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Department of the Treasury
Internal Revenue Service
Publication 519
Cat. No. 15023T
U.S. Tax Guide
for Aliens
For use in preparing
2023 Returns
Get forms and other information faster and easier at:
• IRS.gov (English)
• IRS.gov/Spanish (Español)
•
IRS.gov/Chinese (中文)
•
IRS.gov/Korean (한국어)
• IRS.gov/Russian (Pусский)
• IRS.gov/Vietnamese (Tiếng Việt)
Contents
Introduction .............................. 1
What's New ............................... 3
Reminders ............................... 3
Chapter 1. Nonresident Alien or
Resident Alien? ........................ 4
Chapter 2. Source of Income ............... 15
Chapter 3. Exclusions From Gross Income .... 21
Chapter 4. How Income of Aliens Is Taxed ..... 25
Chapter 5. Figuring Your Tax ................ 36
Chapter 6. Dual-Status Tax Year ............. 46
Chapter 7. Filing Information ............... 50
Chapter 8. Paying Tax Through Withholding or
Estimated Tax ........................ 55
Chapter 9. Tax Treaty Benefits .............. 67
Chapter 10. Employees of Foreign
Governments and International
Organizations ......................... 71
Chapter 11. Departing Aliens and the Sailing
or Departure Permit .................... 73
Chapter 12. How To Get Tax Help ............ 76
Taxpayer Assistance Inside the United States ... 76
Appendix A—Tax Treaty Exemption Procedure
for Students .......................... 84
Appendix B—Tax Treaty Exemption Procedure
for Teachers and Researchers ............ 89
Index .................................. 96
Future Developments
For the latest information about developments related to
Pub. 519, such as legislation enacted after it was
published, go to IRS.gov/Pub519.
Introduction
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 deter-
mine 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. citi-
zens. Nonresident aliens are taxed only on their income
from sources within the United States and on certain in-
come connected with the conduct of a trade or business in
the United States.
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Table A. Where To Find What You Need To
Know About U.S. Taxes
Commonly Asked Questions Where To Find the Answer
Am I a nonresident alien or resident alien? See chapter 1.
Can I be a nonresident alien and a resident alien in the same
year?
•
See Dual-Status Aliens in chapter 1.
•
See chapter 6.
I am a resident alien and my spouse is a nonresident alien. Are
there special rules for us?
•
See Nonresident Spouse Treated as a Resident
in chapter 1.
•
See Community Income in chapter 2.
Is all my income subject to U.S. tax?
•
See chapter 2.
•
See chapter 3.
Is my scholarship subject to U.S. tax?
•
See Scholarships, Grants, Prizes, and Awards in chapter 2.
•
See Scholarships and Fellowship Grants in chapter 3.
•
See chapter 9.
Would any U.S. estate or gift taxes apply to me, my estate, or an
estate for which I am an executor, trustee, or representative?
See U.S. federal estate and gift tax in Reminders.
What is the tax rate on my income subject to U.S. tax? See chapter 4.
I moved to the United States this year. Can I deduct my moving
expenses on my U.S. return?
See Deductions in chapter 5.
Can I claim my spouse and/or children as dependents? See Dependents in chapter 5.
I pay income taxes to my home country. Can I get credit for these
taxes on my U.S. tax return?
See Tax Credits and Payments in chapter 5.
What forms must I file and when and where do I file them? See chapter 7.
How should I pay my U.S. income taxes? See chapter 8.
Am I eligible for any benefits under a tax treaty?
•
See Income Entitled to Tax Treaty Benefits in chapter 8.
•
See chapter 9.
Are employees of foreign governments and international
organizations exempt from U.S. tax?
See chapter 10.
Is there anything special I have to do before leaving the United
States?
•
See Expatriation Tax in chapter 4.
•
See chapter 11.
The information in this publication is not as comprehen-
sive for resident aliens as it is for nonresident aliens. Resi-
dent 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 com-
ments 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 com-
ment received, we do appreciate your feedback and will
consider your comments and suggestions as we revise
our tax forms, instructions, and publications. Don’t send
tax questions, tax returns, or payments to the above ad-
dress.
Getting answers to your tax questions. If you have
a tax question not answered by this publication or the How
To Get Tax Help section at the end of this publication, go
to the IRS Interactive Tax Assistant page at IRS.gov/
Help/ITA where you can find topics by using the search
feature or viewing the categories listed.
Getting tax forms, instructions, and publications.
Go to IRS.gov/Forms to download current and prior-year
forms, instructions, and publications.
Ordering tax forms, instructions, and publications.
Go to IRS.gov/OrderForms to order current forms, instruc-
tions, and publications; call 800-829-3676 to order
prior-year forms and instructions. The IRS will process
your order for forms and publications as soon as possible.
Don’t resubmit requests you’ve already sent us. You can
get forms and publications faster online.
2 Publication 519 (2023)
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What's New
Termination of 1979 Tax Convention with Hungary.
On July 15, 2022, the U.S. Treasury Department (Treas-
ury) announced that Hungary was notified on July 8,
2022, that the United States would terminate its tax treaty
with Hungary. In accordance with the treaty’s provisions
on termination, termination is effective on January 8,
2023. With respect to taxes withheld at source, the treaty
ceases to have effect on January 1, 2024. In respect of
other taxes, the treaty ceases to have effect with respect
to taxable periods beginning on or after January 1, 2024.
Qualified disability trusts. The exemption amount for a
qualified disability is $4,700 for 2023.
Reminders
Filing status name changed to qualifying surviving
spouse. The filing status qualifying widow(er) is now
called qualifying surviving spouse. The rules for the filing
status have not changed. The same rules that applied for
qualifying widow(er) apply to qualifying surviving spouse.
See Qualifying surviving spouse in the Instructions for
Form 1040 for details on the qualifying surviving spouse
filing status.
New lines 1a through 1z on Form 1040-NR. In 2022,
line 1 was expanded with new lines 1a through 1z. Some
amounts that in prior years were reported on Form
1040-NR are reported on Schedule 1 (Form 1040).
•
Scholarships and fellowship grants not reported on
Form W-2 are reported on Schedule 1 (Form 1040),
line 8r.
•
Pension or annuity from a nonqualified deferred com-
pensation plan or a nongovernmental section 457 plan
are reported on Schedule 1 (Form 1040), line 8t.
•
Wages earned while incarcerated are reported on
Schedule 1 (Form 1040), line 8u.
Credit for child and dependent care expenses. The
changes to the credit for child and dependent care expen-
ses implemented by the American Rescue Plan Act of
2021 (ARP) were not extended. The credit for the child
and dependent care expenses is nonrefundable. The dol-
lar limit on qualifying expenses is $3,000 for one qualifying
person and $6,000 for two or more qualifying persons.
The maximum credit amount allowed is 35% of your em-
ployment-related expenses. For more information, see the
Instructions for Form 2441 and Pub. 503.
Recovery rebate credit is not available. Aliens could
claim the recovery rebate credit for 2020 and 2021 if they
were a resident alien for the entire year, were married and
chose to file a joint return with a U.S. citizen or resident
spouse, or were a dual-status alien and chose to be trea-
ted as a U.S. resident for the entire year. The credit is not
available after 2021.
Disaster tax relief. Disaster tax relief is available for
those impacted by certain Presidentially declared
disasters (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.
Premium tax credit. You may be eligible to claim the
premium tax credit if you, your spouse, or a dependent en-
rolled in health insurance through the Health Insurance
Marketplace (Marketplace). See Form 8962 and its in-
structions for more information.
Advance payments of the premium tax credit. Ad-
vance 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 ad-
vance payments of the premium tax credit were made, you
must file a 2023 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 enrol-
led in health insurance through the Marketplace, you
should have received a Form 1095-A. If you receive a
Form 1095-A, 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 de-
ceased 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 obliga-
tions. The determination of whether an individual is a non-
resident 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 information is available on IRS.gov
to determine whether any U.S. estate or gift tax considera-
tions may apply to your situation. Further information on
U.S. federal estate tax considerations for nonresident non-
citizens 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.
Digital assets. If, in 2023, you engaged in a transaction
involving digital assets, you may need to answer "Yes" to
the question on page 1 of Form 1040-NR. See Digital As-
sets in the Instructions for Form 1040 for information on
transactions involving digital assets. Do not leave this field
blank. The question must be answered by all taxpayers,
not just taxpayers who engaged in a transaction involving
digital assets.
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 mem-
ber, or any other person you choose. This allows the IRS
to call the person you identified as your designee to an-
swer any questions that may arise during the processing
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of your return. It also allows your designee to perform cer-
tain 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 ad-
dress, 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 se-
lected by the Center may appear in this publication on pa-
ges 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 recog-
nize a child.
1.
Nonresident Alien or
Resident Alien?
Introduction
You should first determine whether, for income tax purpo-
ses, 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 chap-
ter.
Topics
This chapter discusses:
•
How to determine if you are a nonresident, resident, or
dual-status alien; and
•
How to treat a nonresident spouse as a resident alien.
Useful Items
You may want to see:
Form (and Instructions)
1040 U.S. Individual Income Tax Return
1040-SR U.S. Tax Return for Seniors
1040-NR U.S. Nonresident Alien Income Tax Return
8833 Treaty-Based Return Position Disclosure
Under Section 6114 or 7701(b)
8840 Closer Connection Exception Statement for
Aliens
8843 Statement for Exempt Individuals and
Individuals With a Medical Condition
1040
1040-SR
1040-NR
8833
8840
8843
See chapter 12 for information about getting these forms.
Nonresident Aliens
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.
Resident Aliens
You are a resident alien of the United States for tax purpo-
ses if you meet either the green card test or the substan-
tial presence test for calendar year 2023 (January 1–De-
cember 31). Even if you do not meet either of these tests,
you may be able to choose to be treated as a U.S. resi-
dent for part of the year. See First-Year Choice under
Dual-Status Aliens, later.
Green Card Test
You are a resident for tax purposes if you are a lawful per-
manent resident of the United States at any time during
calendar year 2023. (However, see Dual-Status Aliens,
later.) This is known as the green card test. You are a law-
ful permanent resident of the United States at any time if
you have been given the privilege, according to U.S. immi-
gration 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 pred-
ecessor organization) has issued you a Form I-551, U.S.
Permanent Resident 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.
Note. Even if an individual meets the green card test, if
the individual claims foreign residency under a tiebreaker
rule they would be treated as a nonresident for purposes
of their tax liability. See section 7701(b)(6)(B).
Resident status taken away. Resident status is consid-
ered to have been taken away from you if the U.S. Govern-
ment issues you a final administrative or judicial order of
exclusion or deportation. A final judicial order is an order
that you may no longer appeal to a higher court of compe-
tent jurisdiction.
Resident status abandoned. An administrative or judi-
cial 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 U.S. Permanent Resident
Card (green card or Form I-551) attached with the USCIS
or a U.S. consular officer.
•
Form I-407, Record of Abandonment of Lawful Perma-
nent Resident Status.
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•
A letter stating your intent to abandon your resident
status.
When filing by mail, you must send by certified mail, re-
turn receipt requested (or the foreign equivalent), and
keep a copy and proof that it was mailed and received.
Until you have proof your letter was received, you
remain a resident alien for tax purposes even if
the USCIS would not recognize the validity of your
green card because it is more than 10 years old or be-
cause you have been absent from the United States for a
period of time.
If the USCIS or U.S. consular officer initiates this deter-
mination, your resident status will be considered to be
abandoned when the final administrative order of aban-
donment is issued. If you are granted an appeal to a fed-
eral court of competent jurisdiction, a final judicial order is
required.
Under U.S. immigration law, a lawful permanent resi-
dent who is required to file a tax return as a resident and
fails to do so may be regarded as having abandoned sta-
tus and may lose permanent resident status.
A long-term resident (LTR) who ceases to be a
lawful permanent resident may be subject to spe-
cial reporting requirements and tax provisions.
See Expatriation Tax in chapter 4.
Termination of residency after June 3, 2004, and
before June 17, 2008. If you terminated your residency
after June 3, 2004, and before June 17, 2008, you will still
be considered a U.S. resident for tax purposes until you
notify the Secretary of Homeland Security and file Form
8854, Initial and Annual Expatriation Statement.
Note. Requirements for taxpayers who expatriated be-
fore June 17, 2008, are no longer discussed in the Instruc-
tions for Form 8854 or Pub. 519. For information on expa-
triation before June 17, 2008, see the 2018 Instructions for
Form 8854, and chapter 4 of the 2018 Pub. 519.
Termination of residency after June 16, 2008. For
information on your residency termination date, see For-
mer LTR under Expatriation After June 16, 2008 in chap-
ter 4.
Substantial Presence Test
You are a resident for tax purposes if you meet the sub-
stantial presence test for calendar year 2023. To meet this
test, you must be physically present in the United States
on at least:
1. 31 days during 2023; and
2. 183 days during the 3-year period that includes 2023,
2022, and 2021, counting:
a. All the days you were present in 2023,
b.
1
/3 of the days you were present in 2022, and
c.
1
/6 of the days you were present in 2021.
CAUTION
!
CAUTION
!
Example. You were physically present in the United
States on 120 days in each of the years 2023, 2022, and
2021. To determine if you meet the substantial presence
test for 2023, count the full 120 days of presence in 2023,
40 days in 2022 (
1
/3 of 120), and 20 days in 2021 (
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 2023.
The term “United States” includes the following areas.
•
All 50 states and the District of Columbia.
•
The territorial waters of the United States.
•
The seabed and subsoil of those submarine areas that
are adjacent to U.S. territorial waters and over which
the United States has exclusive rights under interna-
tional law to explore and exploit natural resources.
The term does not include U.S. territories or U.S. airspace.
Days of Presence in the United States
You are treated as present in the United States on any day
you are physically present in the country at any time dur-
ing 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.
•
Days you commute to work in the United States from a
residence in Canada or Mexico if you regularly com-
mute from Canada or Mexico.
•
Days you are in the United States for less than 24
hours when you are in transit between two places out-
side the United States.
•
Days you are in the United States as a crew member
of a foreign vessel.
•
Days you are unable to leave the United States be-
cause of a medical condition that arose while you are
in the United States.
•
Days you are in the United States under a NATO visa
as a member of a force or civilian component to
NATO. However, this exception does not apply to an
immediate family member who is present in the United
States under a NATO visa. A dependent family mem-
ber must count every day of presence for purposes of
the substantial presence test.
•
Days you are an exempt individual.
The specific rules that apply to each of these categories
are discussed next.
Regular commuters from Canada or Mexico. Do not
count the days on which you commute to work in the Uni-
ted States from your residence in Canada or Mexico if you
regularly commute from Canada or Mexico. You are con-
sidered to commute regularly if you commute to work in
the United States on more than 75% (0.75) of the work-
days 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
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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 but was temporarily
assigned to the firm's office in the United States from Feb-
ruary 1 through June 1. On June 2, Maria resumed em-
ployment in Mexico. For 69 workdays, Maria commuted
each morning from home in Mexico to work in Compañía
ABC's U.S. office and returned home in Mexico on each of
those evenings. For 7 workdays, Maria worked in Maria’s
firm's Mexico office. For purposes of the substantial pres-
ence test, Maria does not count the days commuting 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%).
Days in transit. Do not count the days you are in the
United States for less than 24 hours and you are in transit
between two places outside the United States. You are
considered to be in transit if you engage in activities that
are substantially related to completing travel to your for-
eign destination. For example, if you travel between air-
ports in the United States to change planes en route to
your foreign destination, you are considered to be in
transit. However, you are not considered to be in transit if
you attend a business meeting while in the United States.
This is true even if the meeting is held at the airport.
Crew members. Do not count the days you are tempora-
rily present in the United States as a regular crew member
of a foreign vessel (boat or ship) engaged in transporta-
tion between the United States and a foreign country or a
U.S. territory. However, this exception does not apply if
you otherwise engage in any trade or business in the Uni-
ted States on those days.
Medical condition. Do not count the days you intended
to leave, but could not leave, the United States because of
a medical condition or problem that arose while you were
in the United States. Whether you intended to leave the
United States on a particular day is determined based on
all the facts and circumstances. For example, you may be
able to establish that you intended to leave if your purpose
for visiting the United States could be accomplished dur-
ing a period that is not long enough to qualify you for the
substantial presence test. However, if you need an exten-
ded period of time to accomplish the purpose of your visit
and that period would qualify you for the substantial pres-
ence test, you would not be able to establish an intent to
leave the United States before the end of that extended
period.
In the case of an individual who is judged mentally in-
competent, proof of intent to leave the United States can
be determined by analyzing the individual's pattern of be-
havior before they were judged mentally incompetent.
If you qualify to exclude days of presence because of a
medical condition, you must file a fully completed Form
8843 with the IRS. See Form 8843, later.
You cannot exclude any days of presence in the United
States under the following circumstances.
•
You were initially prevented from leaving, were then
able to leave, but remained in the United States be-
yond a reasonable period for making arrangements to
leave.
•
You returned to the United States for treatment of a
medical condition that arose during a prior stay.
•
The condition existed before your arrival in the United
States and you were aware of the condition. It does
not matter whether you needed treatment for the con-
dition when you entered the United States.
Exempt individual. Do not count days for which you are
an exempt individual. The term “exempt individual” does
not refer to someone exempt from U.S. tax, but instead re-
fers to anyone in the following categories.
•
An individual temporarily present in the United States
as a foreign government-related individual under an
“A” or “G” visa other than individuals holding “A-3” or
“G-5” class visas.
•
A teacher or trainee temporarily present in the United
States under a “J” or “Q” visa who substantially com-
plies with the requirements of the visa.
•
A student temporarily present in the United States un-
der an “F,” “J,” “M,” or “Q” visa who substantially com-
plies with the requirements of the visa.
•
A professional athlete temporarily present in the Uni-
ted States to compete in a charitable sports event.
The specific rules for each of these four categories (in-
cluding any rules on the length of time you will be an ex-
empt individual) are discussed next.
Foreign government-related individuals. A foreign
government-related individual is an individual (or a mem-
ber of the individual's immediate family) who is temporarily
present in the United States:
•
As a full-time employee of an international organiza-
tion,
•
By reason of diplomatic status, or
•
By reason of a visa (other than a visa that grants lawful
permanent residence) that the Secretary of the Treas-
ury determines represents full-time diplomatic or con-
sular status.
Note. You are considered temporarily present in the
United States regardless of the actual amount of time you
are present in the United States.
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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 their work schedule meets the organization's
standard full-time work schedule.
An individual is considered to have full-time diplomatic
or consular status if they:
•
Have been accredited by a foreign government that is
recognized by the United States;
•
Intend to engage primarily in official activities for that
foreign government while in the United States; and
•
Have been recognized by the President, Secretary of
State, or a consular officer as being entitled to that
status.
Members of the immediate family include the individu-
al'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 ex-
empt individual's visa classification. Unmarried children
are included only if they:
•
Are under 21 years of age,
•
Reside regularly in the exempt individual's household,
and
•
Are not members of another household.
Note. Generally, if you are present in the United States
under an “A” or “G” class visa, you are considered a for-
eign government-related individual (with full-time diplo-
matic or consular status). None of your days count for pur-
poses of the substantial presence test.
Household staff exception. If you are present in the
United States under an “A-3” or “G-5” class visa as a per-
sonal employee, attendant, or domestic worker for either a
foreign government or international organization official,
you are not considered a foreign government-related indi-
vidual and must count all your days of presence in the Uni-
ted States for purposes of the substantial presence test.
Teachers and trainees. A teacher or trainee is an in-
dividual, 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 con-
sidered to have substantially complied with the visa re-
quirements 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 individu-
als.
You will not be an exempt individual as a teacher or
trainee in 2023 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 fol-
lowing conditions are met.
•
You were exempt as a teacher, trainee, or student for
any part of 3 (or fewer) of the 6 preceding calendar
years.
•
A foreign employer paid all of your compensation dur-
ing 2023.
•
You were present in the United States as a teacher or
trainee in any of the 6 prior years.
•
A foreign employer paid all of your compensation dur-
ing each of the preceding 6 years you were present in
the United States as a teacher or trainee.
A foreign employer includes an office or place of business
of an American entity in a foreign country or a U.S. terri-
tory.
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. Carla’s compen-
sation for the year was paid by a foreign employer. Carla
was treated as an exempt teacher for the previous 2 years,
but compensation was not paid by a foreign employer.
Carla will not be considered an exempt individual for the
current year because of being exempt as a teacher for at
least 2 of the past 6 years.
If Carla’s compensation for the past 2 years had been
paid by a foreign employer, Carla would be an exempt in-
dividual for the current year.
Students. A student is any individual who is tempora-
rily 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 ac-
tivities 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
2023 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.
•
You establish that you do not intend to reside perma-
nently in the United States.
•
You have substantially complied with the requirements
of your visa.
The facts and circumstances to be considered in deter-
mining if you have demonstrated an intent to reside per-
manently in the United States include, but are not limited
to, the following.
•
Whether you have maintained a closer connection to a
foreign country (discussed later).
•
Whether you have taken affirmative steps to change
your status from nonimmigrant to lawful permanent
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resident, as discussed later under Closer Connection
to a Foreign Country.
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.
Professional athletes. A professional athlete who is
temporarily in the United States to compete in a charitable
sports event is an exempt individual. A charitable sports
event is one that meets the following conditions.
•
The main purpose is to benefit a qualified charitable
organization.
•
The entire net proceeds go to charity.
•
Volunteers perform substantially all the work.
In figuring the days of presence in the United States,
you can exclude only the days on which you actually com-
peted in a sports event. You cannot exclude the days on
which you were in the United States to practice for the
event, to perform promotional or other activities related to
the event, or to travel between events.
If you qualify to exclude days of presence as a profes-
sional athlete, you must file a fully completed Form 8843
with the IRS. See Form 8843 next.
Form 8843. If you exclude days of presence in the United
States because you fall into any of the following catego-
ries, you must file a fully completed Form 8843.
•
You were unable to leave the United States as plan-
ned because of a medical condition or problem.
•
You were temporarily in the United States as a teacher
or trainee on a “J” or “Q” visa.
•
You were temporarily in the United States as a student
on an “F,” “J,” “M,” or “Q” visa.
•
You were a professional athlete competing in a chari-
table sports event.
Attach Form 8843 to your 2023 income tax return. If you
do not have to file a return, send Form 8843 to the follow-
ing address.
Department of the Treasury
Internal Revenue Service Center
Austin, 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 reasona-
ble actions to become aware of the filing requirements and
significant steps to comply with those requirements.
Closer Connection to a Foreign Country
Even if you meet the substantial presence test, you can be
treated as a nonresident alien if you:
•
Are present in the United States for less than 183 days
during the year,
•
Maintain a tax home in a foreign country during the
year, and
•
Have a closer connection during the year to one for-
eign country in which you have a tax home than to the
United States (unless you have a closer connection to
two foreign countries, discussed next).
Closer connection to two foreign countries. You can
demonstrate that you have a closer connection to two for-
eign countries (but not more than two) if you meet all of
the following conditions.
•
You maintained a tax home beginning on the first day
of the year in one foreign country.
•
You changed your tax home during the year to a sec-
ond foreign country.
•
You continued to maintain your tax home in the sec-
ond foreign country for the rest of the year.
•
You had a closer connection to each foreign country
than to the United States for the period during which
you maintained a tax home in that foreign country.
•
You are subject to tax as a resident under the tax laws
of either foreign country for the entire year or subject
to tax as a resident in both foreign countries for the pe-
riod during which you maintained a tax home in each
foreign country.
Tax home. Your tax home is the general area of your
main place of business, employment, or post of duty, re-
gardless of where you maintain your family home. Your tax
home is the place where you permanently or indefinitely
work as an employee or a self-employed individual. If you
do not have a regular or main place of business because
of the nature of your work, then your tax home is the place
where you regularly live. If you do not fit either of these
categories, you are considered an itinerant and your tax
home is wherever you work.
For determining whether you have a closer connection
to a foreign country, your tax home must also be in exis-
tence for the entire current year and must be located in the
same foreign country to which you are claiming to have a
closer connection.
Foreign country. In determining whether you have a
closer connection to a foreign country, the term “foreign
country” means:
•
Any territory under the sovereignty of the United Na-
tions or a government other than that of the United
States,
•
The territorial waters of the foreign country (deter-
mined under U.S. law),
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•
The seabed and subsoil of those submarine areas that
are adjacent to the territorial waters of the foreign
country and over which the foreign country has exclu-
sive rights under international law to explore and ex-
ploit natural resources, and
•
Territories of the United States.
Establishing a closer connection. You will be consid-
ered to have a closer connection to a foreign country than
the United States if you or the IRS establishes that you
have maintained more significant contacts with the foreign
country than with the United States. In determining
whether you have maintained more significant contacts
with the foreign country than with the United States, the
facts and circumstances to be considered include, but are
not limited to, the following.
1. The country of residence you designate on forms and
documents.
2. The types of official forms and documents you file,
such as Form W-9, Form W-8BEN, or Form W-8ECI.
3. The location of:
•
Your permanent home;
•
Your family;
•
Your personal belongings, such as cars, furniture,
clothing, and jewelry;
•
Your current social, political, cultural, professional,
or religious affiliations;
•
Your business activities (other than those that
constitute your tax home);
•
The jurisdiction in which you hold a driver's li-
cense;
•
The jurisdiction in which you vote; and
•
Charitable organizations to which you contribute.
It does not matter whether your permanent home is a
house, an apartment, or a furnished room. It also does not
matter whether you rent or own it. It is important, however,
that your home be available at all times, continuously, and
not solely for short stays.
When you cannot have a closer connection. You can-
not claim you have a closer connection to a foreign coun-
try if either of the following applies.
•
You personally applied, or took other steps during the
year, to change your status to that of a permanent res-
ident.
•
You had an application pending for adjustment of sta-
tus during the current year.
Steps to change your status to that of a permanent resi-
dent include, but are not limited to, the filing of the follow-
ing forms.
•
Form I-508, Request for Waiver of Certain Rights,
Privileges, Exemptions, and Immunities.
•
Form I-485, Application to Register Permanent Resi-
dence or Adjust Status.
•
Form I-130, Petition for Alien Relative.
•
Form I-140, Immigrant Petition for Alien Workers.
•
Form ETA-9089, Application for Permanent Employ-
ment Certification.
•
Form ETA-9089, Appendix A.
•
Form DS-230, Application for Immigrant Visa and
Alien Registration.
Form 8840. You must attach a fully completed Form 8840
to your income tax return to claim you have a closer con-
nection to a foreign country or countries.
If you do not have to file a return, send the form to:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
You must file Form 8840 by the due date for filing Form
1040-NR. The due date for filing is discussed later in
chapter 7.
If you do not timely file Form 8840, you cannot claim a
closer connection to a foreign country or countries. 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.
Effect of Tax Treaties
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-resi-
dent 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 conflict-
ing 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. in-
come 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.
Note. In certain instances when an individual is treated
as a nonresident alien pursuant to a tiebreaker rule in a
relevant tax treaty, it can trigger section 877A expatriation
tax. See Expatriation Tax, later.
Information to be reported. If you are a dual-resident
taxpayer and you claim treaty benefits, you must file a re-
turn using Form 1040-NR with Form 8833 attached, and
compute your tax as a nonresident alien. A dual-resident
taxpayer may also be eligible for U.S. competent authority
assistance. See Revenue Procedure 2015-40, 2015-35
I.R.B. 236, available at IRS.gov/irb/
2015-35_IRB#RP-2015-40, or its successor.
See Reporting Treaty Benefits Claimed in chapter 9 for
more information on reporting treaty benefits.
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Certain students and trainees from Barbados, Hun-
gary, and Jamaica. Nonresident alien students from
Barbados, Hungary, and Jamaica, as well as trainees from
Jamaica, may qualify for an election to be treated as a res-
ident alien for U.S. tax purposes under the U.S. income
tax treaties with those countries. See Pub. 901 for addi-
tional information. If you qualify for this election, you can
make it by filing a Form 1040 and attaching a signed elec-
tion statement to your return. The rules about resident ali-
ens described in this publication apply to you. Once
made, the election applies as long as you remain eligible,
and you must obtain permission from the U.S. competent
authority in order to terminate the election.
Note. As of January 8, 2023, the tax treaty between
the United States and Hungary was terminated in accord-
ance with the treaty's provision on termination. As a result,
for tax years beginning January 1, 2024, this election will
no longer be available for students and trainees from Hun-
gary. See Termination of 1979 Tax Convention with Hun-
gary under What's New, earlier.
Dual-Status Aliens
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.
First Year of Residency
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.
Residency starting date under substantial presence
test. If you meet the substantial presence test for a calen-
dar year, your residency starting date is generally the first
day you are present in the United States during that calen-
dar year. However, you do not have to count up to 10 days
of actual presence in the United States if on those days
you establish that:
•
You had a closer connection to a foreign country than
to the United States, and
•
Your tax home was in that foreign country.
See Closer Connection to a Foreign Country, earlier.
In determining whether you can exclude up to 10 days,
the following rules apply.
•
You can exclude days from more than one period of
presence as long as the total days in all periods are
not more than 10.
•
You cannot exclude any days in a period of consecu-
tive days of presence if all the days in that period can-
not be excluded.
•
Although you can exclude up to 10 days of presence
in determining your residency starting date, you must
include those days when determining whether you
meet the substantial presence test.
Example. Ivan Ivanovich is a citizen of Russia. Ivan
came to the United States for the first time on January 6,
2023, to attend a business meeting and returned to Rus-
sia on January 10, 2023. Ivan’s tax home remained in
Russia. On March 1, 2023, Ivan moved to the United
States and resided here for the rest of the year. Ivan is
able to establish a closer connection to Russia for the pe-
riod January 6–10, 2023. Thus, Ivan’s residency starting
date is March 1, 2023.
Statement required to exclude up to 10 days of
presence. You must file a statement with the IRS if you
are excluding up to 10 days of presence in the United
States for purposes of your residency starting date. You
must sign and date this statement and include a declara-
tion that it is made under penalties of perjury. The state-
ment must contain the following information (as applica-
ble).
•
Your name, address, U.S. taxpayer identification num-
ber (TIN) (if any), and U.S. visa number (if any).
•
Your passport number and the name of the country
that issued your passport.
•
The tax year for which the statement applies.
•
The first day that you were present in the United
States during the year.
•
The dates of the days you are excluding in figuring
your first day of residency.
•
Sufficient facts to establish that you have maintained
your tax home in, and a closer connection to, a foreign
country during the period you are excluding.
Attach the required statement to your income tax re-
turn. If you are not required to file a return, send the state-
ment to the following address.
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
You must submit the statement on or before the due
date for filing Form 1040-NR. The due date for filing is dis-
cussed in chapter 7.
If you do not file the required statement as explained
above, you cannot claim that you have a closer connection
to a foreign country or countries. Therefore, your first day
of residency will be the first day you are present in the Uni-
ted States. This does not apply if you can show by clear
and convincing evidence that you took reasonable actions
to become aware of the requirements for filing the state-
ment and significant steps to comply with those require-
ments.
Residency starting date under green card test. If you
meet the green card test at any time during a calendar
year, but do not meet the substantial presence test for that
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year, your residency starting date is the first day in the cal-
endar year on which you are present in the United States
as a lawful permanent resident.
If you meet both the substantial presence test and the
green card test, your residency starting date is the earlier
of the first day during the year you are present in the Uni-
ted States under the substantial presence test or as a law-
ful permanent resident.
Residency during the preceding year. If you were a
U.S. resident during any part of the preceding calendar
year and you are a U.S. resident for any part of the current
year, you will be considered a U.S. resident at the begin-
ning of the current year. This applies whether you are a
resident under the substantial presence test or green card
test.
Example. Robert Bach is a citizen of Switzerland.
Robert came to the United States as a U.S. resident for
the first time on May 1, 2022, and remained until Novem-
ber 5, 2022, when Robert returned to Switzerland. Robert
came back to the United States on March 5, 2023, as a
lawful permanent resident and still resides here. In calen-
dar year 2023, Robert's U.S. residency is deemed to be-
gin on January 1, 2023, because Robert qualified as a
resident in calendar year 2022.
First-Year Choice
If you do not meet either the green card test or the sub-
stantial presence test for 2022 or 2023 and you did not
choose to be treated as a resident for part of 2022, but
you meet the substantial presence test for 2024, you can
choose to be treated as a U.S. resident for part of 2023. To
make this choice, you must:
1. Be present in the United States for at least 31 days in
a row in 2023, and
2. Be present in the United States for at least 75% of the
number of days beginning with the first day of the
31-day period and ending with the last day of 2023.
For purposes of this 75% requirement, you can treat
up to 5 days of absence from the United States as
days of presence in the United States.
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 un-
der Days of Presence in the United States.
If you make the first-year choice, your residency start-
ing date for 2023 is the first day of the earliest 31-day pe-
riod (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 pe-
riod 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.
Note. You do not have to be married to make this
choice.
Example 1. Juan DaSilva is a citizen of the Philip-
pines. Juan came to the United States for the first time on
November 1, 2023, and was here on 31 consecutive days
(from November 1 through December 1, 2023). Juan re-
turned to the Philippines on December 1 and came back
to the United States on December 17, 2023. Juan stayed
in the United States for the rest of the year. During 2024,
Juan is a resident of the United States under the substan-
tial presence test. Juan can make the first-year choice for
2023 because Juan was in the United States in 2023 for a
period of 31 days in a row (November 1 through Decem-
ber 1) and for at least 75% (0.75) of the days following
(and including) the first day of Juan’s 31-day period (46 to-
tal 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, Juan’s residency starting date will be November 1,
2023.
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. Juan can make the
first-year choice for 2023 because up to 5 days of ab-
sence are considered days of presence for purposes of
the 75% (0.75) requirement.
Statement required to make the first-year choice
for 2023. You must attach a statement to Form 1040 or
1040-SR to make the first-year choice for 2023. The state-
ment must contain your name and address and specify
the following.
•
That you are making the first-year choice for 2023.
•
That you were not a resident in 2022.
•
That you are a resident under the substantial pres-
ence test in 2024.
•
The number of days of presence in the United States
during 2024.
•
The date or dates of your 31-day period of presence
and the period of continuous presence in the United
States during 2023.
•
The date or dates of absence from the United States
during 2023 that you are treating as days of presence.
You cannot file Form 1040 or 1040-SR or the statement
until you meet the substantial presence test for 2024. If
you have not met the test for 2024 as of April 15, 2024,
you can request an extension of time for filing your 2023
Form 1040 or 1040-SR until a reasonable period after you
have met that test. To request an extension to file until Oc-
tober 15, 2024, use Form 4868. You can file the paper
form or use one of the electronic filing options explained in
the Form 4868 instructions. You should pay with this ex-
tension the amount of tax you expect to owe for 2023 fig-
ured as if you were a nonresident alien the entire year. You
can use Form 1040-NR to figure the tax. Enter the tax on
Form 4868. If you do not pay the tax due, you will be
charged interest on any tax not paid by the regular due
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date of your return, and you may be charged a penalty on
the late payment.
Once you make the first-year choice, you may not re-
voke it without the approval of the IRS.
If you do not follow the procedures discussed here for
making the first-year choice, you will be treated as a non-
resident alien for all of 2023. However, this does not apply
if you can show by clear and convincing evidence that you
took reasonable actions to become aware of the filing pro-
cedures and significant steps to comply with the proce-
dures.
Choosing Resident Alien Status
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.
•
You were a nonresident alien at the beginning of the
year.
•
You are a resident alien or U.S. citizen at the end of
the year.
•
You are married to a U.S. citizen or resident alien at
the end of the year.
•
Your spouse joins you in making the choice.
This includes situations in which both you and your
spouse were nonresident aliens at the beginning of the tax
year and both of you are resident aliens at the end of the
tax year.
Note. If you are single at the end of the year, you can-
not make this choice.
If you make this choice, the following rules apply.
•
You and your spouse are treated as U.S. residents for
the entire year for income tax purposes.
•
You and your spouse are taxed on worldwide income.
•
You and your spouse must file a joint return for the
year of the choice.
•
Neither you nor your spouse can make this choice for
any later tax year, even if you are separated, divorced,
or remarried.
•
The special instructions and restrictions for dual-sta-
tus taxpayers in chapter 6 do not apply to you.
Note. 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.
Making the choice. You should attach a statement
signed by both spouses to your joint return for the year of
the choice. The statement must contain the following infor-
mation.
•
A declaration that you both qualify to make the choice
and that you choose to be treated as U.S. residents for
the entire tax year.
