. What is my tax status, resident alien or nonresident alien? What tax return do I file? When is my Form 1040-NR due? My spouse is a nonresident alien. Does he need a social security number? I am a nonresident alien. Can I file a joint return with my spouse? I have an H-1B visa and my husband has an F-1 visa. We both lived in the United States all of last year and had income. What kind of form should we file? Do we file separate returns or a joint return? Is a “dual-resident taxpayer” the same as a “dual-status taxpayer”? I am a nonresident alien and invested money in the U.S. stock market through a U.S. brokerage company. Are the dividends and the capital gains taxable? If yes, how are they taxed? I am a nonresident alien. I receive U.S. social security benefits. Are my benefits taxable? Do I have to pay taxes on my scholarship? I am a nonresident alien. Can I claim the standard deduction? I am a dual-status taxpayer. Can I claim the standard deduction? I am filing Form 1040-NR. Can I claim itemized deductions? I am single with a dependent child. I was a dual-status alien in 2021. Can I claim the earned income credit on my 2021 tax return? I am a nonresident alien student. Can I claim an education credit on my Form 1040-NR? I am a nonresident alien, temporarily working in the U.S. under a J visa. Am I subject to social security and Medicare taxes? I am a nonresident alien student. Social security taxes were withheld from my pay in error. How do I get a refund of these taxes? I am an alien who will be leaving the United States. What forms do I have to file before I leave? I filed a Form 1040-C when I left the United States. Do I still have to file an annual U.S. tax return? This section answers tax-related questions commonly asked by aliens.
This appendix contains the statements nonresident alien students and trainees must file with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. For treaty countries not listed, attach a statement in a format similar to those for other treaties. See chapter 8 for more information on withholding.
This appendix contains the statements nonresident alien teachers and researchers must file with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. For treaty countries not listed, attach a statement in a format similar to those for other treaties. See chapter 8 for more information on withholding.
The treaty with the former Union of Soviet Socialist Republics remains in effect for the following countries: Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan.
Accuracy-related penalties, Accuracy-related penalty. Additional Medicare Tax, Additional Medicare Tax., Additional Medicare Tax. Adoption credit Dual-status alien, Adoption credit. Nonresident alien, Adoption credit. Resident alien, Adoption credit. Agricultural workers, Agricultural workers., Agricultural Workers Alien Nonresident, Nonresident Aliens, Nonresident Aliens, Nonresident Aliens Resident, Resident Aliens, Resident Aliens, Resident Aliens Alien status, employer notification of, Notification of Alien Status Amended returns, Amended Returns and Claims for Refund American Samoa, residents of, Aliens From American Samoa or Puerto Rico, Special rules for aliens from certain U.S. possessions., Bona Fide Residents of American Samoa or Puerto Rico Annuities Income, Income from certain annuities. Source rule, Pensions and Annuities Assistance (see Tax help) Athletes, professional, Professional athletes. Awards, Scholarships, Grants, Prizes, and Awards Canada Commuters, Regular commuters from Canada or Mexico. Dependents, Dependents Qualifying widow filing status, Qualifying widow(er). Social security benefits, Special Rule for Canadian and German Social Security Benefits Transportation-related employment, Residents of Canada or Mexico engaged in transportation-related employment. Capital assets, sales or exchanges, Sales or Exchanges of Capital Assets Casualty and theft losses, Casualty and theft losses. Central withholding agreements, Central withholding agreements (CWA). Charitable contributions, Charitable contributions. Child and dependent care credit Dual-status alien, Child and dependent care credit. Nonresident alien, Child and dependent care credit. Resident alien, Child and dependent care credit. Child tax credit Dual-Staus alien, Child tax credit and the additional child tax credit. Nonresident alien, Child tax credit and the additional child tax credit. Resident