•
The name, address, and TIN (social security number
(SSN) or individual taxpayer identification number
(ITIN)) of each spouse. (If one spouse died, include
the name and address of the person who makes the
choice for the deceased spouse.)
You generally make this choice when you file your joint
return. However, you can also make the choice by filing
Form 1040-X, Amended U.S. Individual Income Tax Re-
turn. Attach Form 1040 or 1040-SR and enter “Amended”
across the top of the corrected return. If you make the
choice with an amended return, you and your spouse
must also amend any returns that you may have filed after
the year for which you made the choice.
You must generally file the amended joint return within
3 years from the date you filed your original U.S. income
tax return or 2 years from the date you paid your income
tax for that year, whichever is later.
Last Year of Residency
If you were a U.S. resident in 2023 but are not a U.S. resi-
dent during any part of 2024, you cease to be a U.S. resi-
dent on your residency termination date. Your residency
termination date is December 31, 2023, unless you qualify
for an earlier date, as discussed later.
Earlier residency termination date. You may qualify for
a residency termination date that is earlier than December
31. This date is:
1. The last day in 2023 that you are physically present in
the United States, if you met the substantial presence
test;
2. The first day in 2023 that you are no longer a lawful
permanent resident of the United States, if you met
the green card test; or
3. The later of (1) or (2), if you met both tests.
Note. Claiming residency status under an applicable
treaty tiebreaker provision in another country may also
lead to a residency termination date that is earlier than
December 31.
You can use this date only if, for the remainder of 2023,
your tax home was in a foreign country and you had a
closer connection to that foreign country. See Closer Con-
nection to a Foreign Country, earlier.
An LTR who ceases to be a lawful permanent resi-
dent may be subject to special reporting require-
ments and tax provisions. See Expatriation Tax in
chapter 4.
Termination of residency. For information on your
residency termination date, see Former LTR under Expa-
triation After June 16, 2008 in chapter 4.
De minimis presence. If you are a U.S. resident be-
cause of the substantial presence test and you qualify to
use the earlier residency termination date, you can ex-
clude up to 10 days of actual presence in the United
States in determining your residency termination date. In
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determining whether you can exclude up to 10 days, the
following rules apply.
•
You can exclude days from more than one period of
presence as long as the total days in all periods are
not more than 10.
•
You cannot exclude any days in a period of consecu-
tive days of presence if all the days in that period can-
not be excluded.
•
Although you can exclude up to 10 days of presence
in determining your residency termination date, you
must include those days when determining whether
you meet the substantial presence test.
Example. Lola Bovary is a citizen of Malta. Lola came
to the United States for the first time on March 1, 2023,
and resided here until August 25, 2023. On December 12,
2023, Lola came to the United States for vacation and re-
turned to Malta on December 16, 2023. Lola is able to es-
tablish a closer connection to Malta for the rest of 2023
beginning August 25, 2023, when she leaves the United
States. Lola is a resident under the substantial presence
test because Lola was present in the United States for 183
days (178 days for the period March 1 to August 25 plus 5
days in December). However, Lola is able to exclude her
visit to the United States in December in determining her
residency termination date and therefore Lola's residency
termination date is August 25, 2023.
Residency during the next year. If you are a U.S. resi-
dent during any part of 2024 and you are a resident during
any part of 2023, you will be treated as a resident through
the end of 2023. This applies whether you have a closer
connection to a foreign country than the United States
during 2023, and whether you are a resident under the
substantial presence test or green card test.
Statement required to establish your residency ter-
mination date. You must file a statement with the IRS to
establish your residency termination date. You must sign
and date this statement and include a declaration that it is
made under penalties of perjury. The statement must con-
tain the following information (as applicable).
•
Your name, address, U.S. TIN (if any), and U.S. visa
number (if any).
•
Your passport number and the name of the country
that issued your passport.
•
The tax year for which the statement applies.
•
The last day that you were present in the United
States during the year.
•
Sufficient facts to establish that you have maintained
your tax home in, and that you have a closer connec-
tion to, a foreign country following your last day of
presence in the United States during the year or fol-
lowing the abandonment or rescission of your status
as a lawful permanent resident during the year.
•
The date that your status as a lawful permanent resi-
dent was abandoned or rescinded.
•
Sufficient facts (including copies of relevant docu-
ments) to establish that your status as a lawful perma-
nent resident has been abandoned or rescinded.
•
If you can exclude days, as discussed earlier under De
minimis presence, include the dates of the days you
are excluding and sufficient facts to establish that you
have maintained your tax home in, and that you have a
closer connection to, a foreign country during the pe-
riod you are excluding.
Attach the required statement to your income tax re-
turn. If you are not required to file a return, send the state-
ment to the following address.
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
You must submit the statement on or before the due
date for filing Form 1040-NR. The due date for filing is dis-
cussed in chapter 7.
If you do not file the required statement as explained
above, you cannot claim that you have a closer connection
to a foreign country or countries. This does not apply if
you can show by clear and convincing evidence that you
took reasonable actions to become aware of the require-
ments for filing the statement and significant steps to com-
ply with those requirements.
Nonresident Spouse Treated
as a Resident
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 sit-
uations 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 trea-
ted 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.
If you file a joint return under this provision, the
special instructions and restrictions for dual-status
taxpayers in chapter 6 do not apply to you.
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 resi-
dent 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
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for the year they make the choice, but they can file either
joint or separate returns for later years.
How To Make the Choice
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.
•
A declaration that one spouse was a nonresident alien
and the other spouse a U.S. citizen or resident alien
on the last day of your tax year, and that you choose to
be treated as U.S. residents for the entire tax year.
•
The name, address, and TIN of each spouse. (If one
spouse died, include the name and address of the
person making the choice for the deceased spouse.)
Amended return. You generally make this choice when
you file your joint return. However, you can also make the
choice by filing a joint amended return on Form 1040-X.
Attach Form 1040 or 1040-SR and enter “Amended”
across the top of the corrected return. If you make the
choice with an amended return, you and your spouse
must also amend any returns that you may have filed after
the year for which you made the choice.
You must generally file the amended joint return within
3 years from the date you filed your original U.S. income
tax return or 2 years from the date you paid your income
tax for that year, whichever is later.
Suspending the Choice
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 Decem-
ber 31, 2020, and married to Judy, a nonresident alien.
They chose to treat Judy as a resident alien and filed joint
2020 and 2021 income tax returns. On January 10, 2022,
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 2022 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 2023, their choice is suspended for that year.
If either meets the filing requirements for nonresident ali-
ens discussed in chapter 7, they must file separate returns
as nonresident aliens for 2023. If Dick becomes a resident
alien again in 2024, their choice is no longer suspended.
Ending the Choice
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 fol-
lowing ways.
If the choice is ended in one of the following ways, nei-
ther spouse can make this choice in any later tax year.
1. Revocation. Either spouse can revoke the choice for
any tax year, provided they make the revocation by
the due date for filing the tax return for that tax year.
The spouse who revokes the choice must attach a
signed statement declaring that the choice is being
revoked. The statement must include the name, ad-
dress, and TIN of each spouse. (If one spouse dies,
include the name and address of the person who is
revoking the choice for the deceased spouse.) The
statement must also include a list of any states, for-
eign countries, and territories that have community
property laws in which either spouse is domiciled or
where real property is located from which either
spouse receives income. File the statement as fol-
lows.
a. If the spouse revoking the choice must file a re-
turn, attach the statement to the return for the first
year the revocation applies.
b. If the spouse revoking the choice does not have to
file a return, but does file a return (for example, to
obtain a refund), attach the statement to the re-
turn.
c. If the spouse revoking the choice does not have to
file a return and does not file a claim for refund,
send the statement to the Internal Revenue Serv-
ice Center where you filed the last joint return.
2. Death. The death of either spouse ends the choice,
beginning with the first tax year following the year the
spouse died. However, if the surviving spouse is a
U.S. citizen or resident and is entitled to the joint tax
rates as a surviving spouse, the choice will not end
until the close of the last year for which these joint
rates may be used. If both spouses die in the same
tax year, the choice ends on the first day after the
close of the tax year in which the spouses died.
3. Legal separation. A legal separation under a decree
of divorce or separate maintenance ends the choice
as of the beginning of the tax year in which the legal
separation occurs.
4. Inadequate records. The IRS can end the choice for
any tax year that either spouse has failed to keep ade-
quate books, records, and other information neces-
sary to determine the correct income tax liability, or to
provide adequate access to those records.
Aliens From American Samoa
or Puerto Rico
If you are a nonresident alien in the United States and a
bona fide resident of American Samoa or Puerto Rico dur-
ing the entire tax year, you are taxed, with certain excep-
tions, according to the rules for resident aliens of the Uni-
ted States. For more information, see Bona Fide
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Residents of American Samoa or Puerto Rico in chap-
ter 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.
2.
Source of Income
Introduction
After you have determined your alien status, you must de-
termine 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.
Topics
This chapter discusses:
•
Income source rules, and
•
Community income.
This chapter also discusses special rules for married indi-
viduals who are domiciled in a country with community
property laws.
Resident Aliens
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 re-
turn. You must report these amounts from sources within
and outside the United States.
Nonresident Aliens
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 Ta-
ble 2-1. The following discussions cover the general rules
as well as the exceptions to these rules.
Not all items of U.S. source income are taxable.
See chapter 3.
TIP
Table 2-1. Summary of Source Rules for Income of Nonresident Aliens
Item of income Factor determining source
Salaries, wages, other compensation Where services performed
Business income:
Personal services Where services performed
Sale of inventory—purchased Where sold
Sale of inventory—produced Where produced
Interest Residence of payer
Dividends Whether a U.S. or foreign corporation*
Rents Location of property
Royalties:
Natural resources Location of property
Patents, copyrights, etc. Where property is used
Sale of real property Location of property
Sale of personal property Seller's tax home (but see Personal Property, later, for exceptions)
Pension distributions attributable to contributions Where services were performed that earned the pension
Investment earnings on pension contributions Location of pension trust
Sale of natural resources Allocation based on fair market value of product at export terminal.
For more information, see section 1.863-1(b) of the regulations.
* Exceptions include: Part of a dividend paid by a foreign corporation is U.S. source if at least 25% of the corporation's gross income is effectively
connected with a U.S. trade or business for the 3 tax years before the year in which the dividends are declared. Special rules apply for dividend
equivalent payments.
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Interest Income
Generally, U.S. source interest income includes the follow-
ing items.
•
Interest on bonds, notes, or other interest-bearing obli-
gations of U.S. residents or domestic corporations.
•
Interest paid by a domestic or foreign partnership or
foreign corporation engaged in a U.S. trade or busi-
ness at any time during the tax year.
•
Original issue discount (OID).
•
Interest from a state, the District of Columbia, or the
U.S. Government.
The place or manner of payment is immaterial in deter-
mining the source of the income.
A substitute interest payment made to the transferor of
a security in a securities lending transaction or a sale-re-
purchase transaction is sourced in the same manner as
the interest on the transferred security.
Exceptions. U.S. source interest income does not in-
clude the following items.
1. Interest paid by a resident alien or a domestic corpo-
ration on obligations issued before August 10, 2010, if
for the 3-year period ending with the close of the pay-
er's tax year preceding the interest payment, at least
80% (0.80) of the payer's total gross income:
a. Is from sources outside the United States, and
b. Is attributable to the active conduct of a trade or
business by the individual or corporation in a for-
eign country or a U.S. territory.
However, the interest will be considered U.S.
source interest income if either of the following ap-
plies.
a. The recipient of the interest is related to the resi-
dent alien or domestic corporation. See section
954(d)(3) for the definition of “related person.”
b. The terms of the obligation are significantly modi-
fied after August 9, 2010. Any extension of the
term of the obligation is considered a significant
modification.
2. Interest paid by a foreign branch of a domestic corpo-
ration or a domestic partnership on deposits or with-
drawable accounts with mutual savings banks, coop-
erative banks, credit unions, domestic building and
loan associations, and other savings institutions char-
tered and supervised as savings and loan or similar
associations under federal or state law if the interest
paid or credited can be deducted by the association.
3. Interest on deposits with a foreign branch of a domes-
tic corporation or domestic partnership, but only if the
branch is in the commercial banking business.
Dividends
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-re-
purchase transaction is sourced in the same manner as a
distribution on the transferred security.
Exception. Part of the dividends received from a for-
eign corporation is U.S. source income if 25% or more of
its total gross income for the 3-year period ending with the
close of its tax year preceding the declaration of dividends
was effectively connected with a trade or business in the
United States. If the corporation was formed less than 3
years before the declaration, use its total gross income
from the time it was formed. Determine the part that is
U.S. source income by multiplying the dividend by the fol-
lowing fraction.
Foreign corporation's gross income connected with
a U.S. trade or business for the 3-year period
Foreign corporation's gross income from all sources
for that period
Dividend equivalent payments. U.S. source dividends
also include dividend equivalent payments. Dividend
equivalent payments include:
•
Substitute dividends paid pursuant to a securities
lending transaction, sale-repurchase transaction, or
substantially similar transaction;
•
A payment that references a U.S. source dividend
made pursuant to a specified notional principal con-
tract (NPC); or
•
A payment that references a U.S. source dividend
made pursuant to a specified equity-linked instrument
(ELI).
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 pay-
ment even if the taxpayer makes a net payment or no
amount is paid because the net amount is zero.
In 2023, 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 div-
idend 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
2020-03, for additional information.
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Guarantee of Indebtedness
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:
1. A noncorporate resident or U.S. corporation, or
2. Any foreign person if the amounts are effectively con-
nected with the conduct of a U.S. trade or business.
For more information, see section 861(a)(9).
Personal Services
All wages and any other compensation for services per-
formed 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, or-
ganizations, or offices, later, and in Crew members, ear-
lier.
If you are an employee and receive compensation for
labor or personal services performed both inside and out-
side 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.
Multilevel marketing. Certain companies sell products
through a multilevel marketing arrangement, such that an
upper-tier distributor, who has sponsored a lower-tier dis-
tributor, is entitled to a payment from the company based
on certain activities of that lower-tier distributor. Generally,
depending on the facts, payments from such multilevel
marketing companies to independent (nonemployee) dis-
tributors (upper-tier distributors) that are based on the
sales or purchases of persons whom they have sponsored
(lower-tier distributors) constitute income for the perform-
ance of personal services in recruiting, training, and sup-
porting the lower-tier distributors. The source of such in-
come is generally based on where the services of the
upper-tier distributor are performed and may, depending
on the facts, be considered multiyear compensation, with
the source of income determined over the period to which
such compensation is attributable.
Self-employed individuals. If you are self-employed,
you determine the source of compensation for labor or
personal services from self-employment on the basis that
most correctly reflects the proper source of that income
under the facts and circumstances of your particular case.
In many cases, the facts and circumstances will call for an
apportionment on a time basis, as explained next.
Time Basis
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.
Number of days you performed services in the
United States during the year
Total number of days you performed services
during the year
You can use a unit of time less than a day in the above
fraction, if appropriate. The time period for which the com-
pensation 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 Nether-
lands, worked 240 days for a U.S. company during the tax
year. Christina 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 de-
termining the source of compensation, $20,000 ($80,000
×
60
/240) is Christina’s U.S. source income.
Example 2. Rob Waters, a resident of South Africa, is
employed by a corporation. Rob’s annual salary is
$100,000. None of it is for fringe benefits. During the first
quarter of the year, Rob 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 Rob worked entirely within
the United States during that quarter. The remaining
$75,000 is attributable to the last 3 quarters of the year.
During those quarters, Rob worked 150 days in Singapore
and 30 days in the United States. Rob’s periodic perform-
ance of services in the United States did not result in dis-
tinct, separate, and continuous periods of time. Of this
$75,000, $12,500 ($75,000 ×
30
/180) is U.S. source in-
come.
Multiyear compensation. The source of multiyear com-
pensation is generally determined on a time basis over the
period to which the compensation is attributable. Multiyear
compensation is compensation that is included in your in-
come in 1 tax year but that is attributable to a period that
includes 2 or more tax years.
You determine the period to which the compensation is
attributable based on the facts and circumstances of your
case. For example, an amount of compensation that spe-
cifically relates to a period of time that includes several
calendar years is attributable to the entire multiyear pe-
riod.
The amount of compensation treated as from U.S.
sources is figured by multiplying the total multiyear com-
pensation by a fraction. The numerator of the fraction is
the number of days (or unit of time less than a day, if
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appropriate) that you performed labor or personal services
in the United States in connection with the project. The
denominator of the fraction is the total number of days (or
unit of time less than a day, if appropriate) that you per-
formed labor or personal services in connection with the
project.
Geographical Basis
Compensation you receive as an employee in the form of
the following fringe benefits is sourced on a geographical
basis.
•
Housing.
•
Education.
•
Local transportation.
•
Tax reimbursement.
•
Hazardous or hardship duty pay, as defined in Regula-
tions section 1.861-4(b)(2)(ii)(D)(5).
•
Moving expense reimbursement.
The amount of fringe benefits must be reasonable and you
must substantiate them by adequate records or by suffi-
cient evidence.
Principal place of work. The above fringe benefits, ex-
cept for tax reimbursement and hazardous or hardship
duty pay, are sourced based on your principal place of
work. Your principal place of work is usually the place
where you spend most of your working time. This could be
your office, plant, store, shop, or other location. If there is
no one place where you spend most of your working time,
your main job location is the place where your work is cen-
tered, such as where you report for work or are otherwise
required to “base” your work.
If you have more than one job at any time, your main
job location depends on the facts in each case. The more
important factors to be considered are:
•
The total time you spend at each place,
•
The amount of work you do at each place, and
•
How much money you earn at each place.
Housing. The source of a housing fringe benefit is deter-
mined based on the location of your principal place of
work. A housing fringe benefit includes payments to you or
on your behalf (and your family's if your family resides with
you) only for the following.
•
Rent.
•
Utilities (except telephone charges).
•
Real and personal property insurance.
•
Occupancy taxes not deductible under section 164 or
216(a).
•
Nonrefundable fees for securing a leasehold.
•
Rental of furniture and accessories.
•
Household repairs.
•
Residential parking.
•
Fair rental value of housing provided in kind by your
employer.
A housing fringe benefit does not include:
•
Deductible interest and taxes (including deductible in-
terest and taxes of a tenant-stockholder in a coopera-
tive housing corporation);
•
The cost of buying property, including principal pay-
ments on a mortgage;
•
The cost of domestic labor (maids, gardeners, etc.);
•
Pay television subscriptions;
•
Improvements and other expenses that increase the
value or appreciably prolong the life of property;
•
Purchased furniture or accessories;
•
Depreciation or amortization of property or improve-
ments;
•
The value of meals or lodging that you exclude from
gross income; or
•
The value of meals or lodging that you deduct as mov-
ing expenses.
The deduction for moving expenses is available only if
you are a member of the U.S. Armed Forces on active
duty and move due to a permanent change of duty station.
Education. The source of an education fringe benefit for
the education expenses of your dependents is determined
based on the location of your principal place of work. An
education fringe benefit includes payments only for the fol-
lowing expenses for education at an elementary or secon-
dary school.
•
Tuition, fees, academic tutoring, special needs serv-
ices for a special needs student, books, supplies, and
other equipment.
•
Room and board and uniforms that are required or
provided by the school in connection with enrollment
or attendance.
Local transportation. The source of a local transporta-
tion fringe benefit is determined based on the location of
your principal place of work. Your local transportation
fringe benefit is the amount that you receive as compen-
sation for local transportation for you or your spouse or de-
pendents at the location of your principal place of work.
The amount treated as a local transportation fringe benefit
is limited to actual expenses incurred for local transporta-
tion and the fair rental value of any employer-provided ve-
hicle used predominantly by you, your spouse, or your de-
pendents for local transportation. Actual expenses do not
include the cost (including interest) of any vehicle pur-
chased by you or on your behalf.
Tax reimbursement. The source of a tax reimbursement
fringe benefit is determined based on the location of the
jurisdiction that imposed the tax for which you are reim-
bursed.
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Moving expense reimbursement. The source of a mov-
ing expense reimbursement is generally based on the lo-
cation of your new principal place of work. However, the
source is determined based on the location of your former
principal place of work if you provide sufficient evidence
that such determination of source is more appropriate un-
der the facts and circumstances of your case. Sufficient
evidence generally requires an agreement between you
and your employer, or a written statement of company pol-
icy, which is reduced to writing before the move and which
is entered into or established to induce you or other em-
ployees to move to another country. The written statement
or agreement must state that your employer will reimburse
you for moving expenses that you incur to return to your
former principal place of work regardless of whether you
continue to work for your employer after returning to that
location. It may contain certain conditions upon which the
right to reimbursement is determined as long as those
conditions set forth standards that are definitely ascertain-
able and can only be fulfilled prior to, or through comple-
tion of, your return move to your former principal place of
work.
Alternative Basis
If you are an employee, you can determine the source of
your compensation under an alternative basis if you estab-
lish 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 alterna-
tive basis, you must keep (and have available for inspec-
tion) 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 follow-
ing.
1. Your name and SSN (entered across the top of the
statement).
2. The specific compensation income, or the specific
fringe benefit, for which you are using the alternative
basis.
3. For each item in (2), the alternative basis of allocation
of source used.
4. For each item in (2), a computation showing how the
alternative allocation was computed.
5. A comparison of the dollar amount of the U.S. com-
pensation and foreign compensation sourced under
both the alternative basis and the time or geographi-
cal basis, discussed earlier.
Transportation Income
Transportation income is income from the use of a vessel
or aircraft or for the performance of services directly rela-
ted 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 connec-
tion 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. territory. For non-
resident aliens, this only applies to income derived from,
or in connection with, an aircraft.
For information on how U.S. source transportation in-
come is taxed, see chapter 4.
Scholarships, Grants, Prizes, and
Awards
Generally, the source of scholarships, fellowship grants,
grants, prizes, and awards is the residence of the payer re-
gardless 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 Uni-
ted 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 in-
ternational organization under the International Organiza-
tions Immunities Act are from foreign sources.
Activities to be performed outside the United States.
Scholarships, fellowship grants, targeted grants, and ach-
ievement awards received by nonresident aliens for activi-
ties performed, or to be performed, outside the United
States are not U.S. source income.
These rules do not apply to amounts paid as sal-
ary or other compensation for services. See Per-
sonal Services, earlier, for the source rules that
apply.
Pensions and Annuities
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, pen-
sion, profit-sharing, or annuity plan (whether or not fun-
ded).
If you performed services as an employee of the United
States, you may receive a distribution from the U.S. Gov-
ernment under a plan, such as the Civil Service
CAUTION
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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.
Disaster tax relief. If you are required to file a U.S.
federal income tax return, you may be entitled to some
special disaster-related rules regarding the use of retire-
ment funds. For more information, see Pub. 590-B. Also,
go to IRS.gov/DisasterTaxRelief.
Tax relief for qualified disaster distributions and
repayments. Special rules provide for tax-favored with-
drawals and repayments to certain retirement plans (in-
cluding IRAs) for taxpayers who suffered economic losses
because of certain major disasters. For information about
reporting qualified disaster distributions and repayments,
see Form 8915-F, Qualified Disaster Retirement Plan Dis-
tributions and Repayments, and its instructions.
Rents or Royalties
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
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 in-
cludes gains, profits, and income from the sale or other
disposition of real property located in the United States.
Natural resources. The income from the sale of prod-
ucts of any farm, mine, oil or gas well, other natural de-
posit, or timber located in the United States and sold in a
foreign country, or located in a foreign country and sold in
the United States, is partly from sources in the United
States. For information on determining that part, see Reg-
ulations section 1.863-1(b).
Personal Property
Personal property is property, such as machinery, equip-
ment, 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 Uni-
ted States.
Tax home. Your tax home is the general area of your
main place of business, employment, or post of duty, re-
gardless of where you maintain your family home. Your tax
home is the place where you permanently or indefinitely
work as an employee or a self-employed individual. If you
do not have a regular or main place of business because
of the nature of your work, then your tax home is the place
where you regularly live. If you do not fit either of these
categories, you are considered an itinerant and your tax
home is wherever you work.
Inventory property. Inventory property is personal prop-
erty that is stock in trade or that is held primarily for sale to
customers in the ordinary course of your trade or busi-
ness. Income from the sale of inventory that you pur-
chased is sourced where the property is sold. Generally,
this is where title to the property passes to the buyer. For
example, income from the sale of inventory in the United
States is U.S. source income, whether you purchased it in
the United States or in a foreign country.
Income from the sale of inventory property that you pro-
duced in the United States and sold outside the United
States (or vice versa) is sourced where the property is
produced.
These rules apply even if your tax home is not in 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 al-
locate this part of the gain to sources in the United States
based on the ratio of U.S. depreciation adjustments to to-
tal 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 de-
ductions allowable for that year are treated as U.S. depre-
ciation adjustments. But there are some exceptions for
certain transportation, communications, and other prop-
erty 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 dis-
cussed 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 prop-
erty'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 deduc-
tion for depreciation or amortization or any other allowable
deduction that treats a capital expenditure as a deductible
expense.
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Intangible property. Intangible property includes pat-
ents, 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 de-
preciation 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 ap-
ply this rule.
Gain in excess of the amortization or depreciation de-
ductions is sourced in the country where the property is
used if the income from the sale is contingent on the pro-
ductivity, 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 in-
ventory 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, dis-
position, 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 Uni-
ted 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.
Community Income
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. territory, 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:
•
Both you and your spouse are nonresident aliens, or
•
One of you is a nonresident alien and the other is a
U.S. citizen or resident and you do not both choose to
be treated as U.S. residents as explained in Nonresi-
dent Spouse Treated as a Resident, earlier.
In these cases, you and your spouse must report com-
munity income as explained later.
Earned income. Earned income of a spouse, other than
trade or business income and a partner's distributive
share of partnership income, is treated as the income of
the spouse whose services produced the income. That
spouse must report all of it on their separate return.
Trade or business income. Trade or business income,
other than a partner's distributive share of partnership in-
come, is treated as the income of the spouse carrying on
the trade or business. That spouse must report all of it on
their separate return.
Partnership income (or loss). A partner's distributive
share of partnership income (or loss) is treated as the in-
come (or loss) of the partner. The partner must report all
of it on their separate return.
Separate property income. Income derived from the
separate property of one spouse (and which is not earned
income, trade or business income, or partnership distribu-
tive share income) is treated as the income of that spouse.
That spouse must report all of it on their separate return.
Use the appropriate community property law to determine
what is separate property.
Other community income. All other community income
is treated as provided by the applicable community prop-
erty laws.
3.
Exclusions From Gross
Income
Introduction
Resident and nonresident aliens are allowed exclusions
from gross income if they meet certain conditions. An ex-
clusion 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 com-
mon exclusions allowed to resident and nonresident ali-
ens.
Topics
This chapter discusses:
•
Nontaxable interest,
•
Nontaxable dividends,
•
Certain compensation paid by a foreign employer,
•
Gain from sale of home, and
•
Scholarships and fellowship grants.
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Useful Items
You may want to see:
Publication
54 Tax Guide for U.S. Citizens and Resident Aliens
Abroad
523 Selling Your Home
See chapter 12 for information about getting these publi-
cations.
Resident Aliens
Resident aliens may be able to exclude the following items
from their gross income.
Foreign Earned Income and Housing
Amount
If you are physically present in a foreign country or coun-
tries for at least 330 full days during any period of 12 con-
secutive months, you may qualify for the foreign earned in-
come exclusion. The exclusion is $120,000 in 2023. In
addition, you may be able to exclude or deduct certain for-
eign housing amounts. You may also qualify if you are a
bona fide resident of a foreign country and you are a citi-
zen or national of a country with which the United States
has an income tax treaty. For more information, see Pub.
54.
Foreign country. A foreign country is any territory under
the sovereignty of a government other than that of the Uni-
ted States.
The term “foreign country” includes the country's terri-
torial waters and airspace, but not international waters and
the airspace above them. It also includes the seabed and
subsoil of those submarine areas adjacent to the country's
territorial waters over which it has exclusive rights under
international law to explore and exploit the natural resour-
ces.
The term “foreign country” does not include U.S. territo-
ries. It does not include the Antarctic region.
Nonresident Aliens
Nonresident aliens can exclude the following items from
their gross income.
Interest Income
Interest income that is not connected with a U.S. trade or
business is excluded from income if it is from:
•
Deposits (including certificates of deposit) with per-
sons in the banking business;
•
Deposits or withdrawable accounts with mutual sav-
ings banks, cooperative banks, credit unions, domes-
tic building and loan associations, and other savings
54
523
institutions chartered and supervised as savings and
loan or similar associations under federal or state law
(if the interest paid or credited can be deducted by the
association); and
•
Amounts held by an insurance company under an
agreement to pay interest on them.
State and local government obligations. Interest on
obligations of a state or political subdivision, the District of
Columbia, or a U.S. territory is generally not included in in-
come. However, interest on certain private activity bonds,
arbitrage bonds, and certain bonds not in registered form
is included in income.
Portfolio interest. Interest and OID that qualifies as port-
folio interest is not subject to chapter 3 (of the Internal
Revenue Code) withholding under sections 1441 through
1443. However, such interest may be subject to withhold-
ing if it is a withholdable payment, and there is no excep-
tion to chapter 4 (of the Internal Revenue Code) withhold-
ing under sections 1471 through 1474. For more
information, see the discussion of portfolio interest under
Withholding on Specific Income in Pub. 515.
To qualify as portfolio interest, the interest must be paid
on obligations issued after July 18, 1984, and otherwise
subject to withholding. For obligations issued after March
18, 2012, portfolio interest does not include interest paid
on debt that is not in registered form. Before March 19,
2012, portfolio interest included interest on certain regis-
tered and nonregistered (bearer) bonds if the obligations
meet the requirements described below.
Obligations in registered form. Portfolio interest in-
cludes interest paid on an obligation that is in registered
form, and for which you have received documentation that
the beneficial owner of the obligation is not a U.S. person.
Generally, an obligation is in registered form if:
•
The obligation is registered as to both principal and
any stated interest with the issuer (or its agent) and
any transfer of the obligation may be effected only by
surrender of the old obligation and reissuance to the
new holder;
•
The right to principal and stated interest with respect
to the obligation may be transferred only through a
book entry system maintained by the issuer or its
agent; or
•
The obligation is registered as to both principal and
stated interest with the issuer or its agent and can be
transferred both by surrender and reissuance and
through a book entry system.
An obligation that would otherwise be considered to be
in registered form is not considered to be in registered
form as of a particular time if it can be converted at any
time in the future into an obligation that is not in registered
form. For more information on whether obligations are
considered to be in registered form, see the discussion of
portfolio interest under Withholding on Specific Income in
Pub. 515.
Obligations not in registered form. For obligations
issued before March 19, 2012, interest on an obligation
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that is not in registered form (bearer obligation) is portfolio
interest if the obligation is foreign targeted. A bearer obli-
gation is foreign targeted if:
•
There are arrangements to ensure that the obligation
will be sold, or resold in connection with the original is-
sue, only to a person who is not a U.S. person;
•
Interest on the obligation is payable only outside the
United States and its territories; and
•
The face of the obligation contains a statement that
any U.S. person who holds the obligation will be sub-
ject to limits under the U.S. income tax laws.
Documentation is not required for interest on bearer ob-
ligations to qualify as portfolio interest. In some cases,
however, you may need documentation for purposes of
Form 1099 reporting and backup withholding.
Interest that does not qualify as portfolio interest.
Payments to certain persons and payments of contingent
interest do not qualify as portfolio interest. You must with-
hold at the statutory rate on such payments unless some
other exception, such as a treaty provision, applies.
Contingent interest. Portfolio interest does not in-
clude contingent interest. Contingent interest is either of
the following.
1. Interest that is determined by reference to:
•
Any receipts, sales, or other cash flow of the
debtor or related person;
•
Income or profits of the debtor or related person;
•
Any change in value of any property of the debtor
or a related person; or
•
Any dividend, partnership distributions, or similar
payments made by the debtor or a related person.
For exceptions, see section 871(h)(4)(C).
2. Any other type of contingent interest that is identified
by the Secretary of the Treasury in regulations.
Related persons. Related persons include the follow-
ing.
•
Members of a family, including only brothers, sisters,
half brothers, half sisters, spouse, ancestors (parents,
grandparents, etc.), and lineal descendants (children,
grandchildren, etc.).
•
Any person who is a party to any arrangement under-
taken for the purpose of avoiding the contingent inter-
est rules.
•
Certain corporations, partnerships, and other entities.
For details, see Nondeductible Loss in chapter 2 of
Pub. 544.
Exception for existing debt. Contingent interest
does not include interest paid or accrued on any debt with
a fixed term that was issued:
•
On or before April 7, 1993; or
•
After April 7, 1993, pursuant to a written binding con-
tract in effect on that date and at all times thereafter
before that debt was issued.
Dividend Income
The following dividend income is exempt from the 30%
tax.
Certain dividends paid by foreign corporations.
There is no 30% tax on U.S. source dividends you receive
from a foreign corporation. See Exception under Divi-
dends in chapter 2 for how to figure the amount of U.S.
source dividends. This exemption does not apply to divi-
dend equivalent payments.
Certain interest-related dividends. There is no 30%
tax on interest-related dividends from sources within the
United States that you receive from a mutual fund or other
regulated investment company (RIC). The mutual fund will
designate in writing which dividends are interest-related
dividends.
Certain short-term capital gain dividends. There may
not be any 30% tax on certain short-term capital gain divi-
dends from sources within the United States that you re-
ceive from a mutual fund or other RIC. The mutual fund
will designate in writing which dividends are short-term
capital gain dividends. This tax relief will not apply to you if
you are present in the United States for 183 days or more
during your tax year.
Services Performed for Foreign
Employer
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 offi-
ces. Income for personal services performed in the Uni-
ted 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.
1. You perform personal services as an employee of or
under a contract with a nonresident alien individual,
foreign partnership, or foreign corporation not en-
gaged in a trade or business in the United States; or
you work for an office or place of business maintained
in a foreign country or territory of the United States by
a U.S. corporation, U.S. partnership, or U.S. citizen or
resident.
2. You perform these services while you are a nonresi-
dent alien temporarily present in the United States for
a period or periods of not more than a total of 90 days
during the tax year.
3. Your pay for these services is not more than $3,000.
If you do not meet all three conditions, your income from
personal services performed in the United States is U.S.
source income and is taxed according to the rules in chap-
ter 4.
If your pay for these services is more than $3,000, the
entire amount is income from a trade or business within
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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 expen-
ses, if you were required to and did account to your em-
ployer for those expenses. If the advances or reimburse-
ments 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 2023, Henry Smythe, a nonresi-
dent alien from a nontreaty country, worked for an over-
seas office of a U.S. partnership. Henry, who uses the cal-
endar year as Henry’s tax year, was temporarily present in
the United States for 60 days during 2023 performing per-
sonal services for the overseas office of the partnership.
That office paid Henry a total gross salary of $2,800 for
those services. During 2023, Henry 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 per-
formed in the United States during 2023 was $4,500.
Henry received $2,875 in 2023, and $1,625 in 2024. Dur-
ing 2023, Henry was engaged in a trade or business in the
United States because the compensation for Henry’s per-
sonal 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.
Crew members. Compensation for services performed
by a nonresident alien in connection with the individual's
temporary presence in the United States as a regular crew
member of a foreign vessel (for example, a boat or ship)
engaged in transportation between the United States and
a foreign country or U.S. territory is not U.S. source in-
come and is exempt from U.S. tax. This exemption does
not apply to compensation for services performed on for-
eign aircraft.
Students and exchange visitors. Nonresident alien stu-
dents and exchange visitors present in the United States
under “F,” “J,” “M,” or “Q” visas can exclude from gross in-
come pay received from a foreign employer.
This group includes bona fide students, scholars, train-
ees, 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 enter-
ing the United States as an exchange visitor under the
Mutual Educational and Cultural Exchange Act of 1961.
Foreign employer. A foreign employer is:
•
A nonresident alien individual, foreign partnership, or
foreign corporation; or
•
An office or place of business maintained in a foreign
country or in a U.S. territory by a U.S. corporation, a
U.S. partnership, or an individual who is a U.S. citizen
or resident.
The term “foreign employer” does not include a foreign
government. Pay from a foreign government that is exempt
from U.S. income tax is discussed in chapter 10.
Income from certain annuities. Do not include in in-
come any annuity received under a qualified annuity plan
or from a qualified trust exempt from U.S. income tax if you
meet both of the following conditions.
1. You receive the annuity only because:
a. You performed personal services outside the Uni-
ted States while you were a nonresident alien; or
b. You performed personal services inside the United
States while you were a nonresident alien and you
met the three conditions, described earlier, under
Employees of foreign persons, organizations, or
offices.
2. At the time the first amount is paid as an annuity un-
der the plan (or by the trust), 90% or more of the em-
ployees for whom contributions or benefits are provi-
ded under the annuity plan (or under the plan of which
the trust is a part) are U.S. citizens or residents.
If the annuity qualifies under condition (1) but not condi-
tion (2) above, you do not have to include the amount in
income if:
•
You are a resident of a country that gives a substan-
tially equal exclusion to U.S. citizens and residents, or
•
You are a resident of a beneficiary developing country
under Title V of the Trade Act of 1974.
If you are not sure whether the annuity is from a quali-
fied annuity plan or qualified trust, ask the person who
made the payment.
Income affected by treaties. Income of any kind that is
exempt from U.S. tax under a treaty to which the United
States is a party is excluded from your gross income. In-
come on which the tax is only limited by treaty, however, is
included in gross income. See chapter 9.
Gambling Winnings From Dog or
Horse Racing
You can exclude from your gross income winnings from le-
gal wagers initiated outside the United States in a pari-mu-
tuel pool with respect to a live horse or dog race in the
United States.
Gain From the Sale of Your
Main Home
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
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are married and file a joint return, you may be able to ex-
clude up to $500,000. For information on the requirements
for this exclusion, see Pub. 523.
This exclusion does not apply if you are subject to
the expatriation tax rules discussed in chapter 4.
Scholarships and Fellowship
Grants
If you are a candidate for a degree, you may be able to ex-
clude from your income part or all of the amounts you re-
ceive as a qualified scholarship. The rules discussed here
apply to both resident and nonresident aliens.
If a nonresident alien receives a grant that is not
from U.S. sources, it is not subject to U.S. tax.
See Scholarships, Grants, Prizes, and Awards in
chapter 2 to determine whether your grant is from U.S.
sources.
A scholarship or fellowship is excludable from income
only if:
1. You are a candidate for a degree at an eligible educa-
tional institution, and
2. You use the scholarship or fellowship to pay qualified
education expenses.
Candidate for a degree. You are a candidate for a de-
gree if you:
1. Attend a primary or secondary school or are pursuing
a degree at a college or university; or
2. Attend an accredited educational institution that is au-
thorized to provide:
a. A program that is acceptable for full credit toward
a bachelor's or higher degree, or
b. A program of training to prepare students for gain-
ful employment in a recognized occupation.
Eligible educational institution. An eligible educa-
tional institution is one that maintains a regular faculty and
curriculum and normally has a regularly enrolled body of
students in attendance at the place where it carries on its
educational activities.
Qualified education expenses. These are expenses
for:
•
Tuition and fees required to enroll at or attend an eligi-
ble educational institution; and
•
Course-related expenses, such as fees, books, sup-
plies, and equipment that are required for the courses
at the eligible educational institution. These items
must be required of all students in your course of in-
struction.
However, in order for these to be qualified education ex-
penses, the terms of the scholarship or fellowship cannot
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require that it be used for other purposes, such as room
and board, or specify that it cannot be used for tuition or
course-related expenses.
Expenses that do not qualify. Qualified education
expenses do not include the cost of:
•
Room and board,
•
Travel,
•
Research,
•
Clerical help, or
•
Equipment and other expenses that are not required
for enrollment in or attendance at an eligible educa-
tional institution.
This is true even if the fee must be paid to the institution as
a condition of enrollment or attendance. Scholarship or
fellowship amounts used to pay these costs are taxable.
Amounts used to pay expenses that do not qualify. A
scholarship amount used to pay any expense that does
not qualify is taxable, even if the expense is a fee that
must be paid to the institution as a condition of enrollment
or attendance.
Payment for services. You cannot exclude from income
the portion of any scholarship, fellowship, or tuition reduc-
tion that represents payment for past, present, or future
teaching, research, or other services. This is true even if
all candidates for a degree are required to perform the
services as a condition for receiving the degree.
Example. On January 7, Maria Gomez is notified of a
scholarship of $2,500 for the spring semester. As a condi-
tion for receiving the scholarship, Maria must serve as a
part-time teaching assistant. Of the $2,500 scholarship,
$1,000 represents payment for Maria’s services. Assum-
ing that Maria meets all other conditions, Maria can ex-
clude no more than $1,500 from income as a qualified
scholarship.
4.
How Income of Aliens Is
Taxed
Introduction
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
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you receive during the tax year is effectively connected
with a U.S. trade or business and how it is taxed.
Topics
This chapter discusses:
•
Income that is effectively connected with a U.S. trade
or business,
•
Income that is not effectively connected with a U.S.
trade or business,
•
Interrupted period of residence, and
•
Expatriation tax.
Useful Items
You may want to see:
Publication
544 Sales and Other Dispositions of Assets
1212 Guide to Original Issue (OID) Instruments
Form (and Instructions)
6251 Alternative Minimum Tax—Individuals
Schedule D (Form 1040) Capital Gains and Losses
See chapter 12 for information about getting these publi-
cations and forms.
Resident Aliens
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 gradu-
ated 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. citi-
zens.
Nonresident Aliens
A nonresident alien's income that is subject to U.S. in-
come tax must be divided into two categories.
1. Income that is effectively connected with a trade or
business in the United States, and
2. Income that is not effectively connected with a trade
or business in the United States (discussed under
The 30% Tax, later).
The difference between these two categories is that ef-
fectively 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 ef-
fectively connected is taxed at a flat 30% (or lower treaty)
rate.
544
1212
6251
Schedule D (Form 1040)
If you were formerly a U.S. citizen or resident
alien, these rules may not apply. See Expatriation
Tax, later, in this chapter.
Trade or Business in the United
States
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 busi-
ness. 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.
Personal Services
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.
Certain compensation paid to a nonresident alien
by a foreign employer is not included in gross in-
come. For more information, see Services Per-
formed for Foreign Employer in chapter 3.
Other Trade or Business Activities
Other examples of being engaged in a trade or business
in the United States follow.
Students and trainees. If you are temporarily present in
the United States as a nonimmigrant under an “F,” “J,” “M,”
or “Q” visa, and not otherwise engaged in a trade or busi-
ness, you are considered to be engaged in a trade or busi-
ness in the United States if you have taxable income from
participation in a scholarship or fellowship described in
section 1441(b). The taxable part of any scholarship or fel-
lowship grant that is U.S. source income is treated as ef-
fectively connected with a trade or business in the United
States.
Note. A nonresident alien temporarily present in the
United States under a “J” visa includes a nonresident alien
individual admitted to the United States as an exchange
visitor under the Mutual Educational and Cultural Ex-
change Act of 1961.
Business operations. If you own and operate a busi-
ness in the United States selling services, products, or
merchandise, you are, with certain exceptions, engaged in
a trade or business in the United States.
Partnerships. If you are a member of a partnership that
at any time during the tax year is engaged in a trade or
business in the United States, you are considered to be
engaged in a trade or business in the United States.
Beneficiary of an estate or trust. If you are the benefi-
ciary of an estate or trust that is engaged in a trade or
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business in the United States, you are treated as being
engaged in the same trade or business.
Trading in stocks, securities, and commodities. If
your only U.S. business activity is trading in stocks, securi-
ties, 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 com-
modities that are usually traded on an organized commod-
ity 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.
Effectively Connected Income
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 in-
come) is treated as effectively connected income. This ap-
plies 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
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.
1. Fixed or determinable income (interest, dividends,
rents, royalties, premiums, annuities, etc.).
2. Gains (some of which are considered capital gains)
from the sale or exchange of the following types of
property.
•
Timber, coal, or domestic iron ore with a retained
economic interest.
•
Patents, copyrights, and similar property on which
you receive contingent payments after October 4,
1966.
•
Patents transferred before October 5, 1966.
•
OID obligations.
3. Capital gains (and losses).
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 ef-
fectively connected with your U.S. trade or business. If the
tests indicate that the item of income is effectively connec-
ted, you must include it with your other effectively connec-
ted income. If the item of income is not effectively connec-
ted, include it with all other income discussed under The
30% Tax, later, in this chapter.
Asset-use test. This test usually applies to income that
is not directly produced by trade or business activities. Un-
der this test, if an item of income is from assets (property)
used in, or held for use in, the trade or business in the Uni-
ted States, it is considered effectively connected.
An asset is used in, or held for use in, the trade or busi-
ness in the United States if the asset is:
•
Held for the principal purpose of promoting the con-
duct of a trade or business in the United States;
•
Acquired and held in the ordinary course of the trade
or business conducted in the United States (for exam-
ple, an account receivable or note receivable arising
from that trade or business); or
•
Otherwise held to meet the present needs of the trade
or business in the United States and not its anticipated
future needs.
Generally, stock of a corporation is not treated as an asset
used in, or held for use in, a trade or business in the Uni-
ted States.
Business-activities test. This test usually applies when
income, gain, or loss comes directly from the active con-
duct of the trade or business. The business-activities test
is most important when:
•
Dividends or interest are received by a dealer in
stocks or securities,
•
Royalties are received in the trade or business of li-
censing patents or similar property, or
•
Service fees are earned by a servicing business.
Under this test, if the conduct of the U.S. trade or business
was a material factor in producing the income, the income
is considered effectively connected.
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Personal Service Income
You are usually engaged in a U.S. trade or business when
you perform personal services in the United States. Per-
sonal 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 serv-
ices. 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 be-
cause 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 as-
sets, 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 in-
come, gain, or loss is effectively connected.
Pensions. If you performed personal services in the Uni-
ted States after 1986, and in a later tax year, you receive
pension or retirement distributions attributable to these
services when you are a nonresident alien, such distribu-
tions are effectively connected income to the extent attrib-
utable to contributions. This is true whether or not you are
engaged in a U.S. trade or business in the year you re-
ceive the pension or retirement distributions.
Transportation Income
Transportation income (defined in chapter 2) is effectively
connected if you meet both of the following conditions.
1. You had a fixed place of business in the United States
involved in earning the income.
2. At least 90% of your U.S. source transportation in-
come is attributable to regularly scheduled transporta-
tion.
“Fixed place of business” generally means a place, site,
structure, or other similar facility through which you en-
gage in a trade or business. “Regularly scheduled trans-
portation” means that a ship or aircraft follows a published
schedule with repeated sailings or flights at regular inter-
vals between the same points for voyages or flights that
begin or end in the United States. This definition applies to
both scheduled and chartered air transportation.
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.
Business Profits and Losses and Sales
Transactions
All profits or losses from U.S. sources that are from the op-
eration 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 in-
ventory 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 part-
nership that is engaged in a trade or business in the Uni-
ted States is also effectively connected with a trade or
business in the United States.
Real Property Gain or Loss
Gains and losses from the sale or exchange of U.S. real
property interests (whether or not they are capital assets)
are taxed as if you are engaged in a trade or business in
the United States. You must treat the gain or loss as effec-
tively connected with that trade or business.
U.S. real property interest. This is any interest in real
property located in the United States or the U.S. Virgin Is-
lands or any interest (other than as a creditor) in a domes-
tic corporation that is a U.S. real property holding corpora-
tion. Real property includes the following.
1. Land and unsevered natural products of the land,
such as growing crops and timber, and mines, wells,
and other natural deposits.
2. Improvements on land, including buildings, other per-
manent structures, and their structural components.
3. Personal property associated with the use of real
property, such as equipment used in farming, mining,
forestry, or construction or property used in lodging fa-
cilities or rented office space, unless the personal
property is:
a. Disposed of more than 1 year before or after the
disposition of the real property, or
b. Separately sold to persons unrelated either to the
seller or to the buyer of the real property.
U.S. real property holding corporation. A corpora-
tion is a U.S. real property holding corporation if the fair
market value of the corporation's U.S. real property inter-
ests are at least 50% of the total fair market value of:
•
The corporation's U.S. real property interests; plus
•
The corporation's interests in real property located
outside the United States; plus
•
The corporation's other assets that are used in, or
held for use in, a trade or business.
Stock in any domestic corporation is treated as stock in
a U.S. real property holding corporation unless you estab-
lish that the corporation is not a U.S. real property holding
corporation.
Publicly traded exception. A U.S. real property inter-
est does not include a class of stock of a corporation that
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is regularly traded on an established securities market,
unless you hold more than 5% of the fair market value of
that class of stock (or more than 10% of that stock in the
case of real estate investment trusts (REITs). An interest in
a foreign corporation owning U.S. real property is gener-
ally not a U.S. real property interest unless the corporation
chooses to be treated as a domestic corporation.
Qualified investment entities (QIEs). Special rules ap-
ply to QIEs. A QIE is any REIT or any RIC that is treated
as a U.S. real property holding corporation (after applying
certain rules in section 897(h)(4)(A)(ii)). See U.S. Real
Property Interest in Pub. 515 for more information.
Look-through rule for QIEs. In most cases, any dis-
tribution from a QIE to a nonresident alien, foreign corpo-
ration, or other QIE that is attributable to the QIE’s gain
from the sale or exchange of a U.S. real property interest
is treated as gain recognized by the nonresident alien, for-
eign corporation, or other QIE from the sale or exchange
of a U.S. real property interest.
Certain exceptions apply to the look-through rule for
distributions by QIEs. A distribution by a QIE with respect
to stock regularly traded on an established securities mar-
ket in the United States is not treated as gain from the sale
or exchange of a U.S. real property interest if the share-
holder owns 5% or less of that stock (or 10% or less of
that stock in the case of a REIT) at any time during the
1-year period ending on the date of the distribution.
A distribution made by a REIT is generally not treated
as gain from the sale or exchange of a U.S. real property
interest if the shareholder is a qualified shareholder (as
described in section 897(k)(3)).
A distribution that you do not treat as gain from the sale
or exchange of a U.S. real property interest may be inclu-
ded in your gross income as a regular dividend.
Disposition of REIT stock. Dispositions of stock in a
REIT that is held directly (or indirectly through one or more
partnerships) by a qualified shareholder will not be treated
as a U.S. real property interest. See sections 897(k)(2)
through (4) for more information.
Domestically controlled QIE. The sale of an interest
in a domestically controlled QIE is not the sale of a U.S.
real property interest. The entity is domestically controlled
if at all times during the testing period less than 50% in
value of its stock was held, directly or indirectly, by foreign
persons. The testing period is the shorter of the:
•
5-year period ending on the date of disposition, or
•
Period during which the entity was in existence.
For the purpose of determining whether a QIE is do-
mestically controlled, the following rules apply.
1. A person holding less than 5% of any class of stock of
the QIE, which is regularly traded on an established
securities market in the United States at all times dur-
ing the testing period, would be treated as a U.S. per-
son unless the QIE has actual knowledge that such
person is not a U.S. person.
2. Any stock in a QIE that is held by another QIE will be
treated as held by a foreign person if:
a. Any class of stock of such other QIE is regularly
traded on an established securities market, or
b. Such other QIE is a RIC that issues certain re-
deemable securities.
Notwithstanding the above, the stock of the QIE will
be treated as held by a U.S. person if such other QIE
is domestically controlled.
3. Stock in a QIE held by any other QIE not described
above will be treated as held by a U.S. person in pro-
portion to the stock of such other QIE that is (or is
treated as) held by a U.S. person.
Wash sale. If you dispose of an interest in a domesti-
cally controlled QIE in an applicable wash sale transac-
tion, special rules apply. An applicable wash sale transac-
tion is one in which you:
1. Dispose of an interest in the domestically controlled
QIE during the 30-day period before the ex-dividend
date of a distribution that you would (but for the dispo-
sition) have treated as gain from the sale or exchange
of a U.S. real property interest; and
2. Acquire, or enter into a contract or option to acquire, a
substantially identical interest in that entity during the
61-day period that began on the first day of the 30-day
period.
If this occurs, you are treated as having a gain from the
sale or exchange of a U.S. real property interest in an
amount equal to the distribution that would have been
treated as such gain. This also applies to any substitute
dividend payment.
A transaction is not treated as an applicable wash sale
transaction if:
•
You actually receive the distribution from the domesti-
cally controlled QIE related to the interest disposed of,
or acquired, in the transaction; or
•
You dispose of any class of stock in a QIE that is regu-
larly traded on an established securities market in the
United States but only if you did not own more than
5% of that class of stock at any time during the 1-year
period ending on the date of the distribution.
Alternative minimum tax. There may be a minimum tax
on your net gain from the disposition of U.S. real property
interests. Figure the amount of this tax, if any, on Form
6251.
Withholding of tax. If you dispose of a U.S. real property
interest, the buyer may have to withhold tax. See the dis-
cussion of Tax withheld on real property sales in chap-
ter 8.
Gain or Loss of Foreign Persons 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 en-
gaged) in a trade or business within the United States and
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you directly or indirectly dispose of that interest, then the
gain or loss from the disposition of that partnership inter-
est 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 busi-
ness 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 ef-
fectively 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 af-
ter December 26, 2018. See Regulations section 1.864(c)
(8)-1(j).
Foreign Income
You must treat three kinds of foreign source income as ef-
fectively connected with a trade or business in the United
States if:
•
You have an office or other fixed place of business in
the United States to which the income can be attrib-
uted,
•
That office or place of business is a material factor in
producing the income, and
•
The income is produced in the ordinary course of the
trade or business carried on through that office or
other fixed place of business.
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 be-
low.
1. Rents and royalties for the use of, or for the privilege
of using, intangible personal property located outside
the United States or from any interest in such prop-
erty. Included are rents or royalties for the use, or for
the privilege of using, outside the United States, pat-
ents, copyrights, secret processes and formulas,
goodwill, trademarks, trade brands, franchises, and
similar properties if the rents or royalties are from the
active conduct of a trade or business in the United
States.
2. Dividends, interest, or amounts received for the provi-
sion of a guarantee of indebtedness issued after Sep-
tember 27, 2010, from the active conduct of a bank-
ing, financing, or similar business in the United States.
A substitute dividend or interest payment received un-
der a securities lending transaction or a sale-repurch-
ase transaction is treated the same as the amounts
received on the transferred security.
3. Income, gain, or loss from the sale outside the United
States, through the U.S. office or other fixed place of
business, of:
a. Stock in trade,
b. Property that would be included in inventory if on
hand at the end of the tax year, or
c. Property held primarily for sale to customers in the
ordinary course of business.
Item (3) will not apply if you sold the property for
use, consumption, or disposition outside the United
States and an office or other fixed place of business in
a foreign country was a material factor in the sale.
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, for-
eign source interest and dividend equivalents are treated
as U.S. effectively connected income if the income is de-
rived by a foreign person in the active conduct of a bank-
ing, financing, or similar business within the United States.
Tax on Effectively Connected Income
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 in-
come 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 ex-
change 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 in-
come in the tax year you received them.
Example. Ted Richards entered the United States in
August 2022 to perform personal services in the U.S. of-
fice of an overseas employer. Ted worked in the U.S. office
until December 25, 2022, but did not leave this country
until January 11, 2023. On January 8, 2023, Ted received
the final paycheck for services performed in the United
States during 2022. All of Ted's income during Ted’s stay
here is U.S. source income.
During 2022, Ted was engaged in the trade or business
of performing personal services in the United States.
Therefore, all amounts paid to him in 2022 for services
performed in the United States during 2022 are effectively
connected with that trade or business during 2022.
The salary payment Ted received in January 2023 is
U.S. source income to Ted in 2023. It is effectively connec-
ted income because Ted performed the services that
earned the income in the United States in 2022 and,
therefore, Ted would have been treated as engaged in a
trade or business in the United States during 2022.
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Real property income. You may be able to choose to
treat all income from real property as effectively connec-
ted. See Income From Real Property, later, in this chapter.
The 30% Tax
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 busi-
ness.
Fixed or Determinable Income
The 30% (or lower treaty) rate applies to the gross amount
of U.S. source fixed, determinable, annual, or periodical
(FDAP) 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 determina-
ble 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 in-
come are interest (other than OID), dividends, dividend
equivalent payments (defined in chapter 2), rents, premi-
ums, annuities, salaries, wages, and other compensation.
A substitute dividend or interest payment received under a
securities lending transaction or a sale-repurchase trans-
action is treated the same as the amounts received on the
transferred security. Other items of income, such as royal-
ties, may also be subject to the 30% tax.
Some fixed or determinable income may be ex-
empt from U.S. tax. See chapter 3 if you are not
sure whether the income is taxable.
Original issue discount (OID). If you sold, exchanged,
or received a payment on a bond or other debt instrument
that was issued at a discount, all or part of the OID (other
than portfolio interest) may be subject to the 30% tax. The
amount of OID is the difference between the stated re-
demption price at maturity and the issue price of the debt
instrument. The 30% tax applies in the following circum-
stances.
1. You received a payment on a debt instrument. In this
case, the amount of OID subject to tax is the OID that
accrued while you held the debt instrument minus the
OID previously taken into account. But the tax on the
OID cannot be more than the payment minus the tax
on the interest payment on the debt instrument.
2. You sold or exchanged the debt instrument. The
amount of OID subject to tax is the OID that accrued
while you held the debt instrument minus the amount
already taxed in (1) above.
Report on your return the amount of OID shown on
Form 1042-S if you bought the debt instrument at original
TIP
issue. However, you must recompute your proper share of
OID shown on Form 1042-S if any of the following apply.
•
You bought the debt instrument at a premium or paid
an acquisition premium.
•
The debt instrument is a stripped bond or a stripped
coupon (including zero coupon instruments backed by
U.S. Treasury securities).
•
The debt instrument is a contingent payment or infla-
tion-indexed debt instrument.
For the definition of premium and acquisition premium and
instructions on how to recompute OID, see Pub. 1212.
Gambling Winnings
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 in-
come a nonresident alien wins playing blackjack, bac-
carat, 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 effec-
tively connected with a U.S. trade or business.
Social Security Benefits
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 FDAP in-
come. Social security benefits include monthly retirement,
survivor, and disability benefits. This income is exempt un-
der some tax treaties. See Table 1 in the Tax Treaty Ta-
bles, available at IRS.gov/TreatyTables for a list of tax trea-
ties that exempt U.S. social security benefits from U.S. tax.
For more information, see Pub. 915.
Sales or Exchanges of Capital Assets
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:
•
Inventory;
•
Business accounts or notes receivable;
•
Depreciable property used in a trade or business;
•
Real property used in a trade or business;
•
Supplies regularly used in a trade or business;
•
Certain copyrights, literary or musical or artistic com-
positions, letters or memoranda, or similar property;
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•
Certain U.S. Government publications;
•
Certain commodities derivative financial instruments
held by a commodities derivatives dealer; or
•
Hedging transactions.
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 ex-
change of a capital asset.
If the sale is in foreign currency, for the purpose of de-
termining gain, the cost and selling price of the property
should be expressed in U.S. currency at the rate of ex-
change 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 ex-
change of a capital asset, or what is treated as such. Spe-
cific 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.
1. Gains on the disposal of timber, coal, or domestic iron
ore with a retained economic interest.
2. Gains on contingent payments received from the sale
or exchange of patents, copyrights, and similar prop-
erty after October 4, 1966.
3. Gains on certain transfers of all substantial rights to,
or an undivided interest in, patents if the transfers
were made before October 5, 1966.
4. Gains on the sale or exchange of OID obligations.
Gains in (1) are not subject to the 30% (or lower treaty)
rate if you choose to treat the gains as effectively connec-
ted with a U.S. trade or business. See Income From Real
Property, later.
183-day rule. If you were in the United States for 183
days or more during the tax year, your net gain from sales
or exchanges of capital assets is taxed at a 30% (or lower
treaty) rate. For purposes of the 30% (or lower treaty) rate,
net gain is the excess of your capital gains from U.S. sour-
ces over your capital losses from U.S. sources. This rule
applies even if any of the transactions occurred while you
were not in the United States.
To determine your net gain, consider the amount of
your gains and losses that would be recognized and taken
into account only if, and to the extent that, they would be
recognized and taken into account if you were in a U.S.
trade or business during the year and the gains and los-
ses were effectively connected with that trade or business
during the tax year.
In arriving at your net gain, do not take the following into
consideration.
•
The four types of gains listed earlier.
•
The deduction for a capital loss carryover.
•
Capital losses in excess of capital gains.
•
Exclusion for gain from the sale or exchange of quali-
fied small business stock (section 1202 exclusion).
•
Losses from the sale or exchange of property held for
personal use. However, losses resulting from casual-
ties or thefts attributable to a federally declared disas-
ter may be deductible on Schedule A (Form
1040-NR). See Itemized Deductions in chapter 5.
If you are not engaged in a trade or business in the Uni-
ted States and have not established a tax year for a prior
period, your tax year will be the calendar year for purpo-
ses of the 183-day rule. Also, you must file your tax return
on a calendar year basis.
If you were in the United States for less than 183 days
during the tax year, capital gains (other than gains listed
earlier) are tax exempt unless they are effectively connec-
ted with a trade or business in the United States during
your tax year.
Reporting. Report your gains and losses from the sales
or exchanges of capital assets that are not effectively con-
nected with a trade or business in the United States on
Schedule NEC (Form 1040-NR). Report gains and losses
from sales or exchanges of capital assets (including real
property) that are effectively connected with a trade or
business in the United States on a separate Schedule D
(Form 1040) or Form 4797, or both. Attach them to Form
1040-NR.
Income From Real Property
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 in-
come from any interest in such property. This includes in-
come 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 attrib-
utable to the real property income and only your net in-
come 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 be-
ing engaged in a trade or business in the United States
during the year.
Example. You are a nonresident alien and are not en-
gaged in a U.S. trade or business. You own a single-family
house in the United States that you rent out. Your rental in-
come 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)
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rate. You received a Form 1042-S showing that your ten-
ants properly withheld this tax from the rental income. You
do not have to file a U.S. tax return (Form 1040-NR) be-
cause 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 state-
ment, discussed next.
Making the choice. Make the initial choice by attaching
a statement to your return, or amended return, for the year
of the choice. Include the following in your statement.
•
That you are making the choice.
•
Whether the choice is under section 871(d) (explained
earlier) or a tax treaty.
•
A complete list of all your real property, or any interest
in real property, located in the United States. Give the
legal identification of U.S. timber, coal, or iron ore in
which you have an interest.
•
The extent of your ownership in the property.
•
The location of the property.
•
A description of any major improvements to the prop-
erty.
•
The dates you owned the property.
•
Your income from the property.
•
Details of any previous choices and revocations of the
real property income choice.
This choice stays in effect for all later tax years unless
you revoke it.
Revoking the choice. You can revoke the choice with-
out IRS approval by filing Form 1040-X for the year you
made the choice and for later tax years. You must file
Form 1040-X within 3 years from the date your return was
filed or 2 years from the time the tax was paid, whichever
is later. If this time period has expired for the year of
choice, you cannot revoke the choice for that year. How-
ever, you may revoke the choice for later tax years only if
you have IRS approval. For information on how to get IRS
approval, see Regulations section 1.871-10(d)(2).
Note. You can file your Form 1040-X electronically be-
ginning with the 2019 tax year. For more information, see
IR-2020-107.
Transportation Tax
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).
•
Your name, TIN, and tax year.
•
A description of the types of services performed
(whether on or off board).
•
Names of vessels or registration numbers of aircraft
on which you performed the services.
•
Amount of U.S. source transportation income derived
from each type of service for each vessel or aircraft for
the calendar year.
•
Total amount of U.S. source transportation income de-
rived from all types of services for the calendar year.
This 4% tax applies to your U.S. source gross transpor-
tation 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. territory. For personal services of a nonresident
alien, this only applies to income derived from, or in con-
nection with, an aircraft.
Interrupted Period of
Residence
You are subject to tax under a special rule if you interrupt
your period of U.S. residence with a period of nonresi-
dence. The special rule applies if you meet all of the fol-
lowing conditions.
1. You were a U.S. resident for a period that includes at
least 3 consecutive calendar years.
2. You were a U.S. resident for at least 183 days in each
of those years.
3. You ceased to be treated as a U.S. resident.
4. You then again became a U.S. resident before the end
of the third calendar year after the end of the period
described in (1) above.
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, en-
tered the United States on April 1, 2018, as a lawful per-
manent resident. On August 1, 2020, John ceased to be a
lawful permanent resident and returned to New Zealand.
During John’s period of residence, John was present in
the United States for at least 183 days in each of 3
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consecutive years (2018, 2019, and 2020). John returned
to the United States on October 5, 2023, as a lawful per-
manent resident. John became a resident before the close
of the third calendar year (2023) beginning after the end of
John’s first period of residence (August 1, 2020). There-
fore, John is subject to tax under the special rule for the
period of nonresidence (August 2, 2020, through October
4, 2023) if it is more than the tax that would normally apply
to John as a nonresident alien.
Reporting requirements. If you are subject to this tax
for any year in the period you were a nonresident alien,
you must file Form 1040-NR for that year. The return is
due by the due date (including extensions) for filing your
U.S. income tax return for the year that you again become
a U.S. resident. If you already filed returns for that period,
you must file amended returns. You must attach a state-
ment to your return that identifies the source of all of your
U.S. and foreign gross income and the items of income
subject to this special rule.
Expatriation Tax
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 in-
dividuals 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.
If you renounced your citizenship or terminated
your long-term residency after June 3, 2004, and
before June 17, 2008, you will still be considered
a U.S. citizen or a U.S. resident for tax purposes until you
notify the Department of State or Department of Home-
land Security (as applicable) of your expatriation and file
Form 8854 with the IRS.
Long-term resident (LTR) defined. You are an LTR if
you were a lawful permanent resident of the United States
in at least 8 of the last 15 tax years ending with the year
your residency ends. In determining if you meet the 8-year
requirement, do not count any year that you are treated as
a resident of a foreign country under a tax treaty and do
not waive treaty benefits.
Expatriation After June 16, 2008
Expatriation date. Your expatriation date is the date you
relinquish U.S. citizenship (in the case of a former citizen)
or terminate your long-term residency (in the case of a for-
mer U.S. resident).
Former U.S. citizen. You are considered to have relin-
quished your U.S. citizenship on the earliest of the follow-
ing dates.
CAUTION
!
1. The date you renounced U.S. citizenship before a dip-
lomatic or consular officer of the United States (provi-
ded that the voluntary renouncement was later con-
firmed by the issuance of a certificate of loss of
nationality).
2. The date you furnished to the State Department a
signed statement of voluntary relinquishment of U.S.
nationality confirming the performance of an expatriat-
ing act (provided that the voluntary relinquishment
was later confirmed by the issuance of a certificate of
loss of nationality).
3. The date the State Department issued a certificate of
loss of nationality.
4. The date that a U.S. court canceled your certificate of
naturalization.
Former LTR. You are considered to have terminated
your long-term residency on the earliest of the following
dates.
1. The date you voluntarily relinquished your lawful per-
manent resident status by filing Department of Home-
land Security Form I-407 with a U.S. consular or immi-
gration officer.
2. The date you became subject to a final administrative
order that you abandoned your lawful permanent resi-
dent status (or, if such order has been appealed, the
date of a final judicial order issued in connection with
such administrative order).
3. The date you became subject to a final administrative
order for your removal from the United States under
the Immigration and Nationality Act.
4. If you were a dual resident of the United States and a
country with which the United States has an income
tax treaty, the date you began to be treated as a resi-
dent of that country under the provisions of the treaty
and notified the IRS of that treatment on Forms 8833
and 8854. See Effect of Tax Treaties in chapter 1 for
more information about dual residents.
Covered expatriate. If you expatriated after June 16,
2008, you are treated as a covered expatriate, and the ex-
patriation rules under section 877A apply to you if you
meet any of the following conditions.
1. Your average annual net income tax for the 5 years
ending before the date of expatriation or termination
of residency is more than the following.
a. $139,000 if you expatriated or terminated resi-
dency in 2008.
b. $145,000 if you expatriated or terminated resi-
dency in 2009 or 2010.
c. $147,000 if you expatriated or terminated resi-
dency in 2011.
d. $151,000 if you expatriated or terminated resi-
dency in 2012.
e. $155,000 if you expatriated or terminated resi-
dency in 2013.
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f. $157,000 if you expatriated or terminated resi-
dency in 2014.
g. $160,000 if you expatriated or terminated resi-
dency in 2015.
h. $161,000 if you expatriated or terminated resi-
dency in 2016.
i. $162,000 if you expatriated or terminated resi-
dency in 2017.
j.
$165,000 if you expatriated or terminated resi-
dency in 2018.
k.
$168,000 if you expatriated or terminated resi-
dency in 2019.
l.
$171,000 if you expatriated or terminated resi-
dency in .
m.
$172,000 if you expatriated or terminated resi-
dency in 2021.
n.
$178,000 if you expatriated or terminated resi-
dency in 2022.
o.
$190,000 if you expatriated or terminated resi-
dency in 2023.
2. Your net worth is $2 million or more on the date of
your expatriation or termination of residency.
3. You fail to certify on Form 8854 that you have com-
plied with all U.S. federal tax obligations for the 5
years preceding the date of your expatriation or termi-
nation of residency.
Relief procedures for certain former citizens. If you
were a U.S. citizen who expatriated after March 18, 2010,
you may be eligible for certain relief procedures that pro-
vide an alternative means for satisfying the tax compli-
ance certification process. For more information, see Re-
lief Procedures for Certain Former Citizens, available at
IRS.gov/Individuals/International-Taxpayers/Relief-
Procedures-for-Certain-Former-Citizens.
Exception for dual-citizens and certain minors. Cer-
tain dual-citizens and certain minors (defined next) are not
subject to the expatriation tax even if they meet (1) or (2)
above. However, they must still provide the certification re-
quired in (3) above.
Certain dual-citizens. You may qualify for the excep-
tion described above if both of the following apply.
•
You became at birth a U.S. citizen and a citizen of an-
other country and, as of the expatriation date, you
continue to be a citizen of, and are taxed as a resident
of, that other country.
•
You have been a resident of the United States for not
more than 10 years during the 15-year tax period end-
ing with the tax year during which the expatriation oc-
curs. For the purpose of determining U.S. residency,
use the substantial presence test described in chap-
ter 1.
Certain minors. You may qualify for the exception de-
scribed earlier if you meet both of the following require-
ments.
•
You expatriated before you were age 18
1
/2.
•
You have been a resident of the United States for not
more than 10 tax years before the expatriation occurs.
For the purpose of determining U.S. residency, use the
substantial presence test described in chapter 1.
How To Figure the Expatriation Tax if You
Are a Covered Expatriate
In the year you expatriate, you are subject to income tax
on the net unrealized gain (or loss) in your property as if
the property had been sold for its fair market value on the
day before your expatriation date (“mark-to-market tax”).
This applies to most types of property interests you held
on the date of relinquishment of citizenship or termination
of residency. But see Exceptions, later.
Gains arising from deemed sales must be taken into
account for the tax year of the deemed sale without regard
to other U.S. Internal Revenue laws. Losses from deemed
sales must be taken into account to the extent otherwise
provided under U.S. Internal Revenue laws. However, sec-
tion 1091 (relating to the disallowance of losses on wash
sales of stock and securities) does not apply. The net gain
that you must otherwise include in your income is reduced
(but not below zero) by the following.
1. $600,000 if you expatriated or terminated residency
before January 1, 2009.
2. $626,000 if you expatriated or terminated residency in
2009.
3. $627,000 if you expatriated or terminated residency in
2010.
4. $636,000 if you expatriated or terminated residency in
2011.
5. $651,000 if you expatriated or terminated residency in
2012.
6. $668,000 if you expatriated or terminated residency in
2013.
7. $680,000 if you expatriated or terminated residency in
2014.
8. $690,000 if you expatriated or terminated residency in
2015.
9. $693,000 if you expatriated or terminated residency in
2016.
10.
$699,000 if you expatriated or terminated residency in
2017.
11.
$711,000 if you expatriated or terminated residency in
2018.
12.
$725,000 if you expatriated or terminated residency in
2019.
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13.
$737,000 if you expatriated or terminated residency
in .
14.
$744,000 if you expatriated or terminated residency in
2021.
15.
$767,000 if you expatriated or terminated residency in
2022.
16.
$821,000 if you expatriated or terminated residency in
2023.
Exceptions. The mark-to-market tax does not apply to
the following.