alien, Child tax credit and the additional child tax credit. Claims for refund, Amended Returns and Claims for Refund Commodities, trading in, Trading in stocks, securities, and commodities. Community income, Community Income Commuters from Canada or Mexico, Regular commuters from Canada or Mexico. Compensation for labor or personal services Geographical basis, Geographical Basis Contingent interest, Contingent interest. Coronavirus, Medical condition., Coronavirus. Credits, Self-employed, Credits for certain self-employed individuals. Family Leave, Credits for certain self-employed individuals., Credit for family leave for certain self-employed individuals. Performing Services, COVID-19 relief for certain nonresident alien individuals temporarily performing services or other activities in the United States. Self-employed, Credits for certain self-employed individuals., Credit for sick leave for certain self-employed individuals., Credit for family leave for certain self-employed individuals. Sick Leave, Credits for certain self-employed individuals., Credit for sick leave for certain self-employed individuals. COVID-19, COVID-19 relief for certain nonresident alien individuals temporarily performing services or other activities in the United States. Credit for the elderly or the disabled Dual-status alien, Tax credits. Resident alien, Credit for the elderly or the disabled. Credits against tax Child and dependent care credit, Child and dependent care credit., Child and dependent care credit. Child tax credit, Child tax credit and the additional child tax credit., Child tax credit and the additional child tax credit., Child tax credit and the additional child tax credit. Credit for the elderly or the disabled, Tax credits. Dual-status alien, Credits Earned income credit, Earned income credit (EIC)., Tax credits. Education credits, Education credits., Education credits., Tax credits. Excess social security tax withheld, Excess social security tax withheld. Foreign tax credit, Foreign tax credit., Foreign tax credit. Hope credit, Education credits., Education credits. Lifetime learning credit, Education credits., Education credits. Retirement savings contributions, Retirement savings contributions credit., Retirement savings contributions credit., Retirement savings contributions credit. Tax paid on undistributed long-term capital gains, Tax paid on undistributed long-term capital gains. Tax withheld at source, Tax withheld at the source. Tax withheld on partnership income, Tax withheld on partnership income. Withholding from wages, Withholding from wages. Crew members Alien status, Crew members. Compensation, Crew members. Currency, transporting, Other Forms You May Have To File De minimis presence, De minimis presence. Deductions, Deductions, Itemized Deductions Dependents Dual-status taxpayer, Dependents Nonresident alien, Dependents Resident alien, Dependents Depreciable property, Depreciable property. Diplomats (see Foreign government employees) Disclosure statement, Disclosure statement. Dividends, U.S. source income, Dividends Dual-status aliens, Dual-Status Aliens Dual-status tax year, Dual-Status Aliens, Dual-Status Tax Year Child care credit, Child and dependent care credit. Computation of tax, How To Figure Your Tax Credit for the elderly or the disabled, Tax credits. Earned income credit (EIC), Tax credits. Education credit, Tax credits. Foreign tax credit, Foreign tax credit. Forms to file, Forms To File Head of household., Head of household. Income subject to tax, Income Subject to Tax Joint return, Joint return. Residency ending date, Dual-Status Aliens Residency starting date, Dual-Status Aliens Restrictions, Restrictions for Dual-Status Taxpayers Standard deduction, Standard deduction. Tax rates, Tax rates. When and where to file, When and Where To File Earned income credit Dual-status alien, Tax credits. Nonresident alien, Earned income credit (EIC). Earned income credit (EIC) Resident alien, Earned income credit (EIC). Education credits Dual-status alien, Tax credits. Nonresident alien, Education credits. Resident alien, Education credits. Effectively connected income, Effectively Connected Income Alternative minimum tax, Alternative minimum tax. Asset-use test, Asset-use test. Business profits and losses and sales transactions, Business Profits and Losses and Sales Transactions Business-activities test, Business-activities test. Direct economic relationship, Personal