1. Eligible deferred compensation items.
2. Ineligible deferred compensation items.
3. Interests in nongrantor trusts.
4. Specified tax deferred accounts.
Instead, items (1) and (3) may be subject to withholding at
source. In the case of item (2), you are treated as receiv-
ing the present value of your accrued benefit as of the day
before your expatriation date. In the case of item (4), you
are treated as receiving a distribution of your entire inter-
est in the account on the day before your expatriation
date. See Notice 2009-85 and the Instructions for Form
8854 for more information.
Expatriation Tax Return
You must file an initial Form 8854 in the year you relinquish
your U.S. citizenship or terminate your long-term resi-
dency, even if you are not a covered expatriate. In addi-
tion, you must file a Form 8854 annually after you expatri-
ate if you are a covered expatriate and you:
1. Deferred the payment of mark-to-market tax (see De-
ferral of payment of mark-to-market tax, later),
2. Have an item of eligible deferred compensation, or
3. Have an interest in a nongrantor trust.
Deferral of payment of mark-to-market tax. You can
make an irrevocable election to defer payment of the
mark-to-market tax imposed on the deemed sale of prop-
erty. If you make this election, the following rules apply.
1. You can make the election on a property-by-property
basis.
2. The deferred tax attributable to a particular property is
due on the return for the tax year in which you dispose
of the property.
3. Interest is charged for the period the tax is deferred.
4. The due date for the payment of the deferred tax can-
not be extended beyond the earlier of the following
dates.
a. The due date of the return required for the year of
death.
b. The time that the security provided for the property
fails to be adequate. See item (6) below.
5. You make the election on Form 8854.
6. You must provide adequate security (such as a bond).
7. You must make an irrevocable waiver of any right un-
der any treaty of the United States that would pre-
clude assessment or collection of the mark-to-market
tax.
For more information about the deferral of payment,
see the Instructions for Form 8854.
5.
Figuring Your Tax
Introduction
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 in-
formation in this chapter is not as comprehensive for resi-
dent 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 resi-
dent 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.
Topics
This chapter discusses:
•
Identification numbers,
•
Filing status,
•
Deductions,
•
Dependents,
•
Itemized deductions,
•
Tax credits and payments, and
•
Special rules for bona fide residents of American
Samoa and Puerto Rico.
Useful Items
You may want to see:
Publication
463 Travel, Gift, and Car Expenses
501 Dependents, Standard Deduction, and Filing
Information
521 Moving Expenses
526 Charitable Contributions
463
501
521
526
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597 Information on the United States–Canada
Income Tax Treaty
Form (and Instructions)
W-7 Application for IRS Individual Taxpayer
Identification Number
1040 U.S. Individual Income Tax Return
1040-SR U.S. Tax Return For Seniors
1040-NR U.S. Nonresident Alien Income Tax Return
2106 Employee Business Expenses
3903 Moving Expenses
4563 Exclusion of Income for Bona Fide Residents
of American Samoa
8959 Additional Medicare Tax
8990 Limitation on Business Interest Expense Under
Section 163(j)
See chapter 12 for information about getting these publi-
cations and forms.
Tax Year
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 con-
secutive months ending on December 31. If you have pre-
viously established a regular fiscal year (12 consecutive
months ending on the last day of a month other than De-
cember 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.
Identification Number
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 pro-
prietor and have employees or a qualified retirement plan.
You must furnish a TIN if you are:
•
An alien who has income effectively connected with
the conduct of a U.S. trade or business at any time
during the year;
•
An alien who has a U.S. office or place of business at
any time during the year;
•
A nonresident spouse treated as a resident, as dis-
cussed in chapter 1; or
•
Any other alien who files a tax return, an amended re-
turn, or a refund claim (but not information returns).
597
W-7
1040
1040-SR
1040-NR
2106
3903
4563
8959
8990
Social security number (SSN). Generally, you can get
an SSN if you have been lawfully admitted to the United
States for permanent residence or under other immigra-
tion categories that authorize U.S. employment.
To apply for a new SSN, you must submit Form SS-5,
Application for a Social Security Card, and the required
documents in person at your local Social Security Admin-
istration (SSA) office. To get Form SS-5, you can down-
load it at SSA.gov/forms, call the SSA at 800-772-1213, or
go to your local SSA office. For more information, go to
Social Security Number and Card.
International students. If you have an F-1, M-1, or
J-1 visa, see SSA Pub. 05-10181, available at SSA.gov/
Pubs/10181.html, for more information about the docu-
ments you must provide to prove your immigrant status.
Individual taxpayer identification number (ITIN). If
you already have an ITIN, enter it wherever an SSN is re-
quired on your tax return. If you do not have an ITIN 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 instruc-
tions.
If you qualify for an ITIN and your application is com-
plete, 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 so-
cial security benefits or change your employment or immi-
gration 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 al-
lowable 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.
Expired ITIN. Some ITINs must be renewed. If you
haven't used your ITIN on a federal tax return at least once
for tax year 2020, 2021, or 2022, it will expire on Decem-
ber 31, 2023, and must be renewed if you need to file a
federal tax return for tax year 2023. You do not need to re-
new your ITIN if you do not need to file a federal tax return.
To renew your ITIN, see Form W-7 and its instructions at
IRS.gov/FormW7. For more information, go to IRS.gov/
ITIN.
ITINs assigned before 2013 have expired and
must be renewed if you need to file a tax return for
tax year 2023. If you previously submitted a re-
newal application and it was approved, you do not need to
renew again unless you haven't used your ITIN on a fed-
eral tax return at least once for tax year 2020, 2021, or
2022.
Employer identification number (EIN). An individual
may use an SSN (or ITIN) for individual taxes and an EIN
for business taxes. To apply for an EIN, file Form SS-4
with the IRS.
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Filing Status
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 deter-
mining your filing status are different for resident aliens
and nonresident aliens.
Resident 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.
Married filing jointly. Generally, you can file as married
filing jointly only if both you and your spouse were U.S.
citizens or resident aliens for the entire tax year, or if you
choose to be a nonresident spouse treated as a resident,
as discussed in chapter 1.
Qualifying surviving spouse. If your spouse died in
2021 or 2022 and you did not remarry before the end of
2023, you may qualify to file as a qualifying surviving
spouse and use the joint return tax rates. This applies only
if you could have filed a joint return with your spouse for
the year your spouse died.
For more information on the qualifying surviving spouse
filing status, see Qualifying Surviving Spouse under Filing
Status in the 2023 Instructions for Form 1040.
Head of household. You can qualify as head of house-
hold if you are unmarried or considered unmarried on the
last day of the year and you pay more than half the cost of
keeping up a home for you and a qualifying person. You
must be a resident alien for the entire tax year.
You are considered unmarried for this purpose if your
spouse was a nonresident alien at any time during the
year and your spouse doesn’t choose to be treated as a
resident, as discussed in chapter 1 under Nonresident
Spouse Treated as a Resident.
Note. Even if you are considered unmarried for head of
household purposes because you are married to a non-
resident alien, you may still be considered married for pur-
poses of the earned income credit (EIC). In that case, you
will need to meet the special rule for separated spouses to
claim the credit. See Pub. 596 for more information.
Nonresident Aliens
If you are a nonresident alien filing Form 1040-NR, you
may be able to use one of the filing statuses discussed
later.
Married nonresident alien. Married nonresident aliens
who are not married to U.S. citizens or residents must
generally use the Tax Table column or the Tax Computa-
tion Worksheet for married filing separate returns when
determining the tax on income effectively connected with
a U.S. trade or business.
Exceptions. Married nonresident aliens normally can-
not use the Tax Table column or the Tax Computation
Worksheet for single individuals. However, you may be
able to file as single if you lived apart from your spouse
during the last 6 months of the year and you are a married
resident of Canada, Mexico, or South Korea, or are a mar-
ried U.S. national. See the Instructions for Form 1040-NR
to see if you qualify. “U.S. national” is defined later in this
section.
A nonresident alien generally cannot file as married fil-
ing jointly. However, a nonresident alien who is married to
a U.S. citizen or resident can choose to be treated as a
resident and file a joint return on Form 1040 or 1040-SR.
For information on these choices, see chapter 1. If you do
not make the choice to file jointly, file Form 1040-NR and
use the Tax Table column or the Tax Computation Work-
sheet for married individuals filing separately.
U.S. national. An individual who, although not a U.S.
citizen, owes their allegiance to the United States is con-
sidered a U.S. national. Also, U.S. nationals include Amer-
ican Samoans and Northern Mariana Islanders who
choose to become U.S. nationals instead of U.S. citizens.
Qualifying surviving spouse. If your spouse died in
2021 or 2022 and you did not remarry before the end of
2023, you may be eligible to file as a qualifying surviving
spouse and use the joint return tax rates.
For more information on the qualifying surviving spouse
filing status, see Qualifying Surviving Spouse under Filing
Status in the 2023 Instructions for Form 1040-NR.
Head of household. You cannot file as head of house-
hold if you are a nonresident alien at any time during the
tax year. However, if you are married, your spouse can
qualify as a head of household if:
•
Your spouse is a resident alien or U.S. citizen for the
entire tax year;
•
You do not choose to be treated as a resident alien;
and
•
Your spouse meets the other requirements for this fil-
ing status, as discussed earlier under Resident Aliens.
Note. Even if your spouse is considered unmarried for
head of household purposes because you are a nonresi-
dent alien, your spouse may still be considered married for
purposes of the EIC. In that case, your spouse will not be
entitled to the credit unless they meet the special rule for
separated spouses to claim the credit. See Pub. 596 for
more information.
Estates and trusts. A nonresident alien estate or trust
using Form 1040-NR must use the Tax Rate Schedule W
in the Instructions for Form 1040-NR when determining
the tax on income effectively connected with a U.S. trade
or business.
Special rules for aliens from certain U.S. territories.
A nonresident alien who is a bona fide resident of Ameri-
can Samoa or Puerto Rico for the entire tax year and who
is temporarily working in the United States should see
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Bona Fide Residents of American Samoa or Puerto Rico
at the end of this chapter for information about special
rules.
Reporting Your Income
You must report each item of income that is taxable ac-
cording 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 in-
cludes both income that is effectively connected with a
trade or business in the United States (subject to gradu-
ated 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).
Deductions
Resident and nonresident aliens can claim similar deduc-
tions on their U.S. tax returns. However, nonresident ali-
ens can generally claim only deductions related to income
that is effectively connected with their U.S. trade or busi-
ness.
Resident Aliens
You can claim the same deductions allowed to U.S. citi-
zens if you are a resident alien for the entire tax year.
While the discussion under Nonresident Aliens, later, con-
tains 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 deduc-
tions.
Nonresident Aliens
You can claim deductions to figure your effectively con-
nected taxable income (ECTI). 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.
Ordinary and necessary business expenses. You can
deduct all ordinary and necessary expenses in the opera-
tion of your U.S. trade or business to the extent they relate
to income effectively connected with that trade or busi-
ness. For information about other business expenses, see
Guide to Business Expense Resources at IRS.gov/
Pub535.
Qualified business income deduction. If you have in-
come effectively connected with a U.S. trade or business,
you may be able to deduct up to 20% of your qualified
business income from your qualified trade or business,
plus 20% of your qualified REIT dividends and qualified
publicly traded partnership (PTP) income. For more infor-
mation, see Line 13a in the Instructions for Form
1040-NR.
For more information on the qualified business income
deduction, see Form 8995, Form 8995-A and its sched-
ules, and the related instructions for the forms and sched-
ules.
Losses. You can deduct losses resulting from transac-
tions that you entered into for profit and that you were not
reimbursed for by insurance, etc., to the extent that they
relate to income that is effectively connected with a trade
or business in the United States.
Note. Beginning in 2021, and before 2026, you may
not deduct excess business losses. For 2023, an excess
business loss is the amount of losses from trades or busi-
nesses of a noncorporate taxpayer that is more than the
threshold amount of $289,000 ($578,000 for married tax-
payers filing a joint return).
Educator expenses. If you were an eligible educator in
2023, you can deduct as an adjustment to income up to
$300 in unreimbursed qualified expenses you paid or in-
curred during 2023 for certain professional development
courses, and for books, supplies (other than nonathletic
supplies for courses of instruction in health or physical ed-
ucation), computer equipment (including related software
and services), and other supplementary equipment and
materials you use in the classroom. For more information,
see your tax form instructions.
Qualified expenses include amounts paid or in-
curred in 2023 for personal protective equipment,
disinfectant, and other supplies used for the pre-
vention of the spread of coronavirus.
Individual retirement arrangement (IRA). If you made
contributions to a traditional IRA for 2023, 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, 2024, that shows all contributions to your tradi-
tional IRA for 2023. If you were covered by a retirement
plan (qualified pension, profit-sharing (including 401(k)),
annuity, SEP, SIMPLE, etc.) at work or through self-em-
ployment, your IRA deduction may be reduced or elimina-
ted. But you can still make contributions to a traditional
IRA even if you cannot deduct them. If you made nonde-
ductible contributions to a traditional IRA for 2023, you
must report them on Form 8606.
For more information, see Pub. 590-A.
Moving expenses. The deduction for moving expenses
is only available if you are a member of the U.S. Armed
Forces on active duty and, due to a military order, you
move because of a permanent change of station. For
more information, see Pub. 3. If you qualify, use Form
3903 to figure the amount to deduct.
Services or reimbursements provided by govern-
ment to members of the U.S. Armed Forces. Do not
include in income the value of moving and storage
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services provided by the government because of a move
pursuant to a military order incident to a permanent
change of station. Similarly, do not include in income
amounts received as a dislocation allowance, temporary
lodging expense, temporary lodging allowance, or
move-in housing allowance. For more information, see
Pub. 3.
Self-employed SEP, SIMPLE, and qualified retirement
plans. If you are self-employed, you may be able to de-
duct contributions to a SEP, SIMPLE, or qualified retire-
ment plan that provides retirement benefits for yourself
and your common-law employees, if any. To make deduc-
tible contributions for yourself, you must have net earnings
from self-employment that are effectively connected with
your U.S. trade or business.
See Pub. 560 for further information.
Penalty on early withdrawal of savings. You must in-
clude in income all effectively connected interest income
you receive or that is credited to your account during the
year. Do not reduce it by any penalty you must pay on an
early withdrawal from a time savings account. However, if
the interest income is effectively connected with your U.S.
trade or business during the year, you can deduct on
line 18 of Schedule 1 (Form 1040) the amount of the early
withdrawal penalty that the banking institution charged. At-
tach Schedule 1 (Form 1040) to your Form 1040-NR.
Student loan interest deduction. If you paid interest in
2023 on a qualified student loan, you may be able to de-
duct up to $2,500 of the interest you paid. Generally, you
can claim the deduction if all the requirements are met.
The deduction is taken on line 21 of Schedule 1 (Form
1040). Attach Schedule 1 (Form 1040) to your Form
1040-NR.
To figure the deduction, see the Instructions for Form
1040-NR. For more information, see Pub. 970.
Dependents
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.
1. An individual who is a dependent of a taxpayer is trea-
ted as having no dependents.
2. An individual who is married at the end of the year
can't be claimed as a dependent if the individual files
a joint return, unless the joint return is filed only to
claim a refund of withheld income taxes or estimated
tax paid.
3. An individual claimed as a dependent must be a citi-
zen, national, or resident of the United States, or a
resident of Canada or Mexico.
If you do not show the dependent's SSN, ITIN, or
adoption taxpayer identification number (ATIN) in
the Dependents section of your tax return, or if
you show an incorrect number, certain tax benefits may be
disallowed. See Identification Number, earlier.
Resident Aliens
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.
If you do not show the dependent's SSN, ITIN, or
ATIN in the Dependents section of your tax return,
or if you show an incorrect number, certain tax
benefits may be disallowed. See Identification Number,
earlier.
Nonresident Aliens
See Pub. 501 for more information.
Residents of Mexico or Canada, or U.S. nationals. If
you are a resident of Mexico or Canada, or a national of
the United States, you can claim each of your dependents
who meets certain tests. Residents of Mexico or Canada,
or nationals of the United States, must use the same rules
as U.S. citizens to determine who is a dependent. See
Pub. 501 for these rules.
Residents of South Korea. A nonresident alien who is a
resident of South Korea (other than an employee of the
South Korean government) may be able to claim their
child as a qualifying dependent. In addition to using the
same rules as U.S. citizens to determine who is a depend-
ent, under the income tax treaty with South Korea, the
child must have lived with the nonresident alien in the Uni-
ted States at some time during the tax year.
Students and business apprentices from India. Stu-
dents and business apprentices who are eligible for the
benefits of Article 21(2) of the United States-India Income
Tax Treaty can claim their dependents if they meet the
same rules that apply to U.S. citizens.
Itemized Deductions
Nonresident aliens can claim some of the same itemized
deductions that resident aliens can claim. However, non-
resident 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
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the Instructions for Schedule A (Form 1040) or Instruc-
tions for Schedule A (Form 1040-NR)—Itemized Deduc-
tions in the Instructions for Form 1040-NR.
Resident Aliens
You can claim the same itemized deductions as U.S. citi-
zens 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 fur-
ther information, see the Instructions for Form 1040.
Nonresident Aliens
You can deduct certain itemized deductions if you receive
income effectively connected with your U.S. trade or busi-
ness. You can generally only include deductions and los-
ses 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 ex-
empt 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 los-
ses even if they do not relate to your effectively connected
income. Use Schedule A (Form 1040-NR) to claim item-
ized deductions. See the Instructions for Form 1040-NR
for more information.
Standard deduction. Nonresident aliens cannot claim
the standard deduction. However, there is a special rule,
described next, for certain nonresident aliens from India.
Students and business apprentices from India. A
special rule applies to students and business apprentices
who are eligible for the benefits of Article 21(2) of the Uni-
ted States-India Income Tax Treaty. You can claim the
standard deduction, provided you do not claim itemized
deductions.
Use Worksheet 5-1 to figure your standard deduction
for 2023. If you are married and your spouse files a return
and itemizes deductions, you cannot take the standard
deduction.
Disaster tax relief. If you are a student or business
apprentice eligible for the benefits of Article 21(2) of the
United States-India Income Tax Treaty who was affected
by certain major federally declared disasters in 2023 (see
IRS.gov/DisasterTaxRelief and FEMA.gov/Disasters), you
may be able to elect to increase your standard deduction
by any qualified disaster-related personal casualty losses
on your 2023 tax return. Use Worksheet 5-1 to calculate
your standard deduction for 2023. See the 2023 Form
4684 and its instructions for more information on the tax
benefits for qualified disaster-related personal casualty
losses.
State and local income taxes. You can deduct state
and local income taxes you paid on income that is effec-
tively connected with a trade or business in the United
States. Your deduction is limited to a combined total de-
duction of $10,000 ($5,000 if married filing separately). If
you received a refund or rebate in 2023 of taxes you paid
in an earlier year, do not reduce your deduction by that
amount. Instead, you must include the refund or rebate in
income if you deducted the taxes in the earlier year and
the deduction reduced your tax. See Recoveries in Pub.
525 for details on how to figure the amount to include in in-
come.
Charitable contributions. You can deduct your charita-
ble contributions or gifts to qualified organizations subject
to certain limits. Qualified organizations include organiza-
tions that are religious, charitable, educational, scientific,
or literary in nature, or that work to prevent cruelty to chil-
dren or animals. Certain organizations that promote na-
tional or international amateur sports competition are also
qualified organizations.
For more information on deducting charitable contribu-
tions, see Gifts to U.S. Charities under Instructions for
Schedule A (Form 1040-NR)—Itemized Deductions in the
Instructions for Form 1040-NR.
Foreign organizations. Contributions made directly
to a foreign organization are not deductible. However, you
can deduct contributions to a U.S. organization that trans-
fers funds to a charitable foreign organization if the U.S.
organization controls the use of the funds or if the foreign
organization is only an administrative arm of the U.S. or-
ganization.
Under a limited number of income tax treaties, you may
be eligible to deduct contributions to a charitable foreign
organization. See Pub. 526 for details.
Casualty and theft losses. You may be able to deduct
casualty and theft losses on your tax return.
You can only deduct a nonbusiness casualty or
theft loss if it is attributable to a federally declared
disaster.
If your casualty or theft loss is attributable to a federally
declared disaster, you can deduct your loss even though
your property is not connected with a U.S. trade or busi-
ness. The property can be personal-use property or in-
come-producing property not connected with a U.S. trade
or business. The property must be located in the United
States at the time of the casualty or theft. You can deduct
theft losses only in the year in which you discover the loss.
Use Form 4684 and its instructions to figure your deducti-
ble casualty and theft losses. For more information, see
Pub. 547.
Other itemized deductions. You may be allowed to de-
duct some other itemized deductions not discussed ear-
lier. These include the following.
•
Net qualified disaster losses.
•
Casualty and theft losses of income-producing prop-
erty.
•
Deduction for repayment of amounts under a claim of
right if over $3,000. See Pub. 525 for details.
•
Certain unrecovered investment in a pension.
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•
Impairment-related work expenses of a disabled per-
son.
For more information, see the instructions for line 7 un-
der Instructions for Schedule A (Form 1040-NR)—Item-
ized Deductions in the Instructions for Form 1040-NR.
Also see Pub. 529.
Net qualified disaster losses. See the Instructions
for Form 4684 for more information on net qualified disas-
ter losses. To determine if you were affected by a major
federally declared disaster, go to IRS.gov/
DisasterTaxRelief.
Losses from income-producing property. These
losses are not subject to the limitations that apply to per-
sonal-use property. Use Section B of Form 4684 to figure
your deduction for these losses.
Tax Credits and Payments
This discussion covers tax credits and payments for resi-
dent aliens, followed by a discussion of the credits and
payments for nonresident aliens.
Resident 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.
Foreign tax credit. You can claim a credit, subject to cer-
tain limits, for income tax you paid or accrued to a foreign
country on foreign source income. You cannot claim a
credit for taxes paid or accrued on excluded foreign
earned income. To claim a credit for income taxes paid or
accrued to a foreign country, you will generally file Form
1116 with your Form 1040 or 1040-SR.
For more information, see Pub. 514.
Child and dependent care credit. You may be able to
take this credit if you pay someone to care for your de-
pendent qualifying child who is under age 13, or your disa-
bled dependent or disabled spouse, so that you can work
or look for work.
For more information, see Form 2441 and Pub. 503.
Credit for the elderly or the disabled. You may qualify
for this credit if you are age 65 or older or if you retired on
permanent and total disability. For more information on
this credit, see Pub. 524 and Schedule R (Form 1040).
Education credits. You may qualify for these credits if
you paid qualified education expenses for yourself, your
spouse, or your dependent. There are two education cred-
its: the American opportunity credit and the lifetime learn-
ing credit. You cannot claim these credits if you are mar-
ried filing separately. Use Form 8863 to figure the credit.
For more information, see Pub. 970.
2023 Standard Deduction Worksheet for
Students and Business Apprentices From
India
Worksheet 5-1.
Keep for Your Records
Caution. If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. You cannot take the
standard deduction even if you were born before January 2, 1958, or are blind.
1. Enter the amount shown below for your filing status.
•
Single or married filing separately—$13,850
•
Qualifying surviving spouse—$27,700 .............................. 1.
2. Can you be claimed as a dependent on someone else's U.S. income tax
return?
No. Enter the amount from line 1 on line 4. Skip line 3 and go to line 5.
Yes. Go to line 3.
3. Is your earned income* more than $750?
Yes. Add $400 to your earned income. Enter the total.
No. Enter $1,250 ...............................................
3.
4. Enter the smaller of line 1 or line 3 ......................................................
4.
5. If born before January 2, 1959, OR blind, enter $1,500 ($1,850 if single). If born before January 2,
1959, AND blind, enter $3,000 ($3,700 if single). Otherwise, enter -0- ........................ 5.
6. Enter any net disaster loss from the 2023 Form 4684, line 15 ................................
6.
7. Add lines 4, 5, and 6. Enter the total here and on Form 1040-NR, line 12. Enter “Standard Deduction
Allowed Under U.S.-India Income Tax Treaty” in the space to the left of the line. This is your
standard deduction for 2023 ......................................................... 7.
* Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also
includes any amount received as a scholarship that you must include in your income. Generally, your earned income is the total of the amount(s)
you reported on Form 1040-NR, line 1z, plus Schedule 1 (Form 1040), lines 3, 6, and 8r, minus Schedule 1 (Form 1040), line 15.
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Nonresident aliens, see Education credits under Non-
resident Aliens, later.
Retirement savings contributions credit. You may
qualify for this credit (also known as the saver’s credit) if
you made eligible contributions to an employer-sponsored
retirement plan or to an IRA in 2023. Use Form 8880 and
its instructions to figure the credit. For more information
about the requirements to claim the credit, see Pub. 590-
A.
Child tax credit and the additional child tax credit.
“Qualifying child,” for purposes of the child tax credit and
the additional child tax credit, is a child who:
•
Was under age 17 at the end of 2023;
•
Is your son, daughter, stepchild, eligible foster child,
brother, sister, stepbrother, stepsister, half brother, half
sister, or a descendant of any of them (for example,
your grandchild, niece, or nephew);
•
Is a U.S. citizen, U.S. national, or resident alien;
•
Did not provide over half of their own support for 2023;
•
Lived with you more than half of 2023 (temporary ab-
sences, such as for school, vacation, or medical care,
count as time lived in the home);
•
Is claimed as a dependent on your return; and
•
Does not file a joint return for the year (or files it only to
claim a refund of withheld income tax or estimated tax
paid).
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 2023 return (including extensions),
you cannot claim the child tax credit on either your original
or an amended 2023 return.
If your child did not have an SSN valid for employment
issued before the due date of the 2023 return (including
extensions), you cannot claim the child tax credit for this
child, but may be able to claim the credit for other depend-
ents for this child. See Credit for other dependents, dis-
cussed below.
Use Schedule 8812 (Form 1040) and its instructions to
figure the credits.
Credit for other dependents. The credit for other de-
pendents is for people who have dependents who cannot
be claimed for the child tax credit. The qualifying depend-
ent must be a U.S. citizen, U.S. national, or U.S. resident
alien and must have an SSN, ITIN, or ATIN issued on or
before the due date of your 2023 return (including exten-
sions). See Schedule 8812 (Form 1040) and its instruc-
tions for more information.
Adoption credit. You may qualify to take a tax credit of
up to $15,950 for qualifying expenses paid to adopt an eli-
gible child. This amount may be allowed for the adoption
of a child with special needs regardless of whether you
have qualifying expenses. To claim the adoption credit, file
Form 8839 with your Form 1040 or 1040-SR.
Earned income credit (EIC). The EIC, or earned in-
come 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 work-
ers 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 informa-
tion, go to IRS.gov/EIC.
If you (and your spouse, if filing a joint return) did not
have an SSN issued on or before the due date of the 2023
return (including extensions), you cannot claim the EIC on
either your original or an amended 2023 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 2023 return.
If a social security card has a legend that says
“Not Valid for Employment” and the number was
issued so that you (or your spouse or your qualify-
ing child) could receive a federally funded benefit, you
cannot claim the EIC. An example of a federally funded
benefit is Medicaid. If a card has this legend and the indi-
vidual's immigration status has changed so that the indi-
vidual is now a U.S. citizen or lawful permanent resident,
ask the SSA to issue a new social security card without
the legend.
To find out if you are eligible for the EIC, go to IRS.gov/
EITCAssistant.
Other information. There are other eligibility rules
that are not discussed here. For more information, see
Pub. 596.
Nonresident Aliens
You can claim some of the same credits that resident ali-
ens can claim. You can also report certain taxes you paid,
are considered to have paid, or that were withheld from
your income.
Credits
Credits are allowed only if you receive effectively connec-
ted income. You may be able to claim some of the follow-
ing credits.
Foreign tax credit. If you receive foreign source income
that is effectively connected with a trade or business in the
United States, you can claim a credit for any income taxes
paid or accrued to any foreign country or U.S. territory on
that income.
If you do not have foreign source income effectively
connected with a U.S. trade or business, you cannot claim
credits against your U.S. tax for taxes paid or accrued to a
foreign country or U.S. territory.
You cannot take any credit for taxes imposed by a for-
eign country or U.S. territory on your U.S. source income if
those taxes were imposed only because you are a citizen
or resident of the foreign country or territory.
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If you claim a foreign tax credit, you will generally have
to attach to your return a Form 1116. See Pub. 514 for
more information.
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 de-
pendent 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 resi-
dent 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.
Education credits. If you are a nonresident alien for any
part of the year, you generally cannot claim the education
credits. However, you may be able to claim an education
credit under the following circumstances.
1. You are married and choose to file a joint return with a
U.S. citizen or resident spouse, as discussed under
Nonresident Spouse Treated as a Resident in chap-
ter 1.
2. You are a dual-status alien, and choose to be treated
as a U.S. resident for the entire year. See Choosing
Resident Alien Status in chapter 1.
Additional information on the American opportunity tax
credit is available at IRS.gov/AOTC.
Retirement savings contributions credit. You may
qualify for this credit (also known as the saver’s credit) if
you made eligible contributions to an employer-sponsored
retirement plan or to an IRA in 2023. You cannot claim this
credit if:
•
You were born after January 1, 2006;
•
You were a full-time student;
•
You were claimed as a dependent on someone else's
2023 tax return; or
•
Your adjusted gross income is more than $36,500.
Use Form 8880 to figure the credit. For more information,
see Pub. 590-A.
Child tax credit and the additional child tax credit.
Only nonresident aliens who are U.S. nationals; residents
of Canada, Mexico, or South Korea; or students and busi-
ness apprentices from India who qualify for benefits under
Article 21(2) of the income tax treaty with India can claim
the child tax credit.
“Qualifying child,” for purposes of the child tax credit
and the additional child tax credit, is a child who:
•
Was under age 17 at the end of 2023;
•
Is your son, daughter, stepchild, eligible foster child,
brother, sister, stepbrother, stepsister, half brother, half
sister, or a descendant of any of them (for example,
your grandchild, niece, or nephew);
•
Is a U.S. citizen, U.S. national, or resident alien;
•
Did not provide over half of their own support for 2023;
•
Lived with you more than half of 2023 (temporary ab-
sences, such as for school, vacation, or medical care,
count as time lived in the home);
•
Is claimed as a dependent on your return; and
•
Does not file a joint return for the year (or files it only to
claim a refund of withheld income tax or estimated tax
paid).
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 2023 return (including extensions),
you may not claim the child tax credit on either your origi-
nal or an amended tax return.
If your child did not have an SSN valid for employment
issued before the due date of the 2023 return (including
extensions), you cannot claim the child tax credit for this
child, but may be able to claim the credit for other depend-
ents for this child. See Credit for other dependents, dis-
cussed below.
Use Schedule 8812 (Form 1040) and its instructions to
figure the credits.
Credit for other dependents. Dependents who cannot
be claimed for the child tax credit may still qualify you for
the credit for other dependents. This is a nonrefundable
tax credit of $500 per qualifying person. The qualifying de-
pendent must be a U.S. citizen, U.S. national, or U.S. resi-
dent alien. See the Instructions for Form 1040-NR. To
claim the credit for other dependents, your dependent
must have an SSN, ITIN, or ATIN issued on or before the
due date of your 2023 return (including extensions).
Only nonresident aliens who are U.S. nationals;
residents of Canada, Mexico, or South Korea; or
students and business apprentices from India
who qualify for benefits under Article 21(2) of the income
tax treaty with India can claim the credit for other depend-
ents.
Adoption credit. You may qualify to take a tax credit of
up to $15,950 for qualifying expenses paid to adopt an eli-
gible child. This amount may be allowed for the adoption
of a child with special needs regardless of whether you
have qualifying expenses. To claim the adoption credit, file
Form 8839 with your Form 1040-NR.
Married nonresident aliens can claim the credit only if
they choose to file a joint return with a citizen or resident
spouse, as discussed in Nonresident Spouse Treated as a
Resident in chapter 1, or if they qualify as certain married
individuals living apart (see Married Persons Not Filing
Jointly in the Instructions for Form 8839).
CAUTION
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Credit for prior-year alternative minimum tax. If you
paid alternative minimum tax in a prior year, use Form
8801 and its instructions to see if you qualify for this credit.
Earned income credit (EIC). If you are a nonresident
alien for any part of the tax year, you generally cannot
claim 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.
If you and your spouse did not have an SSN issued on
or before the due date of the 2023 return (including exten-
sions), you cannot claim the EIC on either your original or
an amended 2023 return. Also, if a child did not have an
SSN issued on or before the due date of your return (in-
cluding extensions), you cannot count that child as a qual-
ifying child in figuring the EIC on either your original or an
amended 2023 return.
If a social security card has a legend that says
“Not Valid for Employment” and the number was
issued so that you (or your spouse or your qualify-
ing child) could receive a federally funded benefit, you
cannot claim the EIC. An example of a federally funded
benefit is Medicaid. If a card has this legend and the indi-
vidual's immigration status has changed so that the indi-
vidual is now a U.S. citizen or lawful permanent resident,
ask the SSA to issue a new social security card without
the legend.
See Pub. 596 for more information on the credit.
Tax Withheld
You can claim the tax withheld during the year as a pay-
ment 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.
Withholding from wages. Any federal income tax with-
held from your wages during the tax year while you were a
nonresident alien is allowed as a payment against your
U.S. income tax liability for the same year. You can claim
the income tax withheld whether or not you were engaged
in a trade or business in the United States during the year,
and whether or not the wages (or any other income) were
connected with a trade or business in the United States.
Excess social security tax withheld. If you have two or
more employers, you may be able to claim a credit against
your U.S. income tax liability for social security tax with-
held in excess of the maximum required. See Social Se-
curity and Medicare Taxes in chapter 8 for more informa-
tion.
Additional Medicare Tax. Your employer is responsible
for withholding the 0.9% (0.009) Additional Medicare Tax
on Medicare wages or Railroad Retirement Tax Act
(RRTA) compensation it pays to you in excess of
$200,000 in 2023. If you do not owe Additional Medicare
Tax, you can claim a credit for any withheld Additional
Medicare Tax against the total tax liability shown on your
tax return by filing Form 8959.
CAUTION
!
Tax paid on undistributed long-term capital gains. If
you are a shareholder in a mutual fund (or other RIC) or
REIT, you can claim a credit for your share of any taxes
paid by the company on its undistributed long-term capital
gains. You will receive information on Form 2439, which
you must attach to your return.
Tax withheld at the source. You can claim as a payment
any tax withheld at the source on investment and other
FDAP income paid to you. Fixed or determinable income
includes interest, dividend, rental, and royalty income that
you do not claim to be effectively connected income.
Wage or salary payments can be fixed or determinable in-
come to you, but are usually subject to withholding, as dis-
cussed above. Taxes on fixed or determinable income are
withheld at a 30% rate or at a lower treaty rate.
Tax withheld on partnership income. If you are a for-
eign partner in a partnership, the partnership will withhold
tax on your share of ECTI from the partnership. The part-
nership will give you a statement on Form 8805 showing
the tax withheld. A partnership that is publicly traded may
withhold on your actual distributions of effectively connec-
ted income. In this case, the partnership will give you a
statement on Form 1042-S. Claim the tax withheld as a
payment on line 25e or 25g of Form 1040-NR, as appro-
priate.
Tax withheld on gain from the sale or exchange of
certain partnership interests. If you are a direct or indi-
rect 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 dis-
pose 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 reflect-
ing 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 with-
holding. 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 nonre-
cognition provision. If you are a transferee that failed to
withhold, under section 1446(f)(4), the partnership may
withhold on distributions to you.
T.D. 9926 (85 FR 76910), available at IRS.gov/irb/
2020-51_IRS#TD-9926, published on November 30, 2020
(as corrected at 86 FR 13191), contains final regulations
(section 1446(f) regulations) relating to the withholding
and reporting required under section 1446(f) on transfers
of interests in certain partnership interests, which include
withholding requirements that apply to brokers effecting
transfers of interests in PTPs. While section 1446(f) with-
holding generally applies to transfers occurring on or after
January 1, 2018, certain provisions of the section 1446(f)
regulations apply to transfers on or after January 1, 2023.
For more information, see Pub. 515.
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For additional guidance on certain issues related to the
1446(f) regulations, see Notice 2023-8.
Tax withheld on dispositions of U.S. real property in-
terests. You can claim as a payment any tax withheld
with respect to a disposition of a U.S. real property interest
(or income treated as derived from the disposition of a
U.S. real property interest). See Real Property Gain or
Loss in chapter 4. The buyer will give you a statement of
the amount withheld on Form 8288-A. Claim the tax with-
held as a payment on line 25f of Form 1040-NR.