Service Income Disposition of REIT stock., Disposition of REIT stock. Domestically controlled QIE., Domestically controlled QIE. Foreign income, Foreign Income Gain or Loss of Foreign Persons from the Sale or Exchange of Certain Partnership Interests, Gain or Loss of Foreign Persons From the Sale or Exchange of Certain Partnership Interests Investment income, Investment Income Look-through rule for QIEs., Look-through rule for QIEs. Pensions, Pensions. Publicly traded exception, Publicly traded exception. Qualified investment entity, Qualified investment entities (QIEs). Real property gain or loss, Real Property Gain or Loss Real property income choice, Income From Real Property Tax on, Tax on Effectively Connected Income Transportation income, Transportation Income U.S. real property holding corporation, U.S. real property holding corporation. U.S. real property interest, U.S. real property interest. Wash sale, Wash sale. Withholding of tax, Withholding of tax. Employees, household, Household employees. Employees, withholding exemption under tax treaty, Employees and independent contractors. Employer identification number, Employer identification number (EIN). Estate, beneficiary, Beneficiary of an estate or trust. Estimated tax, Paying Tax Through Withholding or Estimated Tax , Estimated Tax Form 1040-ES (NR) Excess social security tax, Excess social security tax withheld. Exchange visitors, Exchange Visitors Income from foreign employer, Students and exchange visitors. Social security and Medicare taxes, Students and Exchange Visitors Exclusions from gross income, Exclusions From Gross Income Annuities, Income from certain annuities. Compensation from a foreign employer, Students and exchange visitors. Gambling winnings, dog or horse racing, Gambling Winnings From Dog or Horse Racing Students and exchange visitors, Students and exchange visitors. Treaty income, Income affected by treaties., Treaty Income Exempt individual, Exempt individual. Exemption from withholding Employees, Employees and independent contractors. Independent contractors, Employees and independent contractors. Students, teachers, and researchers, Students, teachers, and researchers. Expatriation tax Certain dual-citizens, Certain dual-citizens. Certain minors, Certain minors. Covered expatriate, Covered expatriate. Deferral of payment of mark-to-market tax, Deferral of payment of mark-to-market tax. Exception for dual-citizens and certain minors, Exception for dual-citizens and certain minors. Exceptions., Exceptions. Expatriation After June 16, 2008, Expatriation After June 16, 2008 Expatriation date., Expatriation date. Expatriation Tax Return, Expatriation Tax Return Former LTR, Former LTR. Former U.S. citizen., Former U.S. citizen. How To Figure the Expatriation Tax If You Are a Covered Expatriate (If You Expatriate After June 16, 2008), How To Figure the Expatriation Tax if You Are a Covered Expatriate Long-term resident (LTR) defined, Expatriation Tax Family Leave credit Cornonavirus, Credit for family leave for certain self-employed individuals. Self-employed, Credit for family leave for certain self-employed individuals. Fellowship grant Excludable, Scholarships and Fellowship Grants Source rule, Scholarships, Grants, Prizes, and Awards Withholding tax, Withholding on Scholarships and Fellowship Grants Filing requirements, Nonresident Aliens Filing returns, Figuring Your Tax Amended returns, Amended Returns and Claims for Refund Claims for refund, Amended Returns and Claims for Refund Commonwealth of the Northern Mariana Islands, Aliens from Guam or the Commonwealth of the Northern Mariana Islands (CNMI). Dual-status taxpayer, Forms To File Estimated tax, When to pay estimated tax. Form 1040-C, Form 1040-C Form 1040-NR, Figuring Your Tax, Nonresident Aliens Form 1040-NR-EZ, Figuring Your Tax Form 2063, Form 2063 Guam, Aliens from Guam or the Commonwealth of the Northern Mariana Islands (CNMI). Nonresident alien, Figuring Your Tax U.S. Virgin Islands, Aliens from the U.S. Virgin Islands. Who must file, Nonresident Aliens Filing status, Filing Status First-year choice, First-Year Choice Fixed or determinable income, Fixed or Determinable Income Foreign country, Foreign country. Foreign earned income exclusion COVID-19 relief, Foreign Earned Income and Housing Amount Foreign employer, Employees of foreign persons, organizations, or offices., Foreign employer. Foreign government employees Alien status, Foreign government-related individuals. Exempt from U.S. tax, Employees of Foreign Governments and International Organizations Tax treaty exemption, Employees of Foreign Governments Foreign income subject to U.S. tax, Foreign Income Foreign tax credit Dual-status alien, Foreign tax credit. Nonresident alien, Foreign tax credit. Resident alien, Foreign tax credit. Form 8833, Effect of Tax Treaties Form 8840, Form 8840. Forms, Form 8843. 1040-C, Form 1040-C 1040-ES(NR), Estimated Tax Form 1040-ES (NR) 1040-NR, Nonresident Aliens 1040-X, Amended Returns and Claims for Refund 1042-S, Income Entitled to Tax Treaty Benefits 1116, Foreign tax credit., Foreign tax credit., Foreign tax credit. 2063, Form 2063 2210, Penalty for failure to pay estimated income tax. 3903, Moving expenses. 4563, Residents of American Samoa. 4790 (see FinCEN 105) 8233, Employees and independent contractors. 8275, Disclosure statement. 8288, Credit for tax withheld. 8288-A, Credit for tax withheld. 8288-B, Withholding certificates. 8801, Credit for prior-year alternative minimum tax. 8805, Tax Withheld on Partnership Income, Income Entitled to Tax Treaty Benefits 8833, Resident Aliens 8843, Form 8843. FinCEN 105, Other Forms You May Have To File W-4, Withholding on Wages, Alternate Withholding Procedure, Form W-4. W-7, Individual taxpayer identification number (ITIN). W-8BEN, Income Entitled to Tax Treaty Benefits W-8ECI, Withholding on Pensions W-9, Notification of Alien Status Forms to file Dual-status alien, Forms To File Nonresident aliens, Nonresident Aliens Resident alien, Resident Aliens Sailing permits, Forms To File Frequently Asked Questions, Publication 519 - Additional Material Identification number, taxpayer Defined, Identification Number Penalty for failure to supply, Failure to supply TIN. Income Community, Community Income Effectively connected, Effectively Connected Income Exclusions, Exclusions From Gross Income Fixed or determinable, Fixed or Determinable Income Foreign, Foreign Income From real property, Income From Real Property Income affected by treaties, Income affected by treaties. Interest, Interest Income Investment, Investment Income Personal services, Personal Service Income Reporting, Reporting Your Income Sale of home, Gain From the Sale of Your Main Home Tip, Withholding on Tip Income Income code 28, Gambling Winnings Income from U.S. sources, Source of Income Dividends, Dividends Interest, Interest Income Pensions and annuities, Pensions and Annuities Personal property, Personal Property Personal services, Personal Services Real property, Real Property Rents or royalties, Rents or Royalties Independent contractors Withholding exemption under tax treaty, Employees and independent contractors. Withholding rules, Independent Contractors India, students and business apprentices from Standard deduction, Students and business apprentices from India. Withholding allowances, Students and business apprentices from India. Individual retirement arrangement (IRA), Individual retirement arrangement (IRA). Individual taxpayer identification number (ITIN), Individual taxpayer identification number (ITIN). Intangible property, Intangible property. Interest Portfolio, Portfolio interest., Interest that does not qualify as portfolio interest. Interest income Contingent, Contingent interest. Excludable, Interest Income Source rule, Interest Income International organization employees, Employees of International Organizations Alien status, Foreign government-related individuals. Exempt from U.S. tax, Employees of Foreign Governments and International Organizations International social security agreements, International Social Security Agreements Interrupted period of residence, Interrupted Period of Residence Inventory, Inventory property. Investment income, Investment Income Itemized deductions, Itemized Deductions Married filing jointly Nonresident alien, Married nonresident alien. Resident alien, Married filing jointly. Medical condition Travel exception, Medical condition. Medicare tax, Social Security and Medicare Taxes Mexico Commuters, Regular commuters from Canada or Mexico. Dependents, Dependents Qualifying widow filing status, Qualifying widow(er). Transportation-related employment, Residents of Canada or Mexico engaged in transportation-related employment. Monetary instruments, transporting, Other Forms You May Have To File Moving expenses, Moving expenses. Services