Claiming tax withheld on your return. When you fill out
your tax return, take extra care to enter the correct amount
of any tax withheld shown on your information documents.
The following table lists some of the more common infor-
mation documents and shows where to find the amount of
tax withheld.
Form number
Location
of tax
withheld
RRB-1042S ........................ Box 13
SSA-1042S .........................Box 9
W-2 ..............................Box 2
W-2c ............................. Box 2
1042-S ............................Box 10
8805 ............................. Line 10
8288-A ............................Box 4
Bona Fide Residents of
American Samoa or Puerto
Rico
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. How-
ever, you can exclude the income discussed in the follow-
ing 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 un-
less that person is a citizen or national of the United
States. There are also limits on what deductions and cred-
its 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 resi-
dent 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 em-
ployee 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 2023, file
your return and pay your tax by June 15, 2024. You must
also make your first payment of estimated tax for 2024 by
June 15, 2024. 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. in-
come tax return is due by April 15, 2024. You must also
make your first payment of estimated tax for 2024 by April
15, 2024. For information on withholding and estimated
tax, see chapter 8.
Residents of American Samoa. If you are a bona fide
resident of American Samoa for the entire year, you can
exclude from gross income all income from sources in
American Samoa (other than amounts for services per-
formed as an employee of the U.S. Government or any of
its agencies). An employee of the American Samoan Gov-
ernment is not considered an employee of the U.S. Gov-
ernment or any of its agencies for purposes of the exclu-
sion. For more information about this exclusion, see Form
4563 and Pub. 570.
6.
Dual-Status Tax Year
Introduction
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, dif-
ferent 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 chap-
ter 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.
Topics
This chapter discusses:
•
Income subject to tax,
•
Restrictions for dual-status taxpayers,
•
How to figure the tax,
•
Forms to file,
•
When and where to file, and
•
How to fill out a dual-status return.
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Useful Items
You may want to see:
Publication
503 Child and Dependent Care Expenses
514 Foreign Tax Credit for Individuals
575 Pension and Annuity Income
Form (and Instructions)
1040 U.S. Individual Income Tax Return
1040-SR U.S. Tax Return for Seniors
1040-C U.S. Departing Alien Income Tax Return
1040-ES Estimated Tax for Individuals
1040-ES (NR) U.S. Estimated Tax for Nonresident
Alien Individuals
1040-NR U.S. Nonresident Alien Income Tax Return
1116 Foreign Tax Credit
See chapter 12 for information about getting these publi-
cations and forms.
Tax Year
You must file your tax return on the basis of an annual ac-
counting period called a tax year. If you have not previ-
ously established a fiscal tax year, your tax year is the cal-
endar year. A calendar year is 12 consecutive months
ending on December 31. If you have previously estab-
lished 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. resi-
dent for any part of your fiscal year that falls within that cal-
endar year.
Income Subject to Tax
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 be-
came 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 for-
eign 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
503
514
575
1040
1040-SR
1040-C
1040-ES
1040-ES (NR)
1040-NR
1116
earned it while you were a resident alien or if you became
a resident alien or a U.S. citizen after receiving it and be-
fore the end of the year.
Income from U.S. sources is taxable whether you re-
ceive 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 cer-
tain 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 for-
eign countries. For a further discussion of tax treaties, see
chapter 9.
Restrictions for Dual-Status
Taxpayers
The following restrictions apply if you are filing a tax return
for a dual-status tax year.
Standard deduction. You cannot use the standard de-
duction allowed on Form 1040 or 1040-SR. However, you
can itemize any allowable deductions.
Head of household. You cannot use the head of house-
hold Tax Table column or Tax Computation Worksheet.
Joint return. You cannot file a joint return. However, see
Choosing Resident Alien Status under Dual-Status Aliens
in chapter 1.
Tax rates. If you are married and a nonresident of the
United States for all or part of the tax year and you do not
choose to file jointly, as discussed in chapter 1, you must
use the Tax Table column or Tax Computation Worksheet
for married filing separately to figure your tax on income
effectively connected with a U.S. trade or business. You
cannot use the Tax Table column or Tax Computation
Worksheet for married filing jointly or single. However, you
may be able to file as single if you lived apart from your
spouse during the last 6 months of the year and you are a:
•
Married resident of Canada, Mexico, or South Korea;
or
•
Married U.S. national.
See the Instructions for Form 1040-NR to see if you qual-
ify.
A U.S. national is an individual who, although not a U.S.
citizen, owes their allegiance to the United States. U.S.
nationals include American Samoans and Northern Ma-
riana Islanders who chose to become U.S. nationals in-
stead of U.S. citizens.
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Dependents
As a dual-status taxpayer, you may be able to claim a de-
pendent 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.
How To Figure Your Tax
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.
Income
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 allow-
able deductions, are added and taxed at the rates that ap-
ply to U.S. citizens and residents. Income that is not con-
nected 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.
Social security and railroad retirement benefits. Dur-
ing the part of the year you are a nonresident alien, 85% of
any U.S. social security benefits (and the equivalent part
of tier 1 railroad retirement benefits) you receive is subject
to the flat 30% tax, unless exempt, or subject to a lower
treaty rate. (See The 30% Tax in chapter 4.)
During the part of the year you are a resident alien, part
of the social security and the equivalent part of tier 1 rail-
road retirement benefits will be taxed at graduated rates if
your modified adjusted gross income plus half of these
benefits are more than a certain base amount.
Use the Social Security Benefits Worksheet in the In-
structions for Form 1040 to help you figure the taxable part
of your social security and equivalent tier 1 railroad retire-
ment 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 com-
plete 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 Rail-
road Retirement Board, and/or Form RRB-1099-R, Annui-
ties 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.
Tax Credits and Payments
This discussion covers tax credits and payments for
dual-status aliens.
Credits
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 cred-
its often claimed by individuals.
You cannot claim the education credits, EIC, or
credit for the elderly or the disabled unless you
are married and you choose to be treated as a
resident for all of 2023 by filing a joint return with your
spouse who is a U.S. citizen or resident, as discussed in
chapter 1.
Foreign tax credit. If you have paid, or are liable for the
payment of, income tax to a foreign country on income
from foreign sources, you may be able to claim a credit for
the foreign taxes.
If you claim the foreign tax credit, you must generally
file Form 1116 with your income tax return. For more infor-
mation, see the Instructions for Form 1116 and Pub. 514.
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 de-
pendent or disabled spouse, so that you can work or look
for work.
Married dual-status aliens can claim the credit only if
they choose to file a joint return, as discussed in chap-
ter 1, or if they qualify as certain married individuals living
apart.
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 for that tax year.
For more information, see Pub. 503 and Form 2441.
Retirement savings contributions credit. You may
qualify for this credit (also known as the saver’s credit) if
you made eligible contributions to an employer-sponsored
retirement plan or to an IRA in 2023. You cannot claim this
credit if:
•
You were born after January 1, 2006,
•
You were a full-time student,
•
You were claimed as a dependent on someone else's
2023 tax return, or
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•
Your adjusted gross income is more than $36,500.
Use Form 8880 to figure the credit. For more information,
see Pub. 590-A.
Child tax credit and the additional child tax credit.
“Qualifying child,” for purposes of the child tax credit and
the additional child tax credit, is a child who:
•
Was under age 17 at the end of 2023;
•
Is your son, daughter, stepchild, eligible foster child,
brother, sister, stepbrother, stepsister, half brother, half
sister, or a descendant of any of them (for example,
your grandchild, niece, or nephew);
•
Is a U.S. citizen, U.S. national, or resident alien;
•
Did not provide over half of their own support for 2023;
•
Lived with you more than half of 2023 (temporary ab-
sences, such as for school, vacation, or medical care,
count as time lived in the home);
•
Is claimed as a dependent on your return; and
•
Does not file a joint return for the year (or files it only to
claim a refund of withheld income tax or estimated tax
paid).
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 2023 return (including extensions),
you may not claim the child tax credit on either your origi-
nal or an amended 2023 return.
If your child did not have an SSN valid for employment
issued before the due date of the 2023 return (including
extensions), you cannot claim the child tax credit for this
child, but may be able to claim the credit for other depend-
ents for this child. See Credit for other dependents, dis-
cussed below.
Use Schedule 8812 (Form 1040) and its instructions to
figure the credits.
Credit for other dependents. The credit for other de-
pendents is for people who have dependents who cannot
be claimed for the child tax credit. The qualifying depend-
ent must be a U.S. citizen, U.S. national, or U.S. resident
alien and must have an SSN, ITIN, or ATIN issued on or
before the due date of your 2023 return (including exten-
sions).
Adoption credit. You may qualify to take a tax credit of
up to $15,950 for qualifying expenses paid to adopt an eli-
gible child. This amount may be allowed for the adoption
of a child with special needs regardless of whether you
have qualifying expenses. To claim the adoption credit, file
Form 8839 with the U.S. income tax return that you file.
Married dual-status aliens can claim the credit only if
they choose the Nonresident Spouse Treated as a Resi-
dent status, as discussed in chapter 1, or if they qualify as
certain married individuals living apart (see Married Per-
sons Not Filing Jointly in the Instructions for Form 8839).
Payments
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 in-
clude:
•
Tax withheld from wages earned in the United States,
•
Taxes withheld at the source from various items of in-
come from U.S. sources other than wages,
•
Estimated tax paid with Form 1040-ES or Form
1040-ES (NR), and
•
Tax paid with Form 1040-C at the time of departure
from the United States.
Forms To File
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.
Resident at end of year. You must file Form 1040 or
1040-SR if you are a dual-status taxpayer who becomes a
resident during the year and who is a U.S. resident on the
last day of the tax year. Enter “Dual-Status Return” across
the top of the return. Attach a statement to your return to
show the income for the part of the year you are a nonresi-
dent. You can use Form 1040-NR as the statement, but be
sure to enter “Dual-Status Statement” across the top.
Nonresident at end of year. You must file Form
1040-NR if you are a dual-status taxpayer who gives up
residence in the United States during the year and who is
not a U.S. resident on the last day of the tax year. Enter
“Dual-Status Return” across the top of the return. Attach a
statement to your return to show the income for the part of
the year you are a resident. You can use Form 1040 or
1040-SR as the statement, but be sure to enter “Dual-Sta-
tus Statement” across the top.
If you expatriated or terminated your residency in 2023,
you may be required to file an expatriation statement
(Form 8854) with your tax return. For more information,
see Expatriation Tax in chapter 4.
Statement. Any statement must have your name, ad-
dress, and TIN on it. You do not need to sign a separate
statement or schedule accompanying your return because
your signature on the return also applies to the supporting
statements and schedules.
When and Where To File
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
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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 Form 1040.
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 with-
holding. If you report your income on other than a calen-
dar 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 re-
port 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 Service
Austin, TX 73301-0215
If enclosing a payment, mail your return to:
Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303
If the regular due date for filing falls on a Saturday,
Sunday, or legal holiday, the due date is the next
day that is not a Saturday, Sunday, or legal holi-
day.
7.
Filing Information
Introduction
This chapter provides the basic filing information that you
may need.
Topics
This chapter discusses:
•
Forms aliens must file,
•
When and where to file,
•
Penalties, and
•
Amended returns and claims for refund.
TIP
Useful Items
You may want to see:
Forms (and Instructions)
1040 U.S. Individual Income Tax Return
1040-SR U.S. Tax Return for Seniors
1040-NR U.S. Nonresident Alien Income Tax Return
See chapter 12 for information about getting these forms.
What, When, and Where To File
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
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 resi-
dent who is required to file a tax return as a resident and
fails to do so may be regarded as having abandoned sta-
tus and may lose permanent resident status.
Extensions of time to file. You can get an automatic
6-month extension (October 15 for calendar year taxpay-
ers) if, no later than the date your return is due, you file
Form 4868. For more information, see Form 4868.
An automatic 6-month extension to file does not
extend the time to pay your tax. If you do not pay
your tax by the original due date of your return,
you will owe interest on the unpaid tax and may owe pen-
alties.
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 ex-
tension of time to file their returns (December 15 for calen-
dar 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.
1040
1040-SR
1040-NR
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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 ali-
ens abroad who expect to qualify for special tax treat-
ment).
If the due date for filing falls on a Saturday, Sun-
day, or legal holiday, the due date is the next day
that is not a Saturday, Sunday, or legal holiday.
You may be able to file your return elec-
tronically. Go to IRS.gov/Efile for more
information.
Nonresident Aliens
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.
1. A nonresident alien individual engaged or considered
to be engaged in a trade or business in the United
States during 2023. (But see Exceptions, later.)
You must file even if:
a. Your income did not come from a trade or busi-
ness conducted in the United States,
b. You have no income from U.S. sources, or
c. Your income is exempt from income tax.
2. A nonresident alien individual not engaged in a trade
or business in the United States with U.S. income on
which the tax liability was not satisfied by the with-
holding of tax at the source.
3. A representative or agent responsible for filing the re-
turn of an individual described in (1) or (2).
4. A fiduciary for a nonresident alien estate or trust.
You must also file if you want to:
•
Claim a refund of overwithheld or overpaid tax, or
•
Claim the benefit of any deductions or credits. For ex-
ample, if you have no U.S. business activities but have
income from real property that you choose to treat as
effectively connected income (discussed in chap-
ter 4), you must timely file a true and accurate return to
take any allowable deductions against that income.
For information on what is timely, see When to file for
deductions and credits under When To File, later.
Exceptions. You do not need to file Form 1040-NR if you
meet any of the following conditions.
The exception that previously allowed nonresident
aliens whose only U.S. trade or business was the
performance of personal services and whose
wage income did not exceed the personal exemption
amount to not file a Form 1040-NR is no longer available.
You must meet (1), (2), or (3) below to be exempt from fil-
ing a 2023 Form 1040-NR.
TIP
CAUTION
!
1. You were a nonresident alien student, teacher, or
trainee who was temporarily present in the United
States under an “F,” “J,” “M,” or “Q” visa, and you have
no income that is subject to tax, such as wages, tips,
scholarship and fellowship grants, dividends, etc.
2. You were a student or business apprentice who was
eligible for the benefits of Article 21(2) of the United
States-India Income Tax Treaty, you are single or a
qualifying surviving spouse, and your gross income
for 2023 was less than or equal to $13,850 if single
($27,700 if a qualifying surviving spouse).
3. You were a partner in a U.S. partnership that was not
engaged in a trade or business in the United States
during 2023 and your Schedule K-1 (Form 1065) in-
cludes only income from U.S. sources that is not ef-
fectively connected with a U.S. trade or business.
Even if you have left the United States and filed a
Form 1040-C on departure, you must still file an
annual U.S. income tax return. If you are married
and both you and your spouse are required to file, you
must each file a separate return.
Foreign-owned domestic disregarded entities. If a
foreign person wholly owns a domestic disregarded entity
(DE), the domestic DE is treated as a domestic corpora-
tion separate from its owner (the foreign person) for the
limited purposes of the requirements under section 6038A
that apply to 25% foreign-owned domestic corporations.
The foreign-owned domestic DE must file a pro forma
Form 1120 with Form 5472 attached by the due date (in-
cluding extensions) of the return. The only information re-
quired to be completed on Form 1120 is the name and ad-
dress of the foreign-owned domestic DE and items B and
E on the first part. A foreign-owned domestic DE may
have had a reporting requirement before 2017 if it had a
U.S. trade or business or other activity that otherwise re-
quired reporting. See the Instructions for Form 5472 for
additional information and coordination with Form 5472 fil-
ing by the domestic DE. Also note that because the do-
mestic DE is generally a transparent entity, the foreign per-
son will include (or continue to include) on Form 1040-NR
any of the domestic DE's tax items that are subject to re-
porting. A DE (foreign or domestic) may also have a sepa-
rate reporting requirement related to employment or ex-
cise taxes. See Regulations sections 301.7701-2(c)(2)(iv)
and (v).
When To File
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
2023 calendar year, file your return by April 15, 2024.
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
2023 calendar year, file your return by June 17, 2024.
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Extensions of time to file. If you cannot file your return
by the due date, file Form 4868 or use one of the elec-
tronic filing options explained in the Instructions for Form
4868. For the 2023 calendar year, this will extend the due
date to October 15, 2024. If your regular due date is June
17, 2024, this will extend the due date to December 15,
2024. You must file the extension by the regular due date
of your return.
An automatic 6-month extension to file does not
extend the time to pay your tax. If you do not pay
your tax by the original due date of your return,
you will owe interest on the unpaid tax and may owe pen-
alties. See Form 4868.
When to file for deductions and credits. To get the
benefit of any allowable deductions or credits, you must
timely file a true and accurate return. For this purpose, a
return is timely if it is filed within 16 months of the due date
just discussed. However, if you did not file a 2022 tax re-
turn and 2023 is not the first year for which you are re-
quired to file one, your 2023 return is timely for this pur-
pose if it is filed by the earlier of:
•
The date that is 16 months after the due date for filing
your 2023 return, or
•
The date the IRS notifies you that your 2023 return
has not been filed and that you cannot claim certain
deductions and credits.
The allowance of the following credits is not affected by
this time requirement.
•
Credit for withheld taxes.
•
Credit for excise tax on certain uses of gasoline and
special fuels.
•
Credit for tax paid by a mutual fund (or other RIC) or a
REIT on undistributed long-term capital gains.
Protective return. If your activities in the United
States were limited and you do not believe that you had
any gross income effectively connected with a U.S. trade
or business during the year, you can file a protective return
(Form 1040-NR) by the deadline explained above. By fil-
ing a protective return, you protect your right to receive the
benefit of deductions and credits in the event it is later de-
termined that some or all of your income is effectively con-
nected. You are not required to report any effectively con-
nected income or any deductions on the protective return,
but you must give the reason the return is being filed.
If you believe some of your activities resulted in effec-
tively connected income, file your return reporting that in-
come and related deductions by the regular due date. To
protect your right to claim deductions or credits resulting
from other activities, attach a statement to that return ex-
plaining that you wish to protect your right to claim deduc-
tions and credits if it is later determined that the other ac-
tivities produced effectively connected income.
You can follow the same procedure if you believe you
have no U.S. tax liability because of a U.S. tax treaty. Be
sure to also complete item L on Schedule OI (Form
1040-NR).
CAUTION
!
Waiver of filing deadline. The IRS may waive the fil-
ing deadline if you establish that, based on the facts and
circumstances, you acted reasonably and in good faith in
failing to file a U.S. income tax return (including a protec-
tive return) and you cooperate with the IRS in determining
your U.S. income tax liability for the tax year for which you
did not file a return.
Where To File
If you are not enclosing a payment, file Form
1040-NR at the following address.
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
If enclosing a payment, mail your return to:
Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303
Aliens from the U.S. Virgin Islands. Report all income
from U.S. sources, as well as income from other sources,
on your return. For information on filing U.S. Virgin Islands
returns, contact the U.S. Virgin Islands Bureau of Internal
Revenue.
If you are a bona fide resident of the U.S. Virgin Is-
lands during your entire tax year and work tempo-
rarily in the United States, you must pay your in-
come taxes to the U.S. Virgin Islands and file your income
tax returns at the following address.
Virgin Islands Bureau of Internal Revenue
6115 Estate Smith Bay
Suite 225
St. Thomas, VI 00802
Chapter 8 discusses withholding from U.S. wages of resi-
dents of the U.S. Virgin Islands.
Aliens from Guam or the Commonwealth of the
Northern Mariana Islands (CNMI). If you are a bona
fide resident of Guam or the CNMI during your entire tax
year, you must file your return with, and pay any tax due
to, Guam or the CNMI. Report all income, including in-
come from U.S. sources, on your return. It is not neces-
sary to file a separate U.S. income tax return.
Bona fide residents of Guam should file their
Guam returns at the following address.
Department of Revenue and Taxation
Government of Guam
P.O. Box 23607
Barrigada, GU 96921
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Bona fide residents of the CNMI should file their
CNMI income tax returns at the following address.
Department of Finance
Division of Revenue and Taxation
Commonwealth of the Northern Mariana Islands
P.O. Box 5234 CHRB
Saipan, MP 96950
If you are not a bona fide resident of Guam or the
CNMI, see Pub. 570 for information on where to file your
return.
Amended Returns and Claims for
Refund
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 in-
stead 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.
Note. You can now file Form 1040-X electronically
with tax filing software to amend 2019 or later Forms 1040
and 1040-SR, and 2021 or later Forms 1040-NR. For
more information, go to IRS.gov/Form1040X.
Other Forms You May Have To File
You may be required to file information returns to report
certain foreign income or assets, or monetary transac-
tions.
FinCEN Form 105, Report of International
Transportation of Currency or Monetary
Instruments (CMIR)
FinCEN Form 105 is required by 31 U.S.C. 5316 and
Treasury Department regulations (31 CFR, chapter X).
The following persons must file FinCEN Form 105.
1. Each person who physically transports, mails, or
ships, or causes to be physically transported, mailed,
or shipped, currency or other monetary instruments
totaling more than $10,000 at one time from the Uni-
ted States to any place outside the United States or
into the United States from any place outside the Uni-
ted States.
2. Each person who receives in the United States cur-
rency or other monetary instruments totaling more
than $10,000 at one time from any place outside the
United States.
A transfer of funds through normal banking procedures,
which does not involve the physical transportation of cur-
rency or monetary instruments, is not required to be repor-
ted.
Penalties. Civil and criminal penalties are provided for
failing to file a report, filing a report containing material
omissions or misstatements, or filing a false or fraudulent
report. Also, the entire amount of the currency or mone-
tary instrument may be subject to seizure and forfeiture.
More information. The form is available at FINCEN.gov/
resources/filing-information. For more information about
BSA E-Filing, see the E-Filing Section at
BSAefiling.fincen.treas.gov/main.html.
Form 8938
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.
•
A resident alien of the United States for any part of the
tax year.
•
A nonresident alien who makes an election to be trea-
ted as a resident for purposes of filing a joint income
tax return. See chapter 1 for information about this
election.
•
A nonresident alien who is a bona fide resident of
American Samoa or Puerto Rico. See Pub. 570 for a
definition of bona fide resident.
You must file Form 8938 if the total value of those as-
sets 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 understate-
ment of tax due to any transaction involving an undis-
closed foreign financial asset.
More information about filing Form 8938 can be found
in the Instructions for Form 8938.
Penalties
The law provides penalties for failure to file returns or pay
taxes as required.
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Civil Penalties
If you do not file your return and pay your tax by the due
date, you may have to pay a penalty. You may also have to
pay a penalty if you substantially understate your tax, file a
frivolous tax submission, or fail to supply your TIN. If you
provide fraudulent information on your return, you may
have to pay a civil fraud penalty.
Filing late. If you do not file your return by the due date
(including extensions), you may have to pay a fail-
ure-to-file penalty. The penalty is based on the tax not
paid by the due date (without regard to extensions). The
penalty is usually 5% for each month or part of a month
that a return is late, but not more than 25%.
Fraud. If your failure to file is due to fraud, the penalty
is 15% for each month or part of a month that your return
is late, up to a maximum of 75%.
Return over 60 days late. If you file your return more
than 60 days after the due date or extended due date, the
minimum penalty is the smaller of $485 or 100% of the un-
paid tax.
Exception. You will not have to pay the penalty if you
show that you failed to file on time because of reasonable
cause and not because of willful neglect.
Paying tax late. You will have to pay a failure-to-pay pen-
alty of
1
/2 of 1% (0.005) of your unpaid taxes for each
month, or part of a month, after the due date that the tax is
not paid. This penalty does not apply during the automatic
6-month extension of time to file period if you paid at least
90% of your actual tax liability on or before the due date of
your return and pay the balance when you file the return.
The monthly rate of the failure-to-pay penalty is half the
usual rate,
1
/4% (0.0025 instead of
1
/2% (0.005)), if an in-
stallment agreement is in effect for that month. You must
have filed your return by the due date (including exten-
sions) to qualify for this reduced penalty.
If a notice of intent to levy is issued, the rate will in-
crease to 1% at the start of the first month beginning at
least 10 days after the day that the notice is issued. If a
notice and demand for immediate payment is issued, the
rate will increase to 1% at the start of the first month be-
ginning after the day that the notice and demand is is-
sued.
This penalty cannot be more than 25% of your unpaid
tax. You will not have to pay the penalty if you can show
that you had a good reason for not paying your tax on
time.
Combined penalties. If both the failure-to-file penalty
and the failure-to-pay penalty (discussed earlier) apply in
any month, the 5% (or 15%) failure-to-file penalty is re-
duced by the failure-to-pay penalty. However, if you file
your return more than 60 days after the due date or exten-
ded due date, the minimum penalty is the smaller of $485
or 100% of the unpaid tax.
Accuracy-related penalty. You may have to pay an ac-
curacy-related penalty if you underpay your tax because:
•
You show negligence or disregard of rules or regula-
tions,
•
You substantially understate your income tax,
•
You claim tax benefits for a transaction that lacks eco-
nomic substance, or
•
You fail to disclose a foreign financial asset.
The penalty is equal to 20% of the underpayment. The
penalty is 40% of any portion of the underpayment that is
attributable to an undisclosed noneconomic substance
transaction or an undisclosed foreign financial asset trans-
action. The penalty will not be figured on any part of an
underpayment on which the fraud penalty, discussed later,
is charged.
Negligence or disregard. The term “negligence” in-
cludes a failure to make a reasonable attempt to comply
with the tax law or to exercise ordinary and reasonable
care in preparing a return. Negligence also includes failure
to keep adequate books and records. You will not have to
pay a negligence penalty if you have a reasonable basis
for a position you took, or if you can show a reasonable
cause and acted in good faith.
The term “disregard” includes any careless, reckless, or
intentional disregard.
Adequate disclosure. You can avoid the penalty for
disregard of rules or regulations if you adequately disclose
on your return a position that has at least a reasonable ba-
sis. See Disclosure statement, later.
This exception will not apply to an item that is attributa-
ble to a tax shelter. In addition, it will not apply if you fail to
keep adequate books and records or to substantiate items
properly.
Substantial understatement of income tax. You un-
derstate your tax if the tax shown on your return is less
than the correct tax. The understatement is substantial if it
is more than the larger of 10% of the correct tax or $5,000.
However, the amount of the understatement is reduced to
the extent the understatement is due to:
1. Substantial authority,
2. Adequate disclosure and a reasonable basis, or
3. Reasonable cause and good faith.
If an item on your return is attributable to a tax shelter,
there is no reduction for an adequate disclosure. However,
there is a reduction for a position with substantial authority,
but only if you reasonably believed that your tax treatment
was more likely than not the proper treatment.
Substantial authority. Whether there is or was sub-
stantial authority for the tax treatment of an item depends
on the facts and circumstances. Consideration will be
given to court opinions, Treasury regulations, revenue rul-
ings, revenue procedures, and notices and announce-
ments issued by the IRS and published in the Internal
Revenue Bulletin that involve the same or similar circum-
stances as yours.
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Disclosure statement. To adequately disclose the
relevant facts about your tax treatment of an item, use
Form 8275, Disclosure Statement. You must also have a
reasonable basis for treating the item the way you did.
In cases of substantial understatement, only items that
meet the requirements of Revenue Procedure 2023-40,
available at IRS.gov/irb/2023-51_IRB#REV-
PROC-2023-40 (or its successor) are considered ade-
quately disclosed on your return.
Revenue Procedure 2023-40 does not take into ac-
count the effect of tax law changes effective for tax years
beginning after December 31, 2023. If a line referenced in
this revenue procedure is affected by such a change and
requires additional reporting, a taxpayer may have to file
Form 8275; or Form 8275-R, Regulation Disclosure State-
ment, until regulations or other guidance has been issued
to comply with the requirement.
A complete and accurate disclosure of a tax position on
the appropriate year’s Schedule UTP (Form 1120), Uncer-
tain Tax Position Statement, will be treated as if the corpo-
ration filed a Form 8275 or Form 8275-R regarding the tax
position. The filing of a Form 8275 or Form 8275-R, how-
ever, will not be treated as if the corporation filed a Sched-
ule UTP (Form 1120).
Use Form 8275-R to disclose items or positions con-
trary to regulations.
Transaction lacking economic substance. For more
information on economic substance, see section 7701(o).
Foreign financial asset. For more information on un-
disclosed foreign financial assets, see section 6662(j) or
the Instructions for Form 8938.
Reasonable cause. You will not have to pay a penalty
if you show a good reason (reasonable cause) for the way
you treated an item. You must also show that you acted in
good faith. This does not apply to a transaction that lacks
economic substance.
Filing erroneous claim for refund or credit. You may
have to pay a penalty if you file an erroneous claim for re-
fund or credit. The penalty is equal to 20% of the disal-
lowed amount of the claim, unless you can show that you
had reasonable cause for filing your claim. However, any
disallowed amount due to a transaction that lacks eco-
nomic substance will not be treated as due to reasonable
cause. The penalty will not be figured on any part of the
disallowed amount of the claim that is subject to accu-
racy-related or fraud penalties.
Frivolous tax submission. You may have to pay a pen-
alty of $5,000 if you file a frivolous tax return or other frivo-
lous submissions. A frivolous tax return is one that does
not include enough information to figure the correct tax or
that contains information clearly showing that the tax you
reported is substantially incorrect. For more information on
frivolous returns, frivolous submissions, and a list of posi-
tions that are identified as frivolous, see IRS.gov/irb/
2010-17_IRB#NOT-2010-33 (or its successor).
You will have to pay the penalty if you filed this kind of
return or submission based on a frivolous position or a de-
sire to delay or interfere with the administration of federal
tax laws. This includes altering or striking out the preprin-
ted language above the space provided for your signature.
This penalty is added to any other penalty provided by
law.
Fraud. If there is any underpayment of tax on your return
due to fraud, a penalty of 75% of the underpayment due to
fraud will be added to your tax.
Failure to supply TIN. If you do not include your SSN or
ITIN or the SSN or ITIN of another person where required
on a return, statement, or other document, you may be
subject to a penalty of $50 for each failure. You may also
be subject to a penalty of $50 if you do not give your SSN
or ITIN to another person when it is required on a return,
statement, or other document.
For example, if you have a bank account that earns in-
terest, you must give your SSN or ITIN to the bank. The
number must be shown on the Form 1099-INT or other
statement the bank sends you. If you do not give the bank
your SSN or ITIN, you will be subject to the $50 penalty.
(You may also be subject to backup withholding of income
tax.)
You will not have to pay the penalty if you are able to
show that the failure was due to reasonable cause and not
willful neglect.
Criminal Penalties
You may be subject to criminal prosecution (brought to
trial) for actions such as:
1. Tax evasion;
2. Willful failure to file a return, supply information, or pay
any tax due;
3. Fraud and false statements; or
4. Preparing and filing a fraudulent return.
8.
Paying Tax Through
Withholding or Estimated
Tax
Introduction
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.
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1. Withholding. If you are an employee, your employer
probably withholds income tax from your pay. Tax may
also be withheld from certain other income—including
pensions, bonuses, commissions, and gambling win-
nings. In each case, the amount withheld is paid to
the U.S. Treasury in your name.
2. Estimated tax. If you do not pay your tax through
withholding, or do not pay enough tax that way, you
might have to pay estimated tax. People who are in
business for themselves will generally have to pay
their tax this way. You may have to pay estimated tax if
you receive income such as dividends, interest, rent,
and royalties. Estimated tax is used to pay not only in-
come tax, but self-employment tax and alternative
minimum tax as well.
Topics
This chapter discusses:
•
How to notify your employer of your alien status,
•
Income subject to withholding of income tax,
•
Exemptions from withholding,
•
Social security and Medicare taxes, and
•
Estimated tax rules.
Useful Items
You may want to see:
Publication
515 Withholding of Tax on Nonresident Aliens and
Foreign Entities
901 U.S. Tax Treaties
Form (and Instructions)
W-4 Employee's Withholding Certificate
Notice 1392 Supplemental Form W-4 Instructions
for Nonresident Aliens
W-8BEN Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding and
Reporting (Individuals)
W-8ECI Certificate of Foreign Person's Claim That
Income Is Effectively Connected With the
Conduct of a Trade or Business in the United
States
W-9 Request for Taxpayer Identification Number and
Certification
1040-ES (NR) U.S. Estimated Tax for Nonresident
Alien Individuals
8233 Exemption From Withholding on
Compensation for Independent (and Certain
Dependent) Personal Services of a Nonresident
Alien Individual
8288-B Application for Withholding Certificate for
Dispositions by Foreign Persons of U.S. Real
Property Interests
515
901
W-4
Notice 1392
W-8BEN
W-8ECI
W-9
1040-ES (NR)
8233
8288-B
13930 Application for Central Withholding
Agreement
See chapter 12 for information about getting these publi-
cations and forms.
Notification of Alien Status
You must let your employer know whether you are a resi-
dent 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 per-
son, or Form W-4, establishing that your compensation is
subject to graduated withholding at the same rates as res-
ident aliens or U.S. citizens.
If you are a resident alien and you receive income other
than wages (such as dividends and royalties) from sour-
ces 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 in-
come 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 in-
come is effectively connected with a U.S. trade or busi-
ness, file Form W-8ECI instead.
Withholding From
Compensation
The following discussion generally applies only to nonresi-
dent 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 res-
ident aliens and U.S. citizens. Therefore, your compensa-
tion, unless it is specifically excluded from the term “wa-
ges” by law, or is exempt from tax by treaty, is subject to
graduated withholding.
Withholding on Wages
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 fel-
lowship 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 Ben-
efits). These are services you are required to perform as
an employee and as a condition of receiving the
scholarship or fellowship (or tuition reduction).
13930
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Nonresident aliens must follow the special instructions
in Notice 1392 when completing Form W-4 for compensa-
tion paid as employees performing dependent personal
services in the United States. Compensation for depend-
ent 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.
Students and business apprentices from India. If you
are eligible for the benefits of Article 21(2) of the United
States-India Income Tax Treaty, you may claim an addi-
tional withholding allowance for the standard deduction.
Household employees. If you work as a household em-
ployee, your employer does not have to withhold income
tax. However, you may agree to voluntarily withhold in-
come tax by filing a Form W-4 with your employer. The
agreement goes into effect when your employer accepts
the agreement by beginning the withholding. You or your
employer may end the agreement by letting the other
know in writing.
Agricultural workers. If you are an agricultural worker
on an H-2A visa, your employer does not have to withhold
income tax. However, your employer will withhold income
tax only if you and your employer agree to withhold. In that
case, you must provide your employer with a properly
completed Form W-4. You can find more information
about not having tax withheld at IRS.gov/
ForeignAgriculturalWorkers.
Wages Exempt From Withholding
Wages that are exempt from U.S. income tax under an in-
come tax treaty are generally exempt from withholding.
For information on how to claim this exemption from with-
holding, 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.
Residents of Canada or Mexico engaged in transpor-
tation-related employment. Certain residents of Can-
ada or Mexico who enter or leave the United States at fre-
quent intervals are not subject to withholding on their
wages. These persons either:
•
Perform duties in transportation service between the
United States and Canada or Mexico; or
•
Perform duties connected to the construction, mainte-
nance, or operation of a waterway, viaduct, dam, or
bridge crossed by, or crossing, the boundary between
the United States and Canada or the boundary be-
tween the United States and Mexico.
This employment is subject to withholding of so-
cial security and Medicare taxes unless the serv-
ices are performed for a railroad.
To qualify for the exemption from withholding during a
tax year, a Canadian or Mexican resident must give the
employer a statement in duplicate with name, address,
and TIN, certifying that the resident:
•
Is not a U.S. citizen or resident;
•
Is a resident of Canada or Mexico, whichever applies;
and
•
Expects to perform duties previously described during
the tax year in question.
The statement can be in any form, but it must be dated
and signed by the employee and must include a written
declaration that it is made under penalties of perjury.
Residents of American Samoa and Puerto Rico. If
you are a nonresident alien employee who is a resident of
American Samoa or Puerto Rico, wages for services per-
formed in American Samoa or Puerto Rico are generally
not subject to withholding unless you are an employee of
the United States or any of its agencies in American Sa-
moa or Puerto Rico.
Residents of the U.S. Virgin Islands. Nonresident ali-
ens who are bona fide residents of the U.S Virgin Islands
are not subject to withholding of U.S. tax on income
earned while temporarily employed in the United States.