or reimbursements provided by government to members of the U.S. Armed Forces, Services or reimbursements provided by government to members of the U.S. Armed Forces. Multi-level marketing, Multilevel marketing., Multilevel marketing. Municipal bonds, State and local government obligations. National of the United States, Tax rates. Natural resources (see Real property) Non-registered obligations, Obligations not in registered form. Nonresident alien, Nonresident Aliens Annuity income, Income from certain annuities. Business expenses, Ordinary and necessary business expenses. Casualty and theft losses, Casualty and theft losses. Charitable contributions, Charitable contributions. Child care credit, Child and dependent care credit. Child tax credit and the additional child tax credit, Child tax credit and the additional child tax credit. Credit for excess social security tax withheld, Excess social security tax withheld. Credit for income tax withheld, Withholding from wages. Credit for other dependents, Credit for other dependents. Credit for prior-year minimum tax, Credit for prior-year alternative minimum tax. Defined, Nonresident Aliens Earned income credit, Earned income credit (EIC). Education credits, Education credits. Effectively connected income, tax on, Tax on Effectively Connected Income Filing Form 1040-NR, Figuring Your Tax Filing Form 1040-NR-EZ, Figuring Your Tax Foreign tax credit, Foreign tax credit. Gambling winnings, dog or horse racing, Gambling Winnings From Dog or Horse Racing Head of household, Head of household. How income is taxed, Nonresident Aliens Individual retirement arrangement (IRA), Individual retirement arrangement (IRA). Interest income, Interest Income Losses, Losses. Married filing jointly, Married nonresident alien. Qualified business income deduction., Qualified business income deduction. Qualifying widow(er), Qualifying widow(er). Standard deduction, Standard deduction. State and local income taxes, State and local income taxes. Students, Nonresident Alien Students Tax paid on undistributed long-term capital gains, Tax paid on undistributed long-term capital gains. Tax withheld at source, Tax withheld at the source. Withholding from partnership income, Tax withheld on partnership income. Withholding tax, Paying Tax Through Withholding or Estimated Tax Nonresident alien dependents Canada, Mexico. South Korea, Residents of India, Dependents Nonresident spouse treated as a resident, Nonresident Spouse Treated as a Resident Partnership Income, tax withheld on, Tax Withheld on Partnership Income Partnerships, Partnerships. Payment against U.S. tax, Payments Tax withheld at the source, Tax withheld at the source. Withholding from wages, Tax Withheld Penalties, Penalties Accuracy-related, Accuracy-related penalty. Failure to file, Filing late. Failure to pay, Paying tax late. Failure to supply taxpayer identification number, Failure to supply TIN. Fraud, Fraud. Frivolous tax submission, Frivolous tax submission. Negligence, Negligence or disregard. Substantial understatement of income tax, Substantial understatement of income tax. Penalty for failure to pay estimated income tax, Penalty for failure to pay estimated income tax. Penalty on early withdrawal of savings, Penalty on early withdrawal of savings. Pensions COVID-19 relief, Pensions and Annuities Disaster tax relief, Pensions and Annuities Source rule, Pensions and Annuities Withholding on, Withholding on Pensions Personal property, Personal Property Personal services income Connected with U.S. business, Personal Service Income Paid by foreign employer, Services Performed for Foreign Employer Source rule, Personal Services Tax treaty exemption, Personal Services Withholding on wages, Withholding on Wages Portfolio interest, Portfolio interest., Interest that does not qualify as portfolio interest. Prizes, Scholarships, Grants, Prizes, and Awards Professional athletes, Professional athletes. Property Depreciable, Depreciable property. Intangible, Intangible property. Inventory, Inventory property. Personal, Personal Property Real, Real Property, Real Property Gain or Loss Protective return, Protective return. Publications (see Tax help) Puerto Rico, residents of, Aliens From American Samoa or Puerto Rico, Special rules for aliens from certain U.S. possessions., Bona Fide Residents of American Samoa or Puerto Rico, Residents of American Samoa and Puerto Rico. Qualified business income deduction., Qualified business income deduction. Railroad retirement benefits, Social Security Benefits, Social security and railroad retirement benefits. Real estate (see Real property) Real property Definition, Real Property Income from, Income From Real Property Natural resources, Natural resources. Sale or exchange of, Real Property Gain or Loss Source rule, Real Property Real property income, Real property income. Refunds, claims for, Amended Returns and Claims for Refund Registered obligations, Obligations in registered form. Rents, Rents or Royalties Researchers, wage withholding exemption under tax treaty, Students, teachers, and researchers., Appendix B—Tax Treaty Exemption Procedure for Teachers and Researchers Residence, interrupted, Interrupted Period of Residence Residency First year, First Year of Residency Last year, Last Year of Residency Starting date, Residency starting date under substantial presence test. Termination date, Last Year of Residency Tests, Resident Aliens Resident alien, Resident Aliens Child tax credit, Child tax credit and the additional child tax credit. Child tax credit and the additional child tax credit, Child tax credit and the additional child tax credit. Credit for other dependents, Credit for other dependents. Defined, Resident Aliens Education credits, Education credits. Head of household, Head of household. Married filing jointly, Married filing jointly. Qualifying widow(er), Qualifying widow(er). Resident aliens Dependents, Resident Aliens Retirement savings contributions credit Dual-status alien, Retirement savings contributions credit. Nonresident alien, Retirement savings contributions credit. Resident alien, Retirement savings contributions credit. Royalties, Rents or Royalties Sailing permits, departing aliens Aliens not requiring, Aliens Not Required To Obtain Sailing or Departure Permits Bond furnished, insuring tax payment, Paying Taxes and Obtaining Refunds Form 1040-C, Form 1040-C Form 2063, Form 2063 Forms to file, Forms To File When and Where To Get a Sailing or Departure Permit., When and Where To Get a Sailing or Departure Permit Salary (see Personal services income) Sale of home, income from, Gain From the Sale of Your Main Home Sales or exchanges, capital assets, Sales or Exchanges of Capital Assets Scholarship Excludable, Scholarships and Fellowship Grants Source rule, Scholarships, Grants, Prizes, and Awards Withholding tax, Withholding on Scholarships and Fellowship Grants Securities, trading in, Trading in stocks, securities, and commodities. Self-employed retirement plans, Self-employed SEP, SIMPLE, and qualified retirement plans. Self-employment tax, Self-Employment Tax Sick Leave credit Coronavirus, Credit for sick leave for certain self-employed individuals. Social security benefits Dual-status alien, Social security and railroad retirement benefits. Nonresident alien, Social Security Benefits Social security number, Social security number (SSN). Social security tax Credit for excess tax withheld, Social Security and Medicare Taxes Excess withheld, Excess social security tax withheld. Foreign students and exchange visitors, Students and Exchange Visitors International agreements, International Social Security Agreements Self-employment tax, Self-Employment Tax Totalization agreements, International Social Security Agreements Withheld in error, Refund of Taxes Withheld in Error Source of compensation for labor or personal services Alternative basis, Alternative Basis Multi-year compensation, Multiyear compensation. Time basis, Time Basis Source of income, Source of Income Standard deduction, Standard deduction. State and local income taxes, State and local income taxes. Stocks, trading in, Trading in stocks, securities, and commodities. Student loan interest deduction, Student loan interest deduction. Students Alien status, Students. Engaged in U.S. business, Students and trainees. Fellowship grant, Scholarships, Grants, Prizes, and Awards, Withholding on Scholarships and Fellowship Grants Income from foreign employer, Students and exchange visitors. Scholarship, Scholarships, Grants, Prizes, and Awards, Withholding on Scholarships and Fellowship Grants Social security and Medicare taxes, Students and Exchange Visitors Tax treaty exemption, Students, Apprentices, and Trainees Wage withholding exemption under tax treaty, Students, teachers, and researchers., Appendix A—Tax Treaty Exemption