This is because those persons pay their income tax to the
U.S. Virgin Islands. To avoid having tax withheld on in-
come earned in the United States, bona fide residents of
the U.S. Virgin Islands should write a letter, in duplicate, to
their employers, stating that they are bona fide residents
of the U.S. Virgin Islands and expect to pay tax on all in-
come to the U.S. Virgin Islands.
Withholding on Pensions
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 pen-
sion 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.
Withholding on Tip Income
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.
CAUTION
!
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Independent Contractors
If there is no employee-employer relationship between you
and the person for whom you perform services, your com-
pensation 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 en-
tirely or partly exempt from withholding if you reach an
agreement with the IRS on the amount of withholding re-
quired. An agreement that you reach with the IRS regard-
ing 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 par-
ticipating in athletic events in the United States, you may
be able to enter into a CWA with the IRS for reduced with-
holding, provided certain requirements are met. Under no
circumstances will such a withholding agreement reduce
taxes withheld to less than the anticipated amount of in-
come 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.
Central Withholding Agreement Program
Internal Revenue Service
24000 Avila Road, MS 6040
Laguna Niguel, CA 92677
We have temporarily waived the income require-
ment for which form to use when applying for a
CWA. Form 13930-A is currently unavailable.
While the waiver is in effect, individuals with income below
$10,000 can apply for a CWA using Form 13930, Instruc-
tions on how to apply for a Central Withholding Agree-
ment. For more information on how to apply for a CWA,
see Form 13930. For more information, go to IRS.gov/
Individuals/International-Taxpayers/Central-Withholding-
Agreements.
A request for a CWA must be received by the IRS at
least 45 days before the agreement is to take effect to en-
sure 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 consid-
ered on a case-by-case basis.
Final payment exemption. Your final payment of com-
pensation during the tax year for independent personal
services may be entirely or partly exempt from withhold-
ing. This exemption (does not apply to wages) is available
only once during your tax year and applies to a maximum
of $5,000 of compensation. To obtain this exemption, you
CAUTION
!
or your agent must give the following statements and infor-
mation to the Commissioner or Commissioner’s delegate.
•
A statement by each withholding agent from whom
you have received gross income effectively connected
with a trade or business in the United States during
the tax year, showing the amount of income paid and
the tax withheld. Each statement must be signed by
the withholding agent and verified by a declaration
that it is made under penalties of perjury.
•
A statement by the withholding agent from whom you
expect to receive the final payment of compensation,
showing the amount of the payment and the amount of
tax that would be withheld if a final payment exemption
were not granted. This statement must also be signed
by the withholding agent and verified by a declaration
that it is made under penalties of perjury.
•
A statement by you that you do not intend to receive
any other income effectively connected with a trade or
business in the United States during the current tax
year.
•
The amount of tax that has been withheld or paid un-
der any other provision of the Internal Revenue Code
or regulations for any income effectively connected
with your trade or business in the United States during
the current tax year.
•
The amount of your outstanding tax liabilities, if any,
including interest and penalties, from the current tax
year or prior tax periods.
•
Any provision of an income tax treaty under which a
partial or complete exemption from withholding may
be claimed, the country of your residence, and a state-
ment of sufficient facts to justify an exemption under
the treaty.
•
A statement signed by you, and verified by a declara-
tion that it is made under penalties of perjury, that all
the information given is true and that to your knowl-
edge no relevant information has been omitted.
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 Commissioner’s
delegate.
The Commissioner or Commissioner’s delegate will
send you a letter, directed to the withholding agent, show-
ing 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 in-
formation, see Pub. 515.
Refund of Taxes Withheld in Error
Multilevel marketing. If you are a distributor for a multile-
vel marketing company who had taxes withheld in error,
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file a U.S. income tax return (Form 1040-NR or Form
1120-F) or, if a tax return has already been filed, a claim
for refund (Form 1040-X or amended Form 1120-F) to re-
cover the amount withheld in error. You must also attach to
the U.S. income tax return or claim for refund supporting
information that includes, but is not limited to, the following
items.
•
A copy of your Form W-2, Form 1042-S, or Form 1099
to prove the amount of taxes withheld.
•
A statement explaining why income reported on your
Form W-2, Form 1042-S, or Form 1099 is not subject
to U.S. taxation.
•
A statement listing all the dates you entered and left
the United States during the tax year. If the compensa-
tion is multiyear compensation, the statement must list
all the dates you entered and left the United States
during each of the tax years to which the compensa-
tion is attributable.
•
A copy of any documents or records that show the
number of days you actually were present in the Uni-
ted States during the years listed.
•
A statement providing (a) the number of days (or unit
of time less than a day, if appropriate) that personal
services were performed in the United States in con-
nection with recruiting, training, and supporting your
lower-tier distributors; and (b) the total number of days
(or unit of time less than a day, if appropriate) that per-
sonal services were performed globally in connection
with recruiting, training, and supporting your lower-tier
distributors.
•
Any further relevant document or record supporting
your claim that the taxes were withheld in error.
Refund of taxes withheld in error on social security
benefits paid to resident aliens. Social security bene-
fits paid to a lawful permanent resident (green card
holder) are not subject to 30% withholding. For U.S. in-
come tax purposes, green card holders continue to be
resident aliens until their lawful permanent resident status
under immigration laws is either taken away or is adminis-
tratively or judicially determined to have been abandoned.
See Green Card Test in chapter 1. If you are a green card
holder and tax was withheld in error on your social secur-
ity benefits because you have a foreign address, the with-
holding tax is refundable by the IRS. To obtain a refund,
you must file a Form 1040 or 1040-SR. To determine if you
are entitled to a refund, send your return to:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301
You must also attach the following to your Form 1040 or
1040-SR.
•
A copy of Form SSA-1042S, Social Security Benefit
Statement.
•
A copy of the green card.
•
A signed declaration that includes the following state-
ments: “The SSA should not have withheld income tax
from my social security benefits because I am a U.S.
lawful permanent resident and my green card has
been neither revoked nor administratively or judicially
determined to have been abandoned. I am filing a U.S.
income tax return for the tax year as a resident alien
reporting all of my worldwide income. I have not
claimed benefits for the tax year under an income tax
treaty as the resident of a country other than the Uni-
ted States.”
Withholding From Other
Income
Other income subject to 30% withholding generally in-
cludes fixed or determinable income such as interest
(other than portfolio interest), dividends, pensions and an-
nuities, and gains from certain sales and exchanges, dis-
cussed in chapter 4. It also includes 85% of social security
benefits paid to nonresident aliens.
Other income not subject to withholding of 30% (or
lower treaty) rate. The following income is not subject to
withholding at the 30% (or lower treaty) rate if you file
Form W-8ECI with the payer of the income.
•
Income (other than compensation) that is effectively
connected with your U.S. trade or business.
•
Income from real property that you choose to treat as
effectively connected with a U.S. trade or business.
See Income From Real Property in chapter 4 for de-
tails about this choice.
Special rules for withholding on partnership income,
scholarships, and fellowships are explained next.
Tax Withheld on Partnership Income
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 re-
duce withholding on your share of ECTI by considering
certain partner-level deductions. Generally, you must sub-
mit Form 8804-C for this purpose. For more information,
see the Instructions for Form 8804-C.
The withholding rate on your share of effectively con-
nected income is generally the highest rate of tax speci-
fied 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 high-
est tax rate applies. Claim the tax withheld as a credit on
your 2023 Form 1040-NR.
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The partnership will give you a statement on Form 8805
showing the tax withheld. A partnership that is publicly tra-
ded will withhold tax on your actual distributions of effec-
tively 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 indi-
rect 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 dis-
pose 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 re-
flecting 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 with-
holding. 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 nonre-
cognition provision. If you are a transferee that failed to
withhold, under section 1446(f)(4) the partnership is re-
quired to withhold on distributions to you an amount equal
to the tax you failed to withhold (plus interest, if applica-
ble).
On November 30, 2020, the Department of the Treas-
ury and the IRS issued final regulations under section
1446(f) in T.D. 9926 (85 FR 76910) for transfers of both
non-PTP and PTP interests. The final regulations require
any transferee to withhold a tax equal to 10% of the
amount realized on any transfer of a partnership interest
(other than certain PTP interests) under section 1446(f)
(1), unless an exception to withholding applies. These reg-
ulations generally apply to transfers that occur on or after
January 29, 2021. However, in accordance with Notice
2021-51, 2021-36 I.R.B. 361, the rules related to withhold-
ing under section 1446(f)(4) and to transfers of PTP inter-
ests apply to transfers occurring on or after January 1,
2023. Additionally, the final regulations revised certain
provisions in Regulations section 1.1446-4 for withholding
under section 1446(a) on PTP distributions. Also in ac-
cordance with Notice 2021-51, these revisions apply to
PTP distributions made on or after January 1, 2023. Noti-
ces 2018-8 and 2018-29 apply to transfers that occur be-
fore the effective date of the final regulations or, as previ-
ously described, taxpayers may apply the proposed
regulations to transfers of non-PTP interests during this
time.
For additional guidance on certain issues related to the
1446(f) regulations, see Notice 2023-8.
Withholding on Scholarships and
Fellowship Grants
There is no withholding on a qualified scholarship re-
ceived 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.
Alternate Withholding Procedure
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.
Expenses. Include expenses that will be deductible on
your return. These include the IRA deduction discussed
under Deductions in chapter 5.
Nontaxable grant or scholarship. You can exclude the
part of your grant or scholarship that is not taxable under
U.S. law or under a tax treaty.
Standard deduction. If you are a student who qualifies
under Article 21(2) of the United States-India Income Tax
Treaty, you can take the standard deduction. The standard
deduction amount for 2023 is $13,850.
Form W-4. Complete the appropriate lines of Form W-4.
Sign and date the form and give it to your withholding
agent.
If you file a Form W-4 to reduce or eliminate the with-
holding on your scholarship or grant, you must file an an-
nual U.S. income tax return to be allowed any deductions
you claimed on that form. If you are in the United States
during more than 1 tax year, you must attach a statement
to your yearly Form W-4 indicating that you have filed a
U.S. income tax return for the previous year. If you have
not been in the United States long enough to be required
to file a return, you must attach a statement to your Form
W-4 saying you will file a U.S. income tax return when re-
quired.
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.
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Income Entitled to Tax Treaty
Benefits
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 for-
eign 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 serv-
ices income. File Form 8233 for personal services income,
as discussed next.
If you qualify for an exemption under a tax treaty
but did not submit a Form 8233 to your withhold-
ing agent to claim an exemption from withholding,
you can still get the benefit of the exemption by filing a
Form 1040-NR. Follow the instructions for line 1a of the
Form 1040-NR.
Employees and independent contractors. If you per-
form personal services as an employee or as an inde-
pendent contractor and you can claim an exemption from
withholding on that personal service income because of a
tax treaty, give Form 8233 to each withholding agent from
whom amounts will be received.
Even if you submit Form 8233, the withholding agent
may have to withhold tax from your income. This is be-
cause the factors on which the treaty exemption is based
may not be determinable until after the close of the tax
year. In this case, you must file Form 1040-NR to recover
any overwithheld tax and to provide the IRS with proof that
you are entitled to the treaty exemption.
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 publica-
tion to the Form 8233 and give it to the withholding agent.
For treaties not listed in the appendices, attach a state-
ment 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 with-
holding based on a tax treaty for both types of income.
Note. Form 8233 can be used when you are claiming
an exemption for scholarship or fellowship income (that is
not compensation) only if you are also claiming a treaty
withholding exemption for personal services income. Oth-
erwise, you must use Form W-8BEN.
Special events and promotions. Withholding at the full
30% rate is required for payments made to a nonresident
alien or foreign corporation for gate receipts (or television
or other receipts) from music festivals, boxing promotions,
and other entertainment or sporting events, unless the
withholding agent has been specifically advised otherwise
by letter from the IRS. Depending on the calendar year in
TIP
which the U.S. gross income is earned, Form 13930 can
be used to request a reduction in withholding. Withholding
may be required even if the income may be exempt from
taxation by provisions of a tax treaty. One reason for this is
that the partial or complete exemption is usually based on
factors that cannot be determined until after the close of
the tax year.
We have temporarily waived the income require-
ment for which form to use when applying for a
CWA. Form 13930-A is currently unavailable.
While the waiver is in effect, individuals with income below
$10,000 can apply for a CWA using Form 13930, Instruc-
tions on how to apply for a Central Withholding Agree-
ment. For more information on how to apply for a CWA,
see Form 13930. For more information, go to IRS.gov/
Individuals/International-Taxpayers/Central-Withholding-
Agreements.
You will be required to pay U.S. tax at the time of
your departure from the United States on any in-
come for which you incorrectly claimed a treaty
exemption. For more details on treaty provisions that apply
to compensation, see Pub. 901.
Tax withheld on real property sales. If you are a non-
resident alien and you disposed of a U.S. real property in-
terest, the transferee (buyer) of the property must gener-
ally withhold a tax equal to 15% of the amount realized on
the disposition.
However, if the property is acquired by the buyer for use
as a residence and the amount realized does not exceed
$1 million, the rate of withholding is 10%.
The amount realized is the sum of:
•
The cash paid, or to be paid (principal only);
•
The fair market value of other property transferred, or
to be transferred; and
•
The amount of any liability assumed by the transferee
or to which the property is subject immediately before
and after the transfer.
If the property transferred was owned jointly by U.S.
and foreign persons, the amount realized is allocated be-
tween the transferors based on the capital contribution of
each transferor.
A distribution by a QIE to a nonresident alien share-
holder 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 cer-
tain distributions and other transactions by domestic or
foreign corporations, partnerships, trusts, and estates.
These rules are covered in Pub. 515 and in the Instruc-
tions 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
CAUTION
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CAUTION
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gain allocable to its foreign partners. Your share of the in-
come 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.
1. The property is acquired by the buyer for use as a res-
idence and the amount realized is not more than
$300,000.
2. The property disposed of is an interest in a domestic
corporation if any class of stock of the corporation is
regularly traded on an established securities market.
However, this exception does not apply to certain dis-
positions of substantial amounts of nonpublicly traded
interests in publicly traded corporations.
3. The property disposed of is an interest in a U.S. cor-
poration that is not regularly traded on an established
market and you (the seller) give the buyer a copy of a
statement issued by the corporation certifying that the
interest is not a U.S. real property interest.
4. You (the seller) give the buyer a certification stating,
under penalties of perjury, that you are not a foreign
person, and containing your name, U.S. TIN, and
home address.
You can give the certification to a qualified substi-
tute. The qualified substitute gives the buyer a state-
ment, under penalties of perjury, that the certification
is in the possession of the qualified substitute. For this
purpose, a “qualified substitute” is:
a. The person (including any attorney or title com-
pany) responsible for closing the transaction,
other than your agent; or
b. The buyer's agent.
5. The buyer receives a withholding certificate from the
IRS.
6. You give the buyer written notice that you are not re-
quired to recognize any gain or loss on the transfer
because of a nonrecognition provision in the Internal
Revenue Code or a provision in a U.S. tax treaty. The
buyer must file a copy of the notice with the Ogden
Service Center, P.O. Box 409101, Ogden, UT 84409.
You must verify the notice as true and sign it under
penalties of perjury.
See Regulations section 1.1445-2(d)(2) for more
information on the transferor's notice of nonrecogni-
tion.
You may not give the buyer a written notice for any
of the following transfers.
a. The sale of your main home on which you exclude
gain.
b. A like-kind exchange that does not qualify for non-
recognition treatment in its entirety.
c. A deferred like-kind exchange that has not been
completed at the time the buyer must file Form
8288.
Instead, you must get a withholding certificate (descri-
bed next).
7. The amount you realize on the transfer of a U.S. real
property interest is zero.
8. The property is acquired by the United States, a U.S.
state or territory, a political subdivision, or the District
of Columbia.
9. The distribution is from a domestically controlled QIE
and is treated as a distribution of a U.S. real property
interest only because an interest in the entity was dis-
posed of in an applicable wash sale transaction. For
the definition of a QIE, see Qualified investment enti-
ties under Real Property Gain or Loss, earlier. See
Wash sale under Real Property Gain or Loss in chap-
ter 4.
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).
Withholding certificates. The tax required to be with-
held on a disposition can be reduced or eliminated under
a withholding certificate issued by the IRS. In most cases,
either you or the buyer can request a withholding certifi-
cate.
A withholding certificate can be issued due to any of
the following.
1. The IRS determines that reduced withholding is ap-
propriate because either:
a. The amount required to be withheld would exceed
your maximum tax liability, or
b. Withholding of the reduced amount would not
jeopardize collection of the tax.
2. All of your realized gain is exempt from U.S. tax and
you have no unsatisfied withholding liability.
3. You or the buyer enters into an agreement with the
IRS for the payment of tax and provides security for
the tax liability.
See Pub. 515 and IRS.gov/Individuals/International-
Taxpayers/Withholding-Certificates for information on pro-
cedures to request a withholding certificate.
Credit for tax withheld. The buyer must report and pay
over the withheld tax within 20 days after the transfer us-
ing Form 8288. This form is filed with the IRS with copies
A and B of Form 8288-A. Copy B of this statement will be
stamped received by the IRS and returned to you (the
seller) if the statement is complete and includes your TIN.
You must file Copy B with your tax return to take credit for
the tax withheld.
A stamped copy of Form 8288-A will not be provided to
you if your TIN is not included on that form. The IRS will
send you a letter requesting the TIN and provide instruc-
tions for how to get a TIN. When you provide the IRS with
a TIN, the IRS will provide you with a stamped Copy B of
Form 8288-A.
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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.
Social Security and Medicare
Taxes
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 cov-
erage provides retirement benefits, survivors and disability
benefits, and medical insurance (Medicare) benefits to in-
dividuals who meet certain eligibility requirements.
In most cases, the first $160,200 of taxable wages re-
ceived in 2023 for services performed in the United States
is subject to social security tax. All taxable wages are sub-
ject 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 2023 is more than
$9,932.40.
If any one employer deducted more than $9,932.40,
you cannot claim a credit for that amount. Ask your em-
ployer to refund the excess. If your employer does not re-
fund the excess, you can file a claim for refund using Form
843.
In general, U.S. social security and Medicare taxes ap-
ply to payments of wages for services performed as an
employee in the United States, regardless of the citizen-
ship or residence of either the employee or the employer.
In limited situations, these taxes apply to wages for serv-
ices 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-employ-
ment income that are more than:
•
$250,000 if married filing jointly,
•
$125,000 if married filing separately, or
•
$200,000 for any other filing status.
There are no special rules for nonresident aliens for
purposes of Additional Medicare Tax. Wages, RRTA com-
pensation, 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 wa-
ges are not going to be more than $200,000 but your com-
bined 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 pay-
ments.
If you file Form 1040-NR, you must pay Additional Med-
icare Tax if the total of your wages and your self-employ-
ment income was more than $125,000 if married (you
checked the Married filing separately box at the top of
page 1 of Form 1040-NR), or $200,000 if single or qualify-
ing surviving spouse (you checked the Single or Qualify-
ing surviving spouse box at the top of page 1 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/ADMTfaqs.
Self-employed individuals may also be required to pay
Additional Medicare Tax. See Self-Employment Tax, later.
Students and Exchange Visitors
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 per-
formed to carry out the purpose for which you were admit-
ted 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 serv-
ices are very limited and generally include only on-cam-
pus work, practical training, and economic hardship em-
ployment.
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”) re-
mains the same.
Services performed by a spouse or minor child of non-
immigrant aliens with the classification of “F-2,” “J-2,”
“M-2,” and “Q-3” are covered under social security.
Nonresident Alien Students
If you are a nonresident alien temporarily admitted to the
United States as a student, you are generally not permit-
ted to work for a wage or salary or to engage in business
while you are in the United States. In some cases, a stu-
dent 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 un-
less the student is considered a resident alien.
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Any student who is enrolled and regularly attend-
ing classes at a school may be exempt from social
security and Medicare taxes on pay for services
performed for that school.
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 scholar-
ship, 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 un-
less 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 In-
ternal Revenue Code.
Exchange Visitors
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 Reve-
nue 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 se-
curity and Medicare taxes are not withheld from pay for
this work unless the alien is considered a resident alien.
Refund of Taxes Withheld in Error
If social security or Medicare taxes were withheld in error
from pay that is not subject to these taxes, contact the em-
ployer who withheld the taxes for a refund. If you are un-
able 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.
•
A copy of your Form W-2 to prove the amount of social
security and Medicare taxes withheld.
•
A copy of your visa.
TIP
•
Form I-94 (or other documentation showing your dates
of arrival or departure).
•
If you have a J-1 visa, attach a copy of your Form
DS-2019.
•
If you have an F-1 or M-1 visa, attach a complete copy
of your Form I-20.
•
If you are engaged in optional practical training, attach
Form I-766.
•
If you are engaged in employment due to severe eco-
nomic necessity, documentation showing permission
to work in the United States.
•
A statement from your employer indicating the amount
of the reimbursement your employer provided and the
amount of the credit or refund your employer claimed
or you authorized your employer to claim. If you can-
not obtain this statement from your employer, you
must provide this information on your own statement
and explain why you are not attaching a statement
from your employer or on Form 8316 claiming your
employer will not issue the refund.
•
If you were exempt from social security and Medicare
tax for only part of the year, pay statements showing
the tax paid during the period you were exempt.
Send Form 843 (with attachments) to:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0038
Do not use Form 843 to request a refund of Addi-
tional Medicare Tax. If Additional Medicare Tax
was withheld from your pay in error, you can claim
a credit for any withheld Additional Medicare Tax against
the total tax liability shown on your tax return by filing Form
8959 with Form 1040, 1040-SR, or 1040-NR. If Additional
Medicare Tax was withheld in error in a prior year for
which you already filed Form 1040, 1040-SR, or 1040-NR,
you must file Form 1040-X for the prior year in which the
wages or compensation was originally received to recover
the Additional Medicare Tax withheld in error. See the In-
structions for Form 1040-X.
Agricultural Workers
Agricultural workers temporarily admitted into the United
States on H-2A visas are exempt from social security and
Medicare taxes on compensation paid to them for serv-
ices performed in connection with the H-2A visa. You can
find more information about not having tax withheld at
IRS.gov/ForeignAgriculturalWorkers.
Self-Employment Tax
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 in-
ternational social security agreement in effect determines
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that they are covered under the U.S. social security sys-
tem. 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 resi-
dent 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 Bill was a citi-
zen and resident of that country. During 2023, Bill entered
the United States as a resident alien. After becoming a
U.S. resident, Bill continued to receive royalties from Bill’s
foreign publisher. Bill reports Bill’s income and expenses
on the cash basis (income is reported on the tax return
when received and expenses are deducted when paid).
Bill's 2023 self-employment income includes the royalties
received after becoming a U.S. resident even though the
books were published while still being a nonresident alien.
This royalty income is subject to self-employment tax.
Reporting self-employment tax. Use Schedule SE
(Form 1040) to report and figure your self-employment
tax. Then, enter the tax on Schedule 2 (Form 1040), line 4.
Attach Schedule SE (Form 1040) to Form 1040, 1040-SR,
or 1040-NR.
Deferral of employment tax deposits and payments.
Section 2302 of the CARES Act permits self-employed in-
dividuals to defer payment of a portion of their 2020
self-employment tax until 2021 and 2022. All amounts
were due to be paid by December 31, 2022.
Note. This deferral is no longer in effect for tax year
2023.
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).
•
Married filing jointly—$250,000.
•
Married filing separately—$125,000.
•
Single, Head of household, or Qualifying surviving
spouse—$200,000.
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 con-
sidered for purposes of this tax.
If you file Form 1040-NR, you must pay Additional Med-
icare Tax if the total of your wages and your self-employ-
ment income was more than $125,000 if married (you
checked the Married filing separately box at the top of
page 1 of Form 1040-NR), or $200,000 if single or qualify-
ing surviving spouse (you checked the Single or Qualify-
ing surviving spouse box at the top of page 1 of Form
1040-NR).
See Form 8959 and its separate instructions to deter-
mine whether you are required to pay Additional Medicare
Tax. For more information on Additional Medicare Tax, go
to IRS.gov/ADMTfaqs.
Deduction for employer-equivalent portion of
self-employment tax. If you must pay self-employment
tax, you can deduct a portion of the self-employment tax
paid in figuring your adjusted gross income. This deduc-
tion is figured on Schedule SE (Form 1040).
Note. No portion of the Additional Medicare Tax is de-
ductible for self-employment tax.
More information. See Pub. 334 for more information
about self-employment tax.
International Social Security
Agreements
The United States has entered into social security agree-
ments, commonly referred to as “Totalization agreements,”
with foreign countries to coordinate social security cover-
age 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 gener-
ally make sure that social security taxes (including
self-employment tax) are paid only to one country.
For a list of current international social security agree-
ments, go to SSA.gov/international/status.html. As agree-
ments with additional countries enter into force, they will
be posted on this website. For more information on inter-
national social security agreements, go to SSA.gov/
international/totalization_agreements.html.
Employees. Generally, under these agreements, you are
subject to social security taxes only in the country where
you are working. However, if you are temporarily sent to
work for the same employer in the United States and your
pay would normally be subject to social security taxes in
both countries, most agreements provide that you remain
covered only by the social security system of the country
from which you were sent.
To establish that your pay is subject only to foreign so-
cial security taxes and is exempt from U.S. social security
taxes (including the Medicare tax) under an agreement,
you or your employer should request a certificate of cover-
age from the appropriate agency of the foreign country.
This will usually be the same agency to which you or your
employer pays your foreign social security taxes. The for-
eign agency will be able to tell you what information is
needed for them to issue the certificate. Your employer
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should keep a copy of the certificate because it may be
needed to show why you are exempt from U.S. social se-
curity taxes. Only wages paid on or after the effective date
of the agreement can be exempt from U.S. social security
taxes.
Note. Some of the countries with which the United
States has agreements will not issue certificates of cover-
age. In this case, either you or your employer should re-
quest a statement that your wages are not covered by the
U.S. social security system. For more information and how
to apply for a Certificate of Coverage, go to SSA.gov/
international/CoC_link.html.
Self-employed individuals. Under most agreements,
self-employed individuals are covered by the social secur-
ity system of the country where they reside. However, un-
der some agreements, you may be exempt from U.S.
self-employment tax if you temporarily transfer your busi-
ness activity to or from the United States.
If you believe that your self-employment income is sub-
ject only to U.S. self-employment tax and is exempt from
foreign social security taxes, request a Certificate of Cov-
erage from the SSA. See the link in the Note above. This
certificate will establish your exemption from foreign social
security taxes.
To establish that your self-employment income is sub-
ject 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.
Note. Some of the countries with which the United
States has agreements will not issue certificates of cover-
age. In this case, you should request a statement that your
self-employment income is not covered by the U.S. social
security system. For more information and how to apply
for a Certificate of Coverage, go to SSA.gov/international/
CoC_link.html.
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.
For questions on the coverage rules of the agree-
ments, call 410-965-7306.
Estimated Tax Form 1040-ES
(NR)
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
2024 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:
TIP
1. 90% (0.90) of the tax to be shown on your 2024 in-
come tax return, or
2. 100% (1.00) of the tax shown on your 2023 income
tax return (if your 2023 return covered all 12 months of
the year).
If your adjusted gross income for 2023 was more than
$150,000 ($75,000 if your filing status for 2024 is Married
filing separately), substitute 110% (1.10) for 100% (1.00)
in (2) above if you are not a farmer or fisherman. Item (2)
does not apply if you did not file a 2023 return.
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."
How to estimate your tax for 2024. If you filed a 2023
return on Form 1040-NR and expect your income and total
deductions for 2024 to be nearly the same, you should
use your 2023 return as a guide to complete the Estima-
ted Tax Worksheet in the Form 1040-ES (NR) instructions.
If you did not file a return for 2023, or if your income, de-
ductions, or credits will be different for 2024, you must es-
timate these amounts. Figure your estimated tax liability
using the Tax Rate Schedule in the 2024 Form 1040-ES
(NR) instructions for your filing status.
Note. If you expect to be a resident of Puerto Rico dur-
ing the entire year, use Form 1040-ES or Formulario
1040-ES (PR).
When to pay estimated tax. Make your first estimated
tax payment by the due date for filing the previous year's
Form 1040-NR. If you have wages subject to the same
withholding rules that apply to U.S. citizens, you must file
Form 1040-NR and make your first estimated tax payment
by April 15, 2024. If you do not have wages subject to
withholding, file your income tax return and make your first
estimated tax payment by June 17, 2024.
If your first estimated tax payment is due April 15, 2024,
you can pay your estimated tax in full at that time or in four
equal installments by the dates shown next.
1st installment ................. April 15, 2024
2nd installment ................. June 17, 2024
3rd installment ................. Sept. 16, 2024
4th installment ................. Jan. 15, 2025
If your first payment is not due until June 17, 2024, you
can pay your estimated tax in full at that time or pay:
1.
1
/2 of your estimated tax by June 17, 2024;
2.
1
/4 of the tax by September 16, 2024; and
3.
1
/4 by January 15, 2025.
You do not have to make the payment due Janu-
ary 15, 2025, if you file your 2024 Form 1040-NR
by January 31, 2025, and pay the entire balance
due with your return.
Fiscal year. If your return is not on a calendar year ba-
sis, your due dates are the 15th day of the 4th, 6th, and
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9th months of your fiscal year, and the 1st month of the fol-
lowing fiscal year. If any date falls on a Saturday, Sunday,
or legal holiday, use the next day that is not a Saturday,
Sunday, or legal holiday.
Changes in income or deductions. Even if you are not
required to make an estimated tax payment in April or
June, your circumstances may change so that you will
have to make estimated tax payments later. This can hap-
pen if you receive additional income or if any of your de-
ductions are reduced or eliminated. If so, see the Form
1040-ES (NR) instructions and Pub. 505 for information on
figuring your estimated tax.
Amended estimated tax. If, after you have made esti-
mated tax payments, you find your estimated tax is sub-
stantially increased or decreased because of a change in
your income or exemptions, you should adjust your re-
maining estimated tax payments. To do this, see the Form
1040-ES (NR) instructions and Pub. 505.
Penalty for failure to pay estimated income tax. You
will be subject to a penalty for underpayment of install-
ments of estimated tax except in certain situations. These
situations are explained on Form 2210.
9.
Tax Treaty Benefits
Introduction
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 re-
quire that the nonresident alien be a resident of the treaty
country to qualify in the year the benefit is claimed. How-
ever, 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.
Tax treaty tables. You can access the tax treaty tables
by going to IRS.gov/TreatyTables. You can access the
texts of recently signed U.S. income tax treaties, proto-
cols, and tax information exchange agreements (TIEAs)
and the accompanying Treasury Department tax treaty
technical explanations as they become publicly available,
as well as the U.S. Model Income Tax Convention, at
Home.Treasury.gov/Policy-Issues/Tax-Policy/International-
Tax.
Note that treaty and TIEA documents are posted
on this site after signature and before ratification
and entry into force.
CAUTION
!
The full text of individual tax treaties is also available at
IRS.gov/Businesses/International-Businesses/United-
States-Income-Tax-Treaties-A-to-Z. For more information
about tax treaties, go to IRS.gov/Individuals/International-
Taxpayers/Tax-Treaties.
You can generally arrange to have withholding tax re-
duced or eliminated on wages and other income that are
eligible for tax treaty benefits. See Income Entitled to Tax
Treaty Benefits in chapter 8.
Topics
This chapter discusses:
•
Typical tax treaty benefits,
•
How to obtain copies of tax treaties, and
•
How to claim tax treaty benefits on your tax return.
Useful Items
You may want to see:
Publication
901 U.S. Tax Treaties
Form (and Instructions)
1040-NR U.S. Nonresident Alien Income Tax Return
8833 Treaty-Based Return Position Disclosure
Under Section 6114 or 7701(b)
See chapter 12 for information about getting these publi-
cations and forms.
Treaty Income
A nonresident alien's treaty income is the gross income on
which the tax is limited by a tax treaty. Treaty income in-
cludes, for example, dividends from sources in the United
States that are subject to tax at a tax treaty rate not to ex-
ceed 15%. Nontreaty income is the gross income of a
nonresident alien on which the tax is not limited by an ap-
plicable tax treaty.
To determine tax on items of income subject to lower
tax treaty rates, figure the tax on each separate item of in-
come 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. Arthur received gross
901
1040-NR
8833
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income of $25,900 during the tax year from sources within
the United States, consisting of the following items.
Dividends on which the tax is limited to a 15% rate by the
tax treaty ..............................
$1,400
Compensation for personal services on which the tax is
not limited by the tax treaty ...................
24,500
Total gross income ....................... $25,900
Arthur was engaged in business in the United States
during the tax year. Arthur’s dividends are not effectively
connected with that business. Arthur has no deductions.
Arthur’s tax liability, figured as though the tax treaty had
not come into effect, is $3,140 determined as follows.
Total compensation ........................ $24,500
Less: Deductions ......................... 0
Taxable income ......................... $24,500
Tax determined by graduated rate (Tax Table column for
single taxpayers) .........................
$2,720
Plus: Tax on gross dividends ($1,400 × (0.30)) ....... 420
Tax determined as though treaty had not come into
effect ................................
$3,140
Arthur's tax liability, figured by taking into account the
reduced rate on dividend income as provided by the tax
treaty, is $2,930 determined as follows.
Tax determined by graduated rate (same as figured
above) ................................
$2,720
Plus: Tax on gross dividends ($1,400 × (0.15)) ....... 210
Tax on compensation and dividends ........... $2,930
Arthur’s tax liability, therefore, is limited to $2,930, the
tax liability figured using the tax treaty rate on the divi-
dends.
Some Typical Tax Treaty
Benefits
The following paragraphs briefly explain the exemptions
that are available under tax treaties for personal services
income, remittances, scholarships, fellowships, and capi-
tal gain income. The conditions for claiming the exemp-
tions vary under each tax treaty. For more information
about the conditions under a particular tax treaty, down-
load 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 divi-
dends, 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 informa-
tion, see Pub. 901 or the applicable tax treaty.
Personal Services
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 in-
come from U.S. tax if they meet the requirements of the
applicable treaty article.
Income from employment. Most income tax treaties
have an “income from employment” article, sometimes
called the dependent personal services article, which al-
lows residents of the treaty country to exempt income
earned as employees in the United States from U.S. tax if
they satisfy the following.
•
They are present in the United States for a period not
exceeding 183 days in a 12-month period.
•
The income is paid by a foreign employer.
•
The income is not borne by a U.S. permanent estab-
lishment of the foreign employer.
Some income tax treaties contain different requirements,
such as a different period of maximum presence. For
more information, see Pub. 901.
Independent personal services. Some income tax
treaties contain an “independent personal services” arti-
cle, which allows residents of the treaty country to exempt
income earned as an independent contractor or as a
self-employed individual from U.S. tax if they are present
in the United States for a period not exceeding a certain
number of days and if they do not have a fixed base regu-
larly available to them in the United States.
Note. Some treaties do not have an independent
service article. Under these treaties, income for independ-
ent personal services may be covered by the business
profits article. Under the business profits article, individu-
als can generally exempt their business profits from U.S.
tax unless they have a permanent establishment in the
United States to which the business profits are attributa-
ble. For more information, including definitions of the
terms "fixed base" and "permanent establishment," see
Pub. 901.
Teachers, Professors, and
Researchers
Under many income tax treaties, nonresident alien teach-
ers 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.
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Many treaties also provide an exemption for engaging in
research.
Generally, the teacher or professor must be in the Uni-
ted 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 stu-
dent-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 Ali-
ens, later, under Resident Aliens.
Employees of Foreign Governments
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, ali-
ens who are not nationals or subjects of the foreign coun-
try do not qualify. Employees of foreign governments
should read the pertinent treaty carefully to determine
whether they qualify for benefits. Chapter 10 of this publi-
cation also has information for employees of foreign gov-
ernments.
Students, Apprentices, and Trainees
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, apprenti-
ces, 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 Ali-
ens, later, under Resident Aliens.
Capital Gains
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
Resident aliens may qualify for tax treaty benefits in the
situations discussed below.
General Rule for Resident Aliens
Resident aliens generally do not qualify for tax treaty ben-
efits 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 excep-
tions 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 resi-
dent aliens (for example, under the United States-People's
Republic of China treaty); others apply only to resident ali-
ens who are not lawful permanent residents of the United
States (green card holders).