Procedure for Students Students and business apprentices from India, Students and business apprentices from India., Students and business apprentices from India. Substantial presence test, Substantial Presence Test Tax credits and payments Nonresident aliens, Nonresident Aliens Resident aliens, Tax Credits and Payments Tax help, Taxpayer Assistance Inside the United States Tax home, Tax home., Tax home. Tax paid on undistributed long-term capital gains, Tax paid on undistributed long-term capital gains. Tax Treaties Effect of, Effect of Tax Treaties Income entitled to benefits, Income Entitled to Tax Treaty Benefits Tax treaties Benefits, Treaty Income, Some Typical Tax Treaty Benefits Capital gains, Capital Gains Employees of foreign governments, Employees of Foreign Governments Exclusions from income, Income affected by treaties. Income affected by, Income affected by treaties. Reporting benefits claimed, Reporting Treaty Benefits Claimed Teachers and professors, Teachers, Professors, and Researchers Trainees, students, and apprentices, Students, Apprentices, and Trainees Tax withheld on gain from the sale or exchange of certain partnership interests, Tax withheld on gain from the sale or exchange of certain partnership interests. Tax year, Tax Year, Tax Year Tax, transportation, Transportation Tax Taxpayer identification number Defined, Identification Number Penalty for failure to supply, Failure to supply TIN. Teachers Alien status, Teachers and trainees. Tax treaty exemption, Teachers, Professors, and Researchers Wage withholding exemption under tax treaty, Students, teachers, and researchers., Appendix B—Tax Treaty Exemption Procedure for Teachers and Researchers Tie-breaker rule, Effect of Tax Treaties Tip income, Withholding on Tip Income Totalization agreements, International Social Security Agreements Trade or business, U.S., Trade or Business in the United States Beneficiary of estate or trust, Beneficiary of an estate or trust. Business operations, Business operations. Coronavirus relief, Personal Services Income from U.S. sources, Effectively Connected Income Partnerships, Partnerships. Personal services, Personal Services Students and trainees, Students and trainees. Trading in stocks, securities, and commodities, Trading in stocks, securities, and commodities. Trading in stocks, securities, and commodities, Trading in stocks, securities, and commodities. Trainees, Teachers and trainees., Students and trainees. Transportation income Connected with U.S. business, Transportation Income Source rule, Transportation Income Transportation of currency or monetary instruments, Other Forms You May Have To File Transportation tax, Transportation Tax Transportation-related employment, residents of Canada or Mexico, Residents of Canada or Mexico engaged in transportation-related employment. Treaties, income affected by, Income affected by treaties. Treaty benefits for resident aliens, Resident Aliens Treaty benefits, reporting benefits claimed, Reporting Treaty Benefits Claimed Trust, beneficiary, Beneficiary of an estate or trust. Wages (see Personal services income) Wages exempt from withholding, Wages Exempt From Withholding Wages, withholding on, Withholding on Wages Waiver of filing deadline, Waiver of filing deadline. When to file, When To File, When to file for deductions and credits. Where to file, When To File Who must file, Nonresident Aliens Withholding, Paying Tax Through Withholding or Estimated Tax , Withholding From Other Income Withholding tax Central withholding agreements, Central withholding agreements (CWA). Notification of alien status, Notification of Alien Status Pensions, Withholding on Pensions Puerto Rico, residents of, Residents of American Samoa and Puerto Rico. Real property sales, Tax withheld on real property sales. Scholarships and grants, Withholding on Scholarships and Fellowship Grants Social security taxes, Social Security and Medicare Taxes Tax treaty benefits, Income Entitled to Tax Treaty Benefits Tip income, Withholding on Tip Income U.S. Virgin Islands, residents of, Residents of the U.S. Virgin Islands. Wages, Withholding on Wages Wages exempt from, Wages Exempt From Withholding Where to report on the return, Tax Withheld Withholding from compensation, Withholding From Compensation |
If tom were married and his spouse was not working for pay what would his 2022 taxable income be
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