In certain cases, you don’t need to report the income on
your Form 1040 or 1040-SR because the income will be
exempt from U.S. tax under a treaty. However, if the in-
come has been reported as taxable income on a Form
W-2, Form 1042-S, Form 1099, or other information re-
turn, you should report it on the appropriate line of Form
1040 or 1040-SR (for example, line 1a in the case of wa-
ges or salaries reported in box 1 of Form W-2). Enter the
amount for which treaty benefits are claimed, in parenthe-
sis, on Schedule 1 (Form 1040), line 8z. Enter “Exempt in-
come,” the name of the treaty country, and the treaty arti-
cle 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 en-
ter the total on line 10. Then, enter the total from Schedule
1 (Form 1040), line 10, on Form 1040 or 1040-SR, line 8.
For income that is subject to a reduced rate of tax, in-
stead of an exemption, under the treaty, attach a state-
ment 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. Jacques is not re-
quired to report the French social security benefits on
Form 1040 or 1040-SR.
Special Rule for Canadian and German
Social Security Benefits
Under income tax treaties with Canada and Germany, if a
U.S. resident receives social security benefits from Can-
ada or Germany, those benefits are treated for U.S. in-
come tax purposes as if they were received under the so-
cial 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
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in the Instructions for Form 1040, for purposes of deter-
mining 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.
Students, Apprentices, Trainees, Teachers,
Professors, and Researchers Who Became
Resident Aliens
Generally, you must be a nonresident alien student, ap-
prentice, 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 wa-
ges 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 nonresi-
dent 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 claim-
ing 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.
Time limit for claiming treaty exemptions. Many trea-
ties limit the number of years you can claim a treaty ex-
emption. For students, apprentices, and trainees, the limit
is usually 4–5 years; for teachers, professors, and re-
searchers, the limit is usually 2–3 years. Once you reach
this limit, you can no longer claim the treaty exemption.
See the treaty or Pub. 901 for the time limits that apply.
How to report income on your tax return. In certain
cases, you don’t need to report the income on your Form
1040 or 1040-SR because the income will be exempt from
U.S. tax under a 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 ex-
ample, line 1a, amounts reported in box 1 of Form W-2).
Enter the amount for which treaty benefits are claimed, in
parentheses, 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 Sched-
ule 1 (Form 1040), line 10, on Form 1040 or 1040-SR,
line 8.
Example. A citizen of the People's Republic of China
entered the United States as a nonresident alien student
on January 1, 2019. The student remained a nonresident
alien through 2023 and was able to exclude 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, 2024, the student became a resident alien un-
der the substantial presence test because their stay in the
United States exceeded 5 years. Even though the student
is now a resident alien, the provisions of Article 20 still ap-
ply because of the exception to the saving clause in para-
graph 2 of the Protocol to the U.S.–People's Republic of
China treaty dated April 30, 1984. The student should re-
port their scholarship income shown on their Form 1042-S
or Form 1098-T on Schedule 1 (Form 1040), line 8r. Then
they should report the amount for which treaty benefits are
claimed, in parentheses, on Schedule 1 (Form 1040),
line 8z. They should enter "Exempt income," the name of
the treaty country, and the treaty article that provides the
exemption.
Reporting Treaty Benefits
Claimed
If you claim treaty benefits that override or modify any pro-
vision 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 re-
quired to file Form 8833.
Form 8833 filing requirement. You must file a U.S. tax
return and Form 8833 if you claim the following treaty ben-
efits.
•
You claim a reduction or modification in the taxation of
gain or loss from the disposition of a U.S. real property
interest based on a treaty.
•
You claim a credit for a specific foreign tax for which
foreign tax credit would not be allowed by the Internal
Revenue Code.
•
You receive payments or income items totaling more
than $100,000 and you determine your country of resi-
dence under a treaty and not under the rules for resi-
dency discussed in chapter 1.
These are the more common situations for which Form
8833 is required. For additional provisions, see the Form
8833 instructions.
Exceptions. You do not have to file Form 8833 for any of
the following situations.
1. You claim a reduced rate of withholding tax under a
treaty on interest, dividends, rent, royalties, or other
FDAP income ordinarily subject to the 30% rate.
2. You claim that a treaty reduces or modifies the taxa-
tion of income from dependent personal services,
pensions, annuities, social security and other public
pensions, or income of artists, athletes, students,
trainees, or teachers. This includes taxable scholar-
ship and fellowship grants.
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3. You claim a reduction or modification of taxation of in-
come under an International Social Security Agree-
ment or a Diplomatic or Consular Agreement.
4. You are a partner in a partnership or a beneficiary of
an estate or trust and the partnership, estate, or trust
reports the required information on its return.
5. The payments or items of income that are otherwise
required to be disclosed total no more than $10,000.
6. You are claiming treaty benefits for amounts that are:
a. Reported to you on Form 1042-S; and
b. Received by you:
i. As a related party from a reporting corporation
within the meaning of section 6038A (relating
to information returns on Form 5472 filed by
U.S. corporations that are 25% owned by a for-
eign person), or
ii. As a beneficial owner that is a direct account
holder of a U.S. financial institution or qualified
intermediary, or a direct partner, beneficiary, or
owner of a withholding foreign partnership or
trust, from that U.S. financial institution, quali-
fied intermediary, or withholding foreign part-
nership or trust.
The exception described in (6) above does not
apply to any amounts for which a treaty-based re-
turn disclosure is specifically required by the Form
8833 instructions.
Penalty for failure to provide required information on
Form 8833. If you are required to report the treaty bene-
fits but do not, you may be subject to a penalty of $1,000
for each failure.
Additional information. For additional information, see
Regulations section 301.6114-1(c).
10.
Employees of Foreign
Governments and
International
Organizations
Introduction
Employees of foreign governments (including foreign polit-
ical subdivisions) may be able to exempt their foreign gov-
ernment wages from U.S. income tax if they satisfy the re-
quirements of any one of the following.
1. The applicable article in the multilateral Vienna Con-
vention on Diplomatic Relations, the multilateral
Vienna Convention on Consular Relations, or a bilat-
eral consular convention, if one exists, between the
United States and the foreign country;
2. The applicable article in a bilateral tax treaty, if one ex-
ists, between the United States and the foreign coun-
try; or
3. The requirements for obtaining an exemption from
U.S. income tax for foreign government wages provi-
ded under U.S. tax law.
Employees of international organizations may be able
to exempt their wages under a provision, if one exists, in
the international agreement creating the international or-
ganization, or by satisfying the requirements for obtaining
an exemption for such wages under U.S. tax law.
An “international organization” is an organization desig-
nated by the President of the United States through Exec-
utive Order to qualify for the privileges, exemptions, and
immunities provided in the International Organizations Im-
munities 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 treat-
ment under an applicable tax treaty provision. The proper
treatment of this kind of income (interest, dividends, etc.)
is discussed earlier in this publication.
Topics
This chapter discusses:
•
Exemptions for employees of Foreign Governments
•
Exemptions for employees of International
Organizations
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Useful Items
You may want to see:
Publication
15-A Employer's Supplemental Tax Guide
901 U.S. Tax Treaties
1779 Independent Contractor or Employee
See chapter 12 for information about getting these publi-
cations.
Employees of Foreign
Governments
Exemption under Vienna Conventions or a bilateral
consular convention. You should first look at the tax ex-
emption provisions under the Vienna Conventions or a bi-
lateral consular convention, if one exists, to see if your wa-
ges qualify for exemption from U.S. income tax under
those provisions. Generally, you are not entitled to the in-
come tax exemption available under either of the Vienna
Conventions or a bilateral consular convention if you are a
U.S. citizen or resident alien. For further information re-
garding the Vienna Conventions and bilateral consular
conventions, email the Department of State Office of For-
eign Missions at [email protected]v.
Exemption under tax treaty. If you do not qualify for the
tax exemption provided under the Vienna Conventions or
a bilateral consular convention but are from a country that
has a tax treaty with the United States, you should look at
the tax treaty to see if there is a provision that exempts
your wages from U.S. income tax. If you are a U.S. citizen
or resident alien working in the United States for a foreign
government, your wages are usually not exempt. For more
information, see Wages and Pensions Paid by a Foreign
Government in Pub. 901.
Exemption under U.S. tax law. Employees of foreign
governments who do not qualify under the tax exemption
provisions of either of the Vienna Conventions, a bilateral
consular convention, or a tax treaty may be able to exempt
their foreign government wages from U.S. income tax if
they satisfy the following requirements for obtaining an ex-
emption for such wages under U.S. tax law.
The exemption under U.S. tax law applies only to
current foreign government employees and not to
former employees. Pensions received by former
employees of foreign governments living in the United
States do not qualify for the exemption discussed here.
This exemption does not apply to independent
contractors. Common law rules apply to deter-
mine whether you are an employee or an inde-
pendent contractor. See Pub. 1779 and Pub. 15-A.
15-A
901
1779
CAUTION
!
CAUTION
!
Your wages are not eligible for exemption under
U.S. tax law if you are employed by a “controlled
commercial entity” or your services are primarily
in connection with a commercial activity of the foreign gov-
ernment (within or outside the United States). A controlled
commercial entity is an entity that is 50% (0.50) or more
owned by a foreign government that is engaged in com-
mercial activity within or outside the United States.
Requirements. If you are not a U.S. citizen (or if you are
a U.S. citizen but also a citizen of the Republic of the Phil-
ippines) and you work for a foreign government in the Uni-
ted States, your foreign government wages are exempt
from U.S. income tax if:
1. You perform services of a similar character to those
performed by U.S. Government employees in foreign
countries, and
2. The country of your foreign government employer
grants an equivalent tax exemption to U.S. Govern-
ment employees performing similar services in its
country.
However, see Aliens who keep immigrant (lawful perma-
nent resident) status, later, for a special rule that may af-
fect your qualifying for this exemption.
To claim the tax exemption, you must be able to dem-
onstrate that you satisfy both U.S. tax law requirements.
Certification. A Department of State certification, if one
has been issued, is the simplest method to establish that
you meet the similar services and equivalent tax exemp-
tion requirements but is not required to qualify for the U.S.
tax law exemption. For information about whether a certifi-
cation has been issued and whether such certification is
currently valid and applicable to you, email the Depart-
ment of State Office of Foreign Missions at
Where no valid certification exists, you must establish
with other written evidence that you perform services of a
similar character to those performed by U.S. Government
employees in foreign countries and that the country of
your foreign government employer grants an equivalent
exemption to U.S. Government employees performing
similar services in its country.
Employees of International
Organizations
Exemption under international organization agree-
ment. Many agreements that establish international or-
ganizations contain a provision that may exempt your wa-
ges from U.S. income tax. If you are employed by an
international organization in the United States, first look to
see if the international agreement establishing the interna-
tional organization you work for has such a provision and
whether you qualify under it. Generally, these provisions
will not exempt wages of U.S. citizen and resident alien
employees.
CAUTION
!
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Exemption under U.S. tax law. If the international
agreement creating the international organization you
work for does not contain a tax exemption provision and
you are not a U.S. citizen (or if you are a U.S. citizen but
also a citizen of the Republic of the Philippines), you may
be able to exempt your wages under U.S. law. However,
see Aliens who keep immigrant (lawful permanent resi-
dent) status, later, for a special rule that may affect your
qualifying for this exemption.
The exemption under U.S. tax law applies only to
current international organization employees and
not to former employees. Pensions received by
former employees of international organizations living in
the United States do not qualify for the exemption dis-
cussed here.
This exemption does not apply to independent
contractors. Common law rules apply to deter-
mine whether you are an employee or an inde-
pendent contractor. See Pub. 1779 and Pub. 15-A.
To claim the exemption, you must be able to demon-
strate that you meet the requirements of either the interna-
tional organization agreement provision or U.S. tax law.
You should know the article number of the international or-
ganization agreement tax exemption provision, if one ex-
ists, and the number of the Executive Order designating
the organization as an international organization.
Aliens who keep immigrant (lawful permanent resi-
dent) status. If you sign the waiver provided by section
247(b) of the Immigration and Nationality Act (USCIS
Form I-508) to keep your lawful permanent resident status
(green card), you no longer qualify for the tax exemption
under U.S. tax law from the date of filing the waiver.
If you are an employee of a foreign government or
international organization who holds a green card,
to claim the exemption under U.S. tax law you
must also be able to demonstrate with written evidence
from the USCIS that you have not signed and filed USCIS
Form I-508.
Note. The filing of Form I-508 has no effect on a tax
exemption that is not dependent upon the provisions of
U.S. tax law. You do not lose the tax exemption if you file
the waiver and meet either of the following conditions.
•
You work for a foreign government and are exempt
from U.S. tax under an income tax treaty, consular
convention, Vienna Conventions, or any other interna-
tional agreement between the United States and your
foreign government employer.
•
You work for an international organization and the in-
ternational organization agreement creating the inter-
national organization provides that alien employees
are exempt from U.S. income tax. Two international or-
ganizations that have such a provision are the Interna-
tional Monetary Fund (IMF) and the International Bank
for Reconstruction and Development (World Bank).
CAUTION
!
CAUTION
!
CAUTION
!
11.
Departing Aliens and the
Sailing or Departure
Permit
Introduction
Before leaving the United States, all aliens (except those
listed under Aliens Not Required To Obtain Sailing or De-
parture Permits) must obtain a certificate of compliance.
This document, also popularly known as the sailing permit
or departure permit, is part of the income tax form you
must file before leaving. You will receive a sailing or depar-
ture permit after filing a Form 1040-C or Form 2063. These
forms are discussed in this chapter.
To find out if you need a sailing or departure permit, first
read Aliens Not Required To Obtain Sailing or Departure
Permits, later. If you do not fall into one of the categories in
that discussion, you must obtain a sailing or departure
permit. Read Aliens Required To Obtain Sailing or Depar-
ture Permits, later.
Topics
This chapter discusses:
•
Who needs a sailing permit,
•
How to get a sailing permit, and
•
Forms you file to get a sailing permit.
Useful Items
You may want to see:
Form (and Instructions)
1040-C U.S. Departing Alien Income Tax Return
2063 U.S. Departing Alien Income Tax Statement
See chapter 12 for information about getting these forms.
Aliens Not Required To Obtain
Sailing or Departure Permits
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 sup-
port your claim for exemption with proper identification or
give the authority for the exemption.
1040-C
2063
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Category 1. Representatives of foreign governments
with diplomatic passports, whether accredited to the Uni-
ted States or other countries, members of their house-
holds, and servants accompanying them. Servants who
are leaving, but not with a person with a diplomatic pass-
port, must get a sailing or departure permit. However, they
can get a sailing or departure permit on Form 2063 with-
out examination of their income tax liability by presenting a
letter from the chief of their diplomatic mission certifying
that:
•
Their name appears on the “White List” (a list of em-
ployees of diplomatic missions); and
•
They do not owe to the United States any income tax,
and will not owe any tax up to and including the inten-
ded date of departure.
The statement must be presented to an IRS office.
Category 2. Employees of international organizations
and foreign governments (other than diplomatic represen-
tatives exempt under category 1) and members of their
households:
•
Whose compensation for official services is exempt
under U.S. tax law (described in chapter 10), and
•
Who receive no other income from U.S. sources.
If you are an alien in category (1) or (2) above who
filed the waiver under section 247(b) of the Immi-
gration and Nationality Act, you must get a sailing
or departure permit. This is true even if your income is ex-
empt from U.S. tax because of an income tax treaty, con-
sular agreement, or international agreement.
Category 3. Alien students, industrial trainees, and ex-
change visitors, including their spouses and children, who
enter on an “F-1,” “F-2,” “H-3,” “H-4,” “J-1,” “J-2,” or “Q” visa
only and who receive no income from U.S. sources while
in the United States under those visas other than:
•
Allowances to cover expenses incident to study or
training in the United States, such as expenses for
travel, maintenance, and tuition;
•
The value of any services or food and lodging connec-
ted with this study or training;
•
Income from employment authorized by the U.S. US-
CIS; or
•
Interest income on deposits that is not effectively con-
nected with a U.S. trade or business. (See Interest In-
come in chapter 3.)
Category 4. Alien students, including their spouses and
children, who enter on an “M-1” or “M-2” visa only and
who receive no income from U.S. sources while in the Uni-
ted States under those visas, other than:
•
Income from employment authorized by the USCIS, or
•
Interest income on deposits that is not effectively con-
nected with a U.S. trade or business. (See Interest In-
come in chapter 3.)
CAUTION
!
Category 5. Certain other aliens temporarily in the Uni-
ted States who have received no taxable income during
the tax year up to and including the date of departure or
during the preceding tax year. If the IRS has reason to be-
lieve that an alien has received income subject to tax and
that the collection of income tax is jeopardized by depar-
ture, it may then require the alien to obtain a sailing or de-
parture permit. Aliens in this category are:
1. Alien military trainees who enter the United States for
training under the sponsorship of the Department of
Defense and who leave the United States on official
military travel orders;
2. Alien visitors for business on a “B-1” visa, or on both a
“B-1” visa and a “B-2” visa, who do not remain in the
United States or a U.S. territory for more than 90 days
during the tax year;
3. Alien visitors for pleasure on a “B-2” visa;
4. Aliens in transit through the United States or any of its
territories on a “C-1” visa, or under a contract, such as
a bond agreement, between a transportation line and
the Attorney General; and
5. Aliens who enter the United States on a border-cross-
ing identification card or for whom passports, visas,
and border-crossing identification cards are not re-
quired, if they are:
a. Visitors for pleasure,
b. Visitors for business who do not remain in the Uni-
ted States or a U.S. territory for more than 90 days
during the tax year, or
c. In transit through the United States or any of its
territories.
Category 6. Alien residents of Canada or Mexico who
frequently commute between that country and the United
States for employment, and whose wages are subject to
the withholding of U.S. tax.
Aliens Required To Obtain
Sailing or Departure Permits
If you do not fall into one of the categories listed earlier un-
der 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 (which-
ever 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.
Getting a Sailing or Departure Permit
The following discussion covers how to get your sailing
permit.
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When and Where To Get a Sailing or
Departure 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 certifi-
cate 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 Find a Taxpayer Assistance
Center Office, and find “Local Services” at the nearest
Taxpayer Assistance Center (TAC) to see if the Departing
Alien Clearances service is available at that office. Note
that all TACs operate by appointment. Services are limited
and not all services are available at every TAC office.
Call 844-545-5640 to schedule an appointment.
Remember that you must visit an IRS office at
least 2 weeks (but no more than 30 days) before
you leave the United States, so make sure you call for an
appointment well before those time frames. Be prepared
to furnish your anticipated date of departure and bring all
necessary documentation with you.
Documents To Submit
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.
1. Your passport and alien registration card or visa.
2. Copies of your U.S. income tax returns filed for the
past 2 years. If you were in the United States for less
than 2 years, bring the income tax returns you filed for
that period.
3. Receipts for income taxes paid on these returns.
4. Receipts, bank records, canceled checks, and other
documents that prove your deductions, business ex-
penses, and dependents claimed on your returns.
5. A statement from each employer showing wages paid
and tax withheld from January 1 of the current year to
the date of departure if you were an employee. If you
were self-employed, you must bring a statement of in-
come and expenses up to the date you plan to leave.
6. Proof of estimated tax payments for the past year and
this year.
7. Documents showing any gain or loss from the sale of
personal property and/or real property, including capi-
tal assets and merchandise.
8. Documents relating to scholarship or fellowship
grants, including:
a. Verification of the grantor, source, and purpose of
the grant.
CAUTION
!
b. Copies of the application for, and approval of, the
grant.
c. A statement of the amount paid, and your duties
and obligations under the grant.
d. A list of any previous grants.
9. Documents indicating you qualify for any special tax
treaty benefits claimed.
10.
Document verifying your date of departure from the
United States, such as an airline ticket.
11.
Document verifying your U.S. TIN, such as a social
security card or an IRS-issued Notice CP 565 show-
ing your ITIN.
Note. 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 re-
quires a permit.
Forms To File
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 “certifi-
cate of compliance” section. When the certificate of com-
pliance 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 de-
tached from Form 2063, is your sailing or departure per-
mit.
Form 2063
This is a short form that asks for certain information but
does not include a tax computation. The following depart-
ing aliens can get their sailing or departure permits by fil-
ing Form 2063.
•
Aliens, whether resident or nonresident, who have had
no taxable income for the tax year up to and including
the date of departure and for the preceding year, if the
period for filing the income tax return for that year has
not expired.
•
Resident aliens who have received taxable income
during the tax year or preceding year and whose de-
parture will not hinder the collection of any tax. How-
ever, if the IRS has information indicating that the ali-
ens are leaving to avoid paying their income tax, they
must file a Form 1040-C.
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 depar-
ture permit for any later departure if it believes the
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collection of income tax is jeopardized by that later depar-
ture.
Form 1040-C
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 depar-
ture 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 dur-
ing the current year. However, the IRS may cancel the sail-
ing or departure permit for any later departure if the pay-
ment of income tax appears to be in jeopardy.
Joint return on Form 1040-C. Departing husbands and
wives who are nonresident aliens cannot file joint returns.
However, if both spouses are resident aliens, they can file
a joint return on Form 1040-C if:
•
Both spouses can reasonably be expected to qualify
to file a joint return at the normal close of their tax
year, and
•
The tax years of the spouses end at the same time.
Paying Taxes and Obtaining Refunds
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.
Bond To Ensure Payment
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 guar-
anteeing 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 ex-
pired.
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.
Filing Annual U.S. Income Tax
Returns
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. in-
come 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.
12.
How To Get Tax Help
Assistance for overseas taxpayers is available in the U.S
and certain foreign locations.
Taxpayer Assistance Inside the
United States
If you have questions about a tax issue; need help prepar-
ing your tax return; or want to download free publications,
forms, or instructions, go to IRS.gov to find resources that
can help you right away.
Preparing and filing your tax return. After receiving all
your wage and earnings statements (Forms W-2, W-2G,
1099-R, 1099-MISC, 1099-NEC, etc.); unemployment
compensation statements (by mail or in a digital format) or
other government payment statements (Form 1099-G);
and interest, dividend, and retirement statements from
banks and investment firms (Forms 1099), you have sev-
eral options to choose from to prepare and file your tax re-
turn. You can prepare the tax return yourself, see if you
qualify for free tax preparation, or hire a tax professional to
prepare your return.
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Free options for tax preparation. Your options for pre-
paring and filing your return online or in your local com-
munity, if you qualify, include the following.
•
Free File. This program lets you prepare and file your
federal individual income tax return for free using soft-
ware or Free File Fillable Forms. However, state tax
preparation may not be available through Free File. Go
to IRS.gov/FreeFile to see if you qualify for free online
federal tax preparation, e-filing, and direct deposit or
payment options.
•
VITA. The Volunteer Income Tax Assistance (VITA)
program offers free tax help to people with
low-to-moderate incomes, persons with disabilities,
and limited-English-speaking taxpayers who need
help preparing their own tax returns. Go to IRS.gov/
VITA, download the free IRS2Go app, or call
800-906-9887 for information on free tax return prepa-
ration.
•
TCE. The Tax Counseling for the Elderly (TCE) pro-
gram offers free tax help for all taxpayers, particularly
those who are 60 years of age and older. TCE volun-
teers specialize in answering questions about pen-
sions and retirement-related issues unique to seniors.
Go to IRS.gov/TCE or download the free IRS2Go app
for information on free tax return preparation.
•
MilTax. Members of the U.S. Armed Forces and quali-
fied veterans may use MilTax, a free tax service of-
fered by the Department of Defense through Military
OneSource. For more information, go to
MilitaryOneSource (MilitaryOneSource.mil/MilTax).
Also, the IRS offers Free Fillable Forms, which can
be completed online and then e-filed regardless of in-
come.
Using online tools to help prepare your return. Go to
IRS.gov/Tools for the following.
•
The Earned Income Tax Credit Assistant (IRS.gov/
EITCAssistant) determines if you’re eligible for the
earned income credit (EIC).
•
The Online EIN Application (IRS.gov/EIN) helps you
get an employer identification number (EIN) at no
cost.
•
The Tax Withholding Estimator (IRS.gov/W4App)
makes it easier for you to estimate the federal income
tax you want your employer to withhold from your pay-
check. This is tax withholding. See how your withhold-
ing affects your refund, take-home pay, or tax due.
•
The First-Time Homebuyer Credit Account Look-up
(IRS.gov/HomeBuyer) tool provides information on
your repayments and account balance.
•
The Sales Tax Deduction Calculator (IRS.gov/
SalesTax) figures the amount you can claim if you
itemize deductions on Schedule A (Form 1040).
Getting answers to your tax questions. On
IRS.gov, you can get up-to-date information on
current events and changes in tax law.
•
IRS.gov/Help: A variety of tools to help you get an-
swers to some of the most common tax questions.
•
IRS.gov/ITA: The Interactive Tax Assistant, a tool that
will ask you questions and, based on your input, pro-
vide answers on a number of tax topics.
•
IRS.gov/Forms: Find forms, instructions, and publica-
tions. You will find details on the most recent tax
changes and interactive links to help you find answers
to your questions.
•
You may also be able to access tax information in your
e-filing software.
Need someone to prepare your tax return? There are
various types of tax return preparers, including enrolled
agents, certified public accountants (CPAs), accountants,
and many others who don’t have professional credentials.
If you choose to have someone prepare your tax return,
choose that preparer wisely. A paid tax preparer is:
•
Primarily responsible for the overall substantive accu-
racy of your return,
•
Required to sign the return, and
•
Required to include their preparer tax identification
number (PTIN).
Although the tax preparer always signs the return,
you're ultimately responsible for providing all the
information required for the preparer to accurately
prepare your return and for the accuracy of every item re-
ported on the return. Anyone paid to prepare tax returns
for others should have a thorough understanding of tax
matters. For more information on how to choose a tax pre-
parer, go to Tips for Choosing a Tax Preparer on IRS.gov.
Employers can register to use Business Services On-
line. The Social Security Administration (SSA) offers on-
line service at SSA.gov/employer for fast, free, and secure
W-2 filing options to CPAs, accountants, enrolled agents,
and individuals who process Form W-2, Wage and Tax
Statement, and Form W-2c, Corrected Wage and Tax
Statement.
IRS social media. Go to IRS.gov/SocialMedia to see the
various social media tools the IRS uses to share the latest
information on tax changes, scam alerts, initiatives, prod-
ucts, and services. At the IRS, privacy and security are our
highest priority. We use these tools to share public infor-
mation with you. Don’t post your social security number
(SSN) or other confidential information on social media
sites. Always protect your identity when using any social
networking site.
The following IRS YouTube channels provide short, in-
formative videos on various tax-related topics in English,
Spanish, and ASL.
•
Youtube.com/irsvideos.
•
Youtube.com/irsvideosmultilingua.
•
Youtube.com/irsvideosASL.
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Watching IRS videos. The IRS Video portal
(IRSVideos.gov) contains video and audio presentations
for individuals, small businesses, and tax professionals.
Online tax information in other languages. You can
find information on IRS.gov/MyLanguage if English isn’t
your native language.
Free Over-the-Phone Interpreter (OPI) Service. The
IRS is committed to serving taxpayers with limited-English
proficiency (LEP) by offering OPI services. The OPI Serv-
ice is a federally funded program and is available at Tax-
payer Assistance Centers (TACs), most IRS offices, and
every VITA/TCE tax return site. The OPI Service is acces-
sible in more than 350 languages.
Accessibility Helpline available for taxpayers with
disabilities. Taxpayers who need information about ac-
cessibility services can call 833-690-0598. The Accessi-
bility Helpline can answer questions related to current and
future accessibility products and services available in al-
ternative media formats (for example, braille, large print,
audio, etc.). The Accessibility Helpline does not have ac-
cess to your IRS account. For help with tax law, refunds, or
account-related issues, go to IRS.gov/LetUsHelp.
Note. Form 9000, Alternative Media Preference, or
Form 9000(SP) allows you to elect to receive certain types
of written correspondence in the following formats.
•
Standard Print.
•
Large Print.
•
Braille.
•
Audio (MP3).
•
Plain Text File (TXT).
•
Braille Ready File (BRF).
Disasters. Go to IRS.gov/DisasterRelief to review the
available disaster tax relief.
Getting tax forms and publications. Go to IRS.gov/
Forms to view, download, or print all the forms, instruc-
tions, and publications you may need. Or, you can go to
IRS.gov/OrderForms to place an order.
Getting tax publications and instructions in eBook
format. Download and view most tax publications and in-
structions (including the Instructions for Form 1040) on
mobile devices as eBooks at IRS.gov/eBooks.
IRS eBooks have been tested using Apple's iBooks for
iPad. Our eBooks haven’t been tested on other dedicated
eBook readers, and eBook functionality may not operate
as intended.
Access your online account (individual taxpayers
only). Go to IRS.gov/Account to securely access infor-
mation about your federal tax account.
•
View the amount you owe and a breakdown by tax
year.
•
See payment plan details or apply for a new payment
plan.
•
Make a payment or view 5 years of payment history
and any pending or scheduled payments.
•
Access your tax records, including key data from your
most recent tax return, and transcripts.
•
View digital copies of select notices from the IRS.
•
Approve or reject authorization requests from tax pro-
fessionals.
•
View your address on file or manage your communica-
tion preferences.
Get a transcript of your return. With an online account,
you can access a variety of information to help you during
the filing season. You can get a transcript, review your
most recently filed tax return, and get your adjusted gross
income. Create or access your online account at IRS.gov/
Account.
Tax Pro Account. This tool lets your tax professional
submit an authorization request to access your individual
taxpayer IRS online account. For more information, go to
IRS.gov/TaxProAccount.
Using direct deposit. The safest and easiest way to re-
ceive a tax refund is to e-file and choose direct deposit,
which securely and electronically transfers your refund di-
rectly into your financial account. Direct deposit also
avoids the possibility that your check could be lost, stolen,
destroyed, or returned undeliverable to the IRS. Eight in
10 taxpayers use direct deposit to receive their refunds. If
you don’t have a bank account, go to IRS.gov/
DirectDeposit for more information on where to find a bank
or credit union that can open an account online.
Reporting and resolving your tax-related identity
theft issues.
•
Tax-related identity theft happens when someone
steals your personal information to commit tax fraud.
Your taxes can be affected if your SSN is used to file a
fraudulent return or to claim a refund or credit.
•
The IRS doesn’t initiate contact with taxpayers by
email, text messages (including shortened links), tele-
phone calls, or social media channels to request or
verify personal or financial information. This includes
requests for personal identification numbers (PINs),
passwords, or similar information for credit cards,
banks, or other financial accounts.
•
Go to IRS.gov/IdentityTheft, the IRS Identity Theft
Central webpage, for information on identity theft and
data security protection for taxpayers, tax professio-
nals, and businesses. If your SSN has been lost or
stolen or you suspect you’re a victim of tax-related
identity theft, you can learn what steps you should
take.
•
Get an Identity Protection PIN (IP PIN). IP PINs are
six-digit numbers assigned to taxpayers to help pre-
vent the misuse of their SSNs on fraudulent federal in-
come tax returns. When you have an IP PIN, it pre-
vents someone else from filing a tax return with your
SSN. To learn more, go to IRS.gov/IPPIN.
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Ways to check on the status of your refund.
•
Go to IRS.gov/Refunds.
•
Download the official IRS2Go app to your mobile de-
vice to check your refund status.
•
Call the automated refund hotline at 800-829-1954.
The IRS can’t issue refunds before mid-February
for returns that claimed the EIC or the additional
child tax credit (ACTC). This applies to the entire
refund, not just the portion associated with these credits.
Making a tax payment. Payments of U.S. tax must be
remitted to the IRS in U.S. dollars. Digital assets are not
accepted. Go to IRS.gov/Payments for information on how
to make a payment using any of the following options.
•
IRS Direct Pay: Pay your individual tax bill or estimated
tax payment directly from your checking or savings ac-
count at no cost to you.
•
Debit Card, Credit Card, or Digital Wallet: Choose an
approved payment processor to pay online or by
phone.
•
Electronic Funds Withdrawal: Schedule a payment
when filing your federal taxes using tax return prepara-
tion software or through a tax professional.
•
Electronic Federal Tax Payment System: Best option
for businesses. Enrollment is required.
•
Check or Money Order: Mail your payment to the ad-
dress listed on the notice or instructions.
•
Cash: You may be able to pay your taxes with cash at
a participating retail store.
•
Same-Day Wire: You may be able to do same-day
wire from your financial institution. Contact your finan-
cial institution for availability, cost, and time frames.
Note. The IRS uses the latest encryption technology to
ensure that the electronic payments you make online, by
phone, or from a mobile device using the IRS2Go app are
safe and secure. Paying electronically is quick, easy, and
faster than mailing in a check or money order.
What if I can’t pay now? Go to IRS.gov/Payments for
more information about your options.
•
Apply for an online payment agreement (IRS.gov/
OPA) to meet your tax obligation in monthly install-
ments if you can’t pay your taxes in full today. Once
you complete the online process, you will receive im-
mediate notification of whether your agreement has
been approved.
•
Use the Offer in Compromise Pre-Qualifier to see if
you can settle your tax debt for less than the full
amount you owe. For more information on the Offer in
Compromise program, go to IRS.gov/OIC.
Filing an amended return. Go to IRS.gov/Form1040X
for information and updates.
CAUTION
!
Checking the status of your amended return. Go to
IRS.gov/WMAR to track the status of Form 1040-X amen-
ded returns.
It can take up to 3 weeks from the date you filed
your amended return for it to show up in our sys-
tem, and processing it can take up to 16 weeks.
Understanding an IRS notice or letter you’ve re-
ceived. Go to IRS.gov/Notices to find additional informa-
tion about responding to an IRS notice or letter.
Responding to an IRS notice or letter. You can now
upload responses to all notices and letters using the
Document Upload Tool. For notices that require additional
action, taxpayers will be redirected appropriately on
IRS.gov to take further action. To learn more about the
tool, go to IRS.gov/Upload.
Note. You can use Schedule LEP (Form 1040), Re-
quest for Change in Language Preference, to state a pref-
erence to receive notices, letters, or other written commu-
nications from the IRS in an alternative language. You may
not immediately receive written communications in the re-
quested language. The IRS’s commitment to LEP taxpay-
ers is part of a multi-year timeline that began providing
translations in 2023. You will continue to receive communi-
cations, including notices and letters, in English until they
are translated to your preferred language.
Contacting your local TAC. Keep in mind, many ques-
tions can be answered on IRS.gov without visiting a TAC.
Go to IRS.gov/LetUsHelp for the topics people ask about
most. If you still need help, TACs provide tax help when a
tax issue can’t be handled online or by phone. All TACs
now provide service by appointment, so you’ll know in ad-
vance that you can get the service you need without long
wait times. Before you visit, go to IRS.gov/TACLocator to
find the nearest TAC and to check hours, available serv-
ices, and appointment options. Or, on the IRS2Go app,
under the Stay Connected tab, choose the Contact Us op-
tion and click on “Local Offices.”
The Taxpayer Advocate Service (TAS)
Is Here To Help You
What Is TAS?
TAS is an independent organization within the IRS that
helps taxpayers and protects taxpayer rights. TAS strives
to ensure that every taxpayer is treated fairly and that you
know and understand your rights under the Taxpayer Bill
of Rights.
How Can You Learn About Your Taxpayer
Rights?
The Taxpayer Bill of Rights describes 10 basic rights that
all taxpayers have when dealing with the IRS. Go to
TaxpayerAdvocate.IRS.gov to help you understand what
these rights mean to you and how they apply. These are
your rights. Know them. Use them.
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What Can TAS Do for You?
TAS can help you resolve problems that you can’t resolve
with the IRS. And their service is free. If you qualify for
their assistance, you will be assigned to one advocate
who will work with you throughout the process and will do
everything possible to resolve your issue. TAS can help
you if:
•
Your problem is causing financial difficulty for you,
your family, or your business;
•
You face (or your business is facing) an immediate
threat of adverse action; or
•
You’ve tried repeatedly to contact the IRS but no one
has responded, or the IRS hasn’t responded by the
date promised.
How Can You Reach TAS?
TAS has offices in every state, the District of Columbia,
and Puerto Rico. To find your advocate’s number:
•
Go to TaxpayerAdvocate.IRS.gov/Contact-Us;
•
Download Pub. 1546, The Taxpayer Advocate Service
Is Your Voice at the IRS, available at IRS.gov/pub/irs-
pdf/p1546.pdf;
•
Call the IRS toll free at 800-TAX-FORM
(800-829-3676) to order a copy of Pub. 1546;
•
Check your local directory; or
•
Call TAS toll free at 877-777-4778.
How Else Does TAS Help Taxpayers?
TAS works to resolve large-scale problems that affect
many taxpayers. If you know of one of these broad issues,
report it to TAS at IRS.gov/SAMS. Be sure to not include
any personal taxpayer information.
Low Income Taxpayer Clinics (LITCs)
LITCs are independent from the IRS and TAS. LITCs rep-
resent individuals whose income is below a certain level
and who need to resolve tax problems with the IRS. LITCs
can represent taxpayers in audits, appeals, and tax collec-
tion disputes before the IRS and in court. In addition,
LITCs can provide information about taxpayer rights and
responsibilities in different languages for individuals who
speak English as a second language. Services are offered
for free or a small fee. For more information or to find an
LITC near you, go to the LITC page at
TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134,
Low Income Taxpayer Clinic List, at IRS.gov/pub/irs-pdf/
p4134.pdf.
Taxpayer Assistance Outside
the United States
If you are outside the United States, you can call
267-941-1000 (English-speaking only). This num-
ber is not toll free.
If you wish to write instead of calling, address your
letter to:
Internal Revenue Service
International Accounts
Philadelphia, PA 19255-0725
U.S.A.
Additional contacts for taxpayers who live outside the Uni-
ted States are available at IRS.gov/uac/Contact-My-Local-
Office-Internationally.
Taxpayer Advocate Service (TAS). If you live outside
the United States, you can call TAS at +15.15.56.46.827.
Your call will be automatically routed to Hawaii or Puerto
Rico depending on your location. If you select Spanish,
your call will be routed to the Puerto Rico office for assis-
tance. You can contact the Taxpayer Advocate at:
Internal Revenue Service
Taxpayer Advocate Service
City View Plaza, 48 Carr 165,
Guaynabo, P.R. 00968-8000
You can call TAS toll free at 877-777-4778. For more in-
formation on TAS and contacts if you are outside of the
United States, go to TaxpayerAdvocate.IRS.gov/Get-Help/
International/.
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Frequently Asked Questions
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?
For tax purposes, an alien is an indi-
vidual who is not a U.S. citizen. Aliens
are classified as resident aliens and
nonresident aliens. Resident aliens
are taxed on their worldwide income,
the same as U.S. citizens. Nonresi-
dent aliens are taxed only on their U.S.
source income and certain foreign
source income that is effectively con-
nected with a U.S. trade or business.
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?
The difference between these two cat-
egories is that effectively connected
income, after allowable deductions, is
taxed at graduated rates. These are
the same rates that apply to U.S. citi-
zens and residents. Income that is not
effectively connected is taxed at a flat
30% (or lower treaty) rate.
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?
The term “exempt individual” does not
refer to someone exempt from U.S.
tax. You were referred to as an “ex-
empt individual” because as a student
temporarily in the United States on an
F visa, you do not have to count the
days you were present in the United
States as a student during the first 5
years in determining if you are a resi-
dent alien under the substantial pres-
ence test. See chapter 1.
I am a resident alien. Can I claim
any treaty benefits?
Generally, you cannot claim tax treaty
benefits as a resident alien. However,
there are exceptions. See Effect of Tax
Treaties in chapter 1. See also Resi-
dent Aliens under Some Typical Tax
Treaty Benefits in chapter 9.
I am a nonresident alien with no
dependents. I am working
temporarily for a U.S. company.
What return do I file?
You must file Form 1040-NR if you are
engaged in a trade or business in the
United States, or have any other U.S.
source income on which tax was not
fully paid by the amount withheld.
I came to the United States on
June 30 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?
You were a dual-status alien last year.
As a general rule, because you were
in the United States for 183 days or
more, you have met the substantial
presence test and you are taxed as a
resident. However, for the part of the
year that you were not present in the
United States, you are a nonresident.
File Form 1040 or 1040-SR. Enter
“Dual-Status Return” across the top.
Attach a statement showing your U.S.
source income for the part of the year
you were a nonresident. You may use
Form 1040-NR as the statement. En-
ter “Dual-Status Statement” across the
top. See First Year of Residency in
chapter 1 for rules on determining
your residency starting date.
When is my Form 1040-NR due?
If you are an employee and you re-
ceive wages subject to U.S. income
tax withholding, you must generally file
by the 15th day of the 4th month after
your tax year ends. If you file for the
2023 calendar year, your return is due
April 15, 2024.
If you are not an employee who re-
ceives 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 2023 calendar
year, file your return by June 17, 2024.
For more information on when to file
and where to file, see chapter 7.
My spouse is a nonresident alien.
Do they need a social security
number?
A social security number (SSN) must
be furnished on returns, statements,
and other tax-related documents. If
your spouse does not have and is not
eligible to get an SSN, they must ap-
ply for an individual taxpayer identifi-
cation number (ITIN).
If you are a U.S. citizen or resident
and you choose to treat your nonresi-
dent spouse as a resident and file a
joint tax return, your nonresident
spouse needs an SSN or an ITIN.
Alien spouses who are claimed as de-
pendents are also required to furnish
an SSN or ITIN.
See Identification Number in chap-
ter 5 for more information.
I am a nonresident alien. Can I file
a joint return with my spouse?
Generally, you cannot file as married
filing jointly if either spouse was a non-
resident alien at any time during the
tax year.
However, nonresident aliens mar-
ried to U.S. citizens or residents can
choose to be treated as U.S. residents
and file joint returns. For more infor-
mation on this choice, see Nonresi-
dent Spouse Treated as a Resident in
chapter 1.
I have an H-1B visa and my spouse
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?
Assuming both of you had these visas
for all of last year and you are a resi-
dent alien, your spouse is a nonresi-
dent alien if they have not been in the
United States as a student for more
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than 5 years. You and your spouse
can file a joint tax return on Form 1040
or 1040-SR if your spouse makes the
choice to be treated as a resident for
the entire year. See Nonresident
Spouse Treated as a Resident in
chapter 1. If your spouse does not
make this choice, you must file a sep-
arate return on Form 1040 or
1040-SR. Your spouse must file Form
1040-NR.
Is a “dual-resident taxpayer” the
same as a “dual-status taxpayer”?
No. A dual-resident taxpayer is one
who is a resident of both the United
States and another country under
each country's tax laws. See Effect of
Tax Treaties in chapter 1. You are a
dual-status alien when you are both a
resident alien and a nonresident alien
in the same year. For information on
determining the U.S. income tax liabil-
ity for a dual-status tax year, see chap-
ter 6.
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?
The following rules apply if the divi-
dends and capital gains are not effec-
tively connected with a U.S. trade or
business.
•
Capital gains are generally not
taxable if you were in the United
States for less than 183 days dur-
ing the year. See Sales or Ex-
changes of Capital Assets in
chapter 4 for more information and
exceptions.
•
Dividends are generally taxed at a
30% (or lower treaty) rate. The
brokerage company or payer of
the dividends should withhold this
tax at source. If tax is not withheld
at the correct rate, you must file
Form 1040-NR to receive a refund
or pay any additional tax due.
If the capital gains and dividends
are effectively connected with a U.S.
trade or business, they are taxed ac-
cording to the same rules and at the
same rates that apply to U.S. citizens
and residents.
I am a nonresident alien. I receive
U.S. social security benefits. Are
my benefits taxable?
If you are a nonresident alien, 85% of
any U.S. social security benefits (and
the equivalent portion of tier 1 railroad
retirement benefits) you receive is
subject to the flat 30% tax, unless ex-
empt, or subject to a lower treaty rate.
See The 30% Tax in chapter 4.
Do I have to pay taxes on my
scholarship?
If you are a nonresident alien and the
scholarship is not from U.S. sources, it
is not subject to U.S. tax. See Scholar-
ships, Grants, Prizes, and Awards in
chapter 2 to determine whether your
scholarship is from U.S. sources.
If your scholarship is from U.S.
sources or you are a resident alien,
your scholarship is subject to U.S. tax
according to the following rules.
•
If you are a candidate for a de-
gree, you may be able to exclude
from your income the part of the
scholarship you use to pay for tui-
tion, fees, books, supplies, and
equipment required by the educa-
tional institution. However, the part
of the scholarship you use to pay
for other expenses, such as room
and board, is taxable. See Schol-
arships and Fellowship Grants in
chapter 3 for more information.
•
If you are not a candidate for a de-
gree, your scholarship is taxable.
I am a nonresident alien. Can I
claim the standard deduction?
Nonresident aliens cannot claim the
standard deduction. However, see
Students and business apprentices
from India, under Itemized Deductions
in chapter 5, for an exception.
I am a dual-status taxpayer. Can I
claim the standard deduction?
You cannot claim the standard deduc-
tion allowed on Form 1040 or
1040-SR. However, you can itemize
any allowable deductions.
I am filing Form 1040-NR. Can I
claim itemized deductions?
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. See Itemized De-
ductions in chapter 5.
I am single with a dependent child.
I was a dual-status alien in 2023.
Can I claim the earned income
credit on my 2023 tax return?
If you are a nonresident alien for any
part of the year, you cannot claim the
earned income credit. See chapter 6
for more information on dual-status ali-
ens.
I am a nonresident alien student.
Can I claim an education credit on
my Form 1040-NR?
If you are a nonresident alien for any
part of the year, you generally cannot
claim the education credits. However,
if you are married and choose to file a
joint return with a U.S. citizen or resi-
dent spouse, you may be eligible for
these credits. See Nonresident
Spouse Treated as a Resident in
chapter 1.
I am a nonresident alien,
temporarily working in the U.S.
under a J visa. Am I subject to
social security and Medicare
taxes?
Generally, services you perform as a
nonresident alien temporarily in the
United States as a nonimmigrant un-
der subparagraph (F), (J), (M), or (Q)
of section 101(a)(15) of the Immigra-
tion and Nationality Act are not cov-
ered under the social security program
if you perform the services to carry out
the purpose for which you were admit-
ted to the United States. See Social
Security and Medicare Taxes in chap-
ter 8.
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?
If social security or Medicare taxes
were withheld in error from pay that is
not subject to these taxes, contact the
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employer who withheld the taxes for a
refund. If you are unable to get a full
refund of the amount from your em-
ployer, file a claim for refund with the
IRS on Form 843. Do not use Form
843 to request a refund of Additional
Medicare Tax. See Refund of Taxes
Withheld in Error in chapter 8.
I am an alien who will be leaving
the United States. What forms do I
have to file before I leave?
Before leaving the United States, ali-
ens must generally obtain a certificate
of compliance. This document, also
popularly known as the “sailing permit”
or “departure permit,” is part of the in-
come tax form you must file before
leaving. You will receive a sailing or
departure permit after filing a Form
1040-C or Form 2063. These forms
are discussed in chapter 11.
I filed a Form 1040-C when I left the
United States. Do I still have to file
an annual U.S. tax return?
Form 1040-C is not an annual U.S. in-
come tax return. If an income tax re-
turn is required by law, you must file
that return even though you already
filed a Form 1040-C. Chapter 5 and
chapter 7 discuss filing an annual U.S.
income tax return.
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Appendix A—Tax Treaty Exemption Procedure for Students
This appendix contains the statements
nonresident alien students and train-
ees 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 for-
mat similar to those for other treaties.
See chapter 8 for more information on
withholding.
Belgium
1. I was a resident of Belgium on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am present in the United States
for the purpose of my education or
training.
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and Belgium in an
amount not in excess of $9,000 for
any tax year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study or training].
For a trainee who is temporarily
present in the United States for the
purpose of securing training re-
quired to practice a profession or
professional specialty, the treaty
exemption is available only for
compensation paid during a period
of 2 years.
Bulgaria
1. I was a resident of Bulgaria on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the university or other rec-
ognized educational institution at
which you study] or securing train-
ing to practice a profession or pro-
fessional specialty.
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and Bulgaria in an
amount not in excess of $9,000 for
any tax year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study or training].
The treaty exemption for training is
available only for compensation
paid during a period of 2 years.
China, People's Republic
of
1. I was a resident of the People's
Republic of China on the date of
my arrival in the United States. I
am not a U.S. citizen.
2. I am present in the United States
solely for the purpose of my edu-
cation or training.
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and the People's
Republic of China in an amount
not in excess of $5,000 for any tax
year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study or training]. I
am claiming this exemption only for
such period of time as is reasona-
bly necessary to complete the ed-
ucation or training.
Cyprus
1. I was a resident of Cyprus on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the university or other rec-
ognized educational institution at
which you study].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and Cyprus in an
amount not in excess of $2,000
($10,000 if you are a participant in
a government sponsored program
of study not exceeding 1 year) for
any tax year. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a student before the
date of my arrival in the United
States.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The
$2,000 treaty exemption is availa-
ble only for compensation paid
during a period of 5 tax years be-
ginning with the tax year that in-
cludes my arrival date, and for
such additional period of time as is
necessary to complete, as a
full-time student, educational re-
quirements as a candidate for a
postgraduate or professional de-
gree from a recognized educa-
tional institution.
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Czech Republic, Estonia,
Latvia, Lithuania, and
Slovak Republic
1. I was a resident of [insert
the name of the country under
whose treaty you claim exemption]
on the date of my arrival in the Uni-
ted States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying or training at
[insert the name of the university or
other recognized educational insti-
tution at which you study]; or, I am
temporarily present in the United
States as a recipient of a grant, al-
lowance, or award from
[insert the name of the nonprofit
organization or government institu-
tion providing the grant, allowance,
or award].
3. I will receive compensation for
services performed in the United
States. This compensation quali-
fies for exemption from withholding
of federal income tax under the tax
treaty between the United States
and [insert the name of
the country] in the amount not in
excess of $5,000 ($10,000 if you
are a participant in a government
sponsored program of study not
exceeding 1 year) for any tax year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The
$5,000 treaty exemption is availa-
ble only for compensation paid
during a period of 5 tax years be-
ginning with the tax year that in-
cludes my arrival date.
Egypt
1. I was a resident of Egypt on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the university or other rec-
ognized educational institution at
which you study].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and Egypt in an amount
not in excess of $3,000 ($10,000 if
you are a participant in a govern-
ment sponsored program of study
not exceeding 1 year) for any tax
year. I have not previously claimed
an income tax exemption under
that treaty for income received as a
teacher, researcher, or student be-
fore the date of my arrival in the
United States.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The
$3,000 treaty exemption is availa-
ble only for compensation paid
during a period of 5 tax years be-
ginning with the tax year that in-
cludes my arrival date, and for
such period of time as is neces-
sary to complete, as a full-time stu-
dent, educational requirements as
a candidate for a postgraduate or
professional degree from a recog-
nized educational institution.
France
1. I was a resident of France on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the accredited university,
college, school or other educa-
tional institution].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and France in an
amount not in excess of $5,000 for
any taxable year. I have not previ-
ously claimed an income tax ex-
emption under this treaty for in-
come received as a teacher,
researcher, or student before the
date of my arrival in the United
States.
4. I will be present in the United
States only for such period of time
as may be reasonably or custom-
arily required to effectuate the pur-
pose of this visit.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years.
Germany
1. I was a resident of Germany on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States as a student or busi-
ness apprentice for the purpose of
full-time study or training at
[insert the name of the
accredited university, college,
school or other educational institu-
tion]; or, I am temporarily present
in the United States as a recipient
of a grant, allowance, or award
from [insert the name of
the nonprofit organization or gov-
ernment institution providing the
grant, allowance, or award].
3. I will receive compensation for de-
pendent personal services per-
formed in the United States. This
compensation qualifies for exemp-
tion from withholding of federal in-
come tax under the tax treaty be-
tween the United States and
Germany in an amount not in ex-
cess of $9,000 for any tax year,
provided that such services are
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performed for the purpose of sup-
plementing funds otherwise availa-
ble for my maintenance, education,
or training.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 4 tax years beginning with the
tax year that includes my arrival
date.
Iceland
1. I was a resident of Iceland on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the university or other rec-
ognized educational institution at
which you study]; or, I am tempora-
rily present in the United States to
obtain professional training or to
study or do research as a recipient
of a grant, allowance, or award
from [insert the name of
the nonprofit organization or gov-
ernment institution providing the
grant, allowance, or award].
3. I will receive compensation for
services performed in the United
States. This compensation quali-
fies for exemption from withholding
of federal income tax under the tax
treaty between the United States
and Iceland in the amount not in
excess of $9,000 for any tax year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years beginning with the
tax year that includes my arrival
date.
Indonesia
1. I was a resident of Indonesia on
the date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States solely for the purpose of
study at [insert the name
of the university or other accredi-
ted educational institution at which
you study]; or, I am temporarily
present in the United States as a
recipient of a grant, allowance or
award from [insert the
name of the nonprofit organization
or government institution providing
the grant, allowance, or award] for
the primary purpose of study, re-
search, or training.
3. I will receive compensation for
services performed in the United
States. This compensation quali-
fies for exemption from withholding
of federal income tax under the tax
treaty between the United States
and Indonesia in an amount not in
excess of $2,000 for my tax year,
provided such services are per-
formed in connection with my stud-
ies or are necessary for my main-
tenance.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years beginning with the
tax year that includes my arrival
date.
Israel, Philippines, and
Thailand
1. I was a resident of the
[insert the name of the country un-
der whose treaty you claim exemp-
tion] on the date of my arrival in the
United States. I am not a U.S. citi-
zen. I have not been lawfully accor-
ded the privilege of residing per-
manently in the United States as
an immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the university or other rec-
ognized educational institution at
which you study].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and [insert the
name of the country under whose
treaty you claim exemption] in an
amount not in excess of $3,000 for
any tax year. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a teacher, researcher, or
student before the date of my ar-
rival in the United States.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years beginning with the
tax year that includes my arrival
date.
Korea, Norway, Poland,
and Romania
1. I was a resident of [insert
the name of the country under
whose treaty you claim exemption]
on the date of my arrival in the Uni-
ted States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the university or other rec-
ognized educational institution at
which you study].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and [insert the
name of the country under whose
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treaty you claim exemption] in an
amount not in excess of $2,000 for
any tax year. I have not previously
claimed an income tax exemption
under this treaty for income re-
ceived as a teacher, researcher, or
student before the date of my ar-
rival in the United States.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years beginning with the
tax year that includes my arrival
date.
Morocco
1. I was a resident of Morocco on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the university or other rec-
ognized educational institution at
which you study].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and Morocco in an
amount not in excess of $2,000 for
any tax year. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a student before the
date of my arrival in the United
States.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years, beginning with the
tax year that includes my arrival
date.
Netherlands
1. I was a resident of the Netherlands
on the date of my arrival in the Uni-
ted States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of full time study at [in-
sert the name of the recognized
university, college, or school in the
United States at which you study].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and the Netherlands in
an amount not in excess of $2,000
for any tax year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. I am claim-
ing this exemption only for such
period of time as is reasonably
necessary to complete my educa-
tion.
Pakistan
1. I am a resident of Pakistan. I am
not a U.S. citizen. I have not been
lawfully accorded the privilege of
residing permanently in the United
States as an immigrant and would
not otherwise be considered a res-
ident alien for the relevant tax year.
2. I am temporarily present in the Uni-
ted States solely as a student at
[insert the name of the
recognized university, college, or
school in the United States at
which you study].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and Pakistan in an
amount not in excess of $5,000 for
any tax year.
Portugal and Spain
1. I was a resident of [insert
the name of the country under
whose treaty you claim exemption]
on the date of my arrival in the Uni-
ted States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying or training at
[insert the name of the university or
other recognized educational insti-
tution at which you study]; or, I am
temporarily present in the United
States as a recipient of a grant, al-
lowance, or award from
[insert the name of the nonprofit
organization or government institu-
tion providing the grant, allowance,
or award].
3. I will receive compensation for
services performed in the United
States. This compensation quali-
fies for exemption from withholding
of federal income tax under the tax
treaty between the United States
and [Insert the name of
the country] in the amount not in
excess of $5,000 for any tax year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years beginning with the
tax year that includes my arrival
date.
Slovenia and Venezuela
1. I was a resident of [insert
the name of the country under
whose treaty you claim exemption]
on the date of my arrival in the Uni-
ted States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying or training at
[insert the name of the university or
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other accredited educational insti-
tution at which you study or train].
3. I will receive compensation for
services performed in the United
States. This compensation quali-
fies for exemption from withholding
of federal income tax under the tax
treaty between the United States
and [insert the name of
the country under whose treaty
you claim exemption] in an amount
not in excess of $5,000 for any tax
year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years beginning with the
tax year that includes my arrival
date, and for such period of time
as is necessary to complete, as a
full-time student, educational re-
quirements as a candidate for a
postgraduate or professional de-
gree from a recognized educa-
tional institution.
Trinidad and Tobago
1. I was a resident of Trinidad and To-
bago on the date of my arrival in
the United States. I am not a U.S.
citizen. I have not been lawfully ac-
corded the privilege of residing
permanently in the United States
as an immigrant.
2. I am temporarily present in the Uni-
ted States for the primary purpose
of studying at [insert the
name of the university or other ac-
credited educational institution at
which you study].
3. I will receive compensation for per-
sonal services performed in the
United States. This compensation
qualifies for exemption from with-
holding of federal income tax un-
der the tax treaty between the Uni-
ted States and Trinidad and
Tobago in an amount not in excess
of $2,000 (or, if you are securing
training required to qualify you to
practice a profession or a profes-
sional specialty, not in excess of
$5,000) for any tax year. I have not
previously claimed an income tax
exemption under this treaty for in-
come received as a teacher, re-
searcher, or student before the
date of my arrival in the United
States.
4. I will be present in the United
States only for such period of time
as may be reasonably or custom-
arily required to effectuate the pur-
pose of this visit.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years.
Tunisia
1. I was a resident of Tunisia on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the purpose of
full-time study, training, or research
at [insert the name of the
university or other accredited edu-
cational institution at which you
study, train, or perform research].
3. I will receive compensation for
services performed in the United
States. This compensation quali-
fies for exemption from withholding
of federal income tax under the tax
treaty between the United States
and Tunisia in an amount not in ex-
cess of $4,000 for any tax year.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning study at the U.S.
educational institution]. The treaty
exemption is available only for
compensation paid during a period
of 5 tax years beginning with the
tax year that includes my arrival
date.
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Appendix B—Tax Treaty Exemption Procedure for Teachers and
Researchers
This appendix contains the statements
nonresident alien teachers and re-
searchers must file with Form 8233 to
claim a tax treaty exemption from with-
holding of tax on compensation for de-
pendent personal services. For treaty
countries not listed, attach a statement
in a format similar to those for other
treaties. See chapter 8 for more infor-
mation on withholding.
Belgium
1. I am a resident of Belgium. I am
not a U.S. citizen. I have not been
lawfully accorded the privilege of
residing permanently in the United
States as an immigrant.
2. I am visiting the United States for
the purpose of teaching or engag-
ing in research at [insert
the name of the educational or re-
search institution at which you
teach or perform research] for a
period not exceeding 2 years. I will
receive compensation for my
teaching or research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) for these ac-
tivities qualifies for exemption from
withholding of federal tax under the
tax treaty between the United
States and Belgium.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search for which exemption is
claimed]. The treaty exemption is
available only for compensation re-
ceived during a period of 2 years
beginning on that date.
Bulgaria
1. I was a resident of Bulgaria on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am visiting the United States for
the purpose of teaching or con-
ducting research at [in-
sert the name of the university, col-
lege, or other recognized
educational or research institution].
I will receive compensation for my
teaching or research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) for these ac-
tivities qualifies for exemption from
withholding of federal tax under the
tax treaty between the United
States and Bulgaria.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival into the United States
before beginning the services for
which the exemption is claimed].
The treaty exemption is available
only for compensation paid during
a period of 2 years beginning on
that date.
China, People's Republic
of
1. I was a resident of the People's
Republic of China on the date of
my arrival in the United States. I
am not a U.S. citizen.
2. I am visiting the United States for
the primary purpose of teaching,
giving lectures, or conducting re-
search at [insert the
name of the educational institution
or scientific research institution at
which you teach, lecture, or con-
duct research], which is an ac-
credited educational institution or
scientific research institution. I will
receive compensation for my
teaching, lecturing, or research ac-
tivities.
3. The teaching, lecturing, or re-
search compensation received
during the entire tax year (or during
the period from to )
qualifies for exemption from with-
holding of federal tax under the tax
treaty between the United States
and the People's Republic of
China. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a teacher, lecturer, re-
searcher, or student before the
date of my arrival in the United
States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning your teaching, lec-
turing, or research activities]. The
treaty exemption is available only
for compensation received during
a maximum aggregate period of 2
years.
Commonwealth of
Independent States
The treaty with the former Union of So-
viet Socialist Republics remains in ef-
fect for the following countries: Arme-
nia, Azerbaijan, Belarus, Georgia,
Kyrgyzstan, Moldova, Tajikistan, Turk-
menistan, and Uzbekistan.
1. I am a resident of [insert
the name of country]. I am not a
U.S. citizen.
2. I have accepted an invitation by a
governmental agency or institution
in the United States, or by an edu-
cational or scientific research insti-
tution in the United States, to come
to the United States for the primary
purpose of teaching, engaging in
research, or participating in scien-
tific, technical, or professional con-
ferences at [insert the
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name of governmental agency or
institution, educational or scientific
institution, or organization spon-
soring professional conference],
which is a governmental agency or
institution, an educational or scien-
tific institution, or an organization
sponsoring a professional confer-
ence. I will receive compensation
for my teaching, research, or con-
ference activities.
3. The teaching, research, or confer-
ence compensation received the
entire tax year (or for the period
from to ) qualifies for
exemption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and the
former Union of Soviet Socialist
Republics. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a teacher, researcher,
conference participant, or student
before the date of my arrival in the
United States.
4. Any research I perform will not be
undertaken primarily for the benefit
of a private person or commercial
enterprise of the United States or a
foreign trade organization of
[insert the name of coun-
try], unless the research is conduc-
ted on the basis of intergovern-
mental agreements on
cooperations.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date.
Czech Republic and
Slovak Republic
1. I was a resident of the
[insert the name of the country un-
der whose treaty you claim exemp-
tion] on the date of my arrival in the
United States. I am not a U.S. citi-
zen. I have not been lawfully accor-
ded the privilege of residing per-
manently in the United States as
an immigrant.
2. I am visiting the United States for
the primary purpose of teaching or
conducting research at
[insert the name of the educational
or scientific institution], which is an
accredited educational or research
institution. I will receive compensa-
tion for my teaching or research
activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) qualifies for ex-
emption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and the
[insert the name of the
country under whose treaty you
claim exemption]. I have not previ-
ously claimed an income tax ex-
emption under that treaty for in-
come received as a teacher,
researcher, or student before the
date of my arrival in the United
States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching, re-
search, or conference services for
which exemption is claimed]. The
treaty exemption is available only
for compensation received during
a period of 2 years beginning on
that date.
Egypt, Hungary, Korea,
Philippines, Poland, and
Romania
1. I was a resident of [insert
the name of the country under
whose treaty you claim exemption]
on the date of my arrival in the Uni-
ted States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I have accepted an invitation by the
U.S. Government (or by a political
subdivision or local authority
thereof), or by a university or other
recognized educational institution
in the United States for a period
not expected to exceed 2 years for
the purpose of teaching or engag-
ing in research at [insert
the name of the educational institu-
tion], which is a recognized educa-
tional institution. I will receive com-
pensation for my teaching or
research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or for the portion of the
year from to ) quali-
fies for exemption from withholding
of federal tax under the tax treaty
between the United States and
[insert the name of the
country under whose treaty you
claim exemption]. I have not previ-
ously claimed an income tax ex-
emption under this treaty for in-
come received as a teacher,
researcher, or student before the
date of my arrival in the United
States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date.
Note. See Termination of 1979 Tax
Convention with Hungary under What’s
New, earlier.
France
1. I was a resident of France on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I have accepted an invitation by the
U.S. Government, or by a univer-
sity or other recognized educa-
tional or research institution in the
United States for the primary pur-
pose of teaching or engaging in
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research at [insert the
name of the educational or re-
search institution]. I will receive
compensation for my teaching or
research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or for the portion of the
year from to ) quali-
fies for exemption from withholding
of federal tax under the tax treaty
between the United States and
France. I have not previously
claimed an income tax exemption
under this treaty for income re-
ceived as a teacher, researcher, or
student before the date of my ar-
rival in the United States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date.
Germany
1. I am a resident of Germany. I am
not a U.S. citizen. I have not been
lawfully accorded the privilege of
residing permanently in the United
States as an immigrant.
2. I am a professor or teacher visiting
the United States for the purpose
of advanced study, teaching, or re-
search at [insert the
name of the accredited university,
college, school, or other educa-
tional institution, or a public re-
search institution or other institu-
tion engaged in research for the
public benefit]. I will receive com-
pensation for my teaching, re-
search, or study activities.
3. The compensation received during
the entire tax year (or during the
period from to )
for these activities qualifies for ex-
emption from withholding of fed-
eral tax under the tax treaty
between the United States and
Germany. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a student, apprentice, or
trainee during the immediately pre-
ceding period. (If, however, follow-
ing the period in which the alien
claimed benefits as a student, ap-
prentice, or trainee, that person re-
turned to Germany and resumed
residence and physical presence
before returning to the United
States as a teacher or researcher,
that person may claim the benefits
of this treaty.)
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival into the United States
before beginning the services for
which the exemption is claimed].
The treaty exemption is available
only for compensation paid during
a period of 2 years beginning on
that date.
Greece
1. I am a resident of Greece. I am not
a U.S. citizen. I have not been law-
fully accorded the privilege of re-
siding permanently in the United
States as an immigrant (and would
not otherwise be considered a res-
ident alien for the relevant tax
year).
2. I am a professor or teacher visiting
the United States for the purpose
of teaching at [insert the
name of the other educational in-
stitution at which you teach], which
is an educational institution. I will
receive compensation for my
teaching activities.
3. The teaching compensation re-
ceived during the entire tax year
(or during the period from to
) qualifies for exemption
from withholding of federal tax un-
der the tax treaty between the Uni-
ted States and Greece. I have not
previously claimed an income tax
exemption under that treaty for in-
come received as a teacher or stu-
dent before the date of my arrival
in the United States.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching serv-
ices for which exemption is
claimed]. The treaty exemption is
available only for compensation re-
ceived during a period of 3 years
beginning on that date.
India
1. I was a resident of India on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am visiting the United States for
the purpose of teaching or con-
ducting research at [in-
sert the name of the university, col-
lege, or other recognized
educational institution]. I will re-
ceive compensation for my teach-
ing or research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) for these ac-
tivities qualifies for exemption from
withholding of federal tax under the
tax treaty between the United
States and India.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival into the United States
before beginning the services for
which the exemption is claimed].
The treaty exemption is available
only for compensation paid during
a period of 2 years beginning on
that date.
Indonesia
1. I was a resident of Indonesia on
the date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
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2. I have accepted an invitation by
[insert the name of the
university, college, school, or other
similar educational institution] to
come to the United States solely
for the purpose of teaching or en-
gaging in research at that educa-
tional institution. I will receive com-
pensation for my teaching or
research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) qualifies for
exemption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and Indo-
nesia. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a teacher or researcher
before the date specified in the
next paragraph.
4. I arrived in the United States on
[insert the date of your
arrival into the United States be-
fore beginning the teaching or re-
search services for which the ex-
emption is claimed]. The treaty
exemption is available only for
compensation paid during a period
of 2 years beginning on that date.
5. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
Israel
1. I was a resident of Israel on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I have accepted an invitation by the
U.S. Government (or by a political
subdivision or local authority
thereof), or by a university or other
recognized educational institution
in the United States, to come to the
United States for a period not ex-
pected to exceed 2 years for the
purpose of teaching or engaging in
research at [insert the
name of the educational institu-
tion], which is a recognized educa-
tional institution. I will receive
compensation for my teaching or
research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or for the portion of the
year from to ) quali-
fies for exemption from withholding
of federal tax under the tax treaty
between the United States and Is-
rael. I have not previously claimed
an income tax exemption under
this treaty for income received as a
teacher, researcher, or student be-
fore the date of my arrival in the
United States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date.
Italy
1. I was a resident of Italy on the date
of my arrival in the United States. I
am not a U.S. citizen. I have not
been accorded the privilege of re-
siding permanently in the United
States as an immigrant.
2. I am a professor or teacher visiting
the United States for the purpose
of teaching or performing research
at [insert the name of the
educational institution or medical
facility at which you teach or per-
form research], which is a recog-
nized educational institution or a
medical facility primarily funded
from governmental sources. I will
receive compensation for my
teaching or research activities.
3. The compensation received during
the entire tax year (or during the
period from to )
qualifies for exemption from with-
holding of federal tax under the tax
treaty between the United States
and Italy. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a teacher, researcher, or
student before the date of my ar-
rival in the United States.
4. Any research I perform will be un-
dertaken in the general interest
and not primarily for the private
benefit of a specific person or per-
sons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date.
Jamaica
1. I was a resident of Jamaica on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am visiting the United States for
the purpose of teaching or con-
ducting research for a period not
expected to exceed 2 years at
[insert the name of the
educational institution at which you
teach or conduct research], which
is a recognized educational institu-
tion. I will receive compensation for
my teaching or research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) qualifies for ex-
emption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and
Jamaica. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a teacher, researcher, or
student before the date of my ar-
rival in the United States.
4. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
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compensation paid during a period
of 2 years beginning on that date.
Luxembourg
1. I am a resident of Luxembourg. I
am not a U.S. citizen. I have not
been lawfully accorded the privi-
lege of residing permanently in the
United States as an immigrant.
2. I have accepted an invitation by
[insert the name of the
educational institution at which you
teach or perform research], which
is a recognized educational institu-
tion, to come to the United States
for the purpose of teaching or en-
gaging in research at that institu-
tion. I will receive compensation for
my teaching or research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) qualifies for ex-
emption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and
Luxembourg. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a teacher, researcher, or
student before the date of my ar-
rival in the United States.
4. Any research I perform will not be
carried on for the benefit of any
person using or disseminating the
results for purposes of profit.
5. I arrived in the United States on
[insert the date of your
last arrival into the United States
before beginning the teaching
services for which exemption is
claimed]. The treaty exemption is
available only for compensation re-
ceived during a period of 2 years
beginning on that date.
Netherlands
1. I am a resident of the Netherlands.
I am not a U.S. citizen. I have not
been lawfully accorded the privi-
lege of residing permanently in the
United States as an immigrant.
2. I am visiting the United States for
the purpose of teaching or engag-
ing in research at [insert
the name of the educational
institution at which you teach or
perform research] for a period not
exceeding 2 years. I will receive
compensation for my teaching or
research activities.
3. The compensation received during
the entire tax year (or during the
period from to ) for
these activities qualifies for exemp-
tion from withholding of federal tax
under the tax treaty between the
United States and the Nether-
lands. I have not previously
claimed an income tax exemption
under that treaty for income re-
ceived as a teacher, researcher, or
student before the date of my ar-
rival in the United States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the benefit of a
specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival into the United States
before beginning the teaching or
research services for which ex-
emption is claimed]. The treaty ex-
emption is available for compensa-
tion received during a period of 2
years beginning on that date only if
my visit does not exceed 2 years.
Norway
1. I was a resident of Norway on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I have accepted an invitation by the
U.S. Government, or by a univer-
sity or other recognized educa-
tional institution in the United
States for a period not expected to
exceed 2 years for the purpose of
teaching or engaging in research
at [insert the name of the
educational institution], which is a
recognized educational institution.
I will receive compensation for my
teaching or research activities.
3. The teaching or research compen-
sation qualifies for exemption from
withholding of federal tax under the
tax treaty between the United
States and Norway. I have not pre-
viously claimed an income tax ex-
emption under this treaty for in-
come received as a teacher,
researcher, or student before the
date of my arrival in the United
States.
4. Any research I perform will not be
undertaken primarily for the private
benefit of a specific person or per-
sons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date.
Pakistan
1. I am a resident of Pakistan. I am
not a U.S. citizen. I have not been
lawfully accorded the privilege of
residing permanently in the United
States as an immigrant and would
not otherwise be considered a res-
ident alien for the relevant tax year.
2. I am a professor or teacher visiting
the United States for the purpose
of teaching at [insert the
name of the educational institution
at which you teach], which is a rec-
ognized educational institution. I
will receive compensation for my
teaching activities.
3. The teaching compensation re-
ceived during the entire tax year
(or during the period from to
) qualifies for exemption
from withholding of federal tax un-
der the tax treaty between the Uni-
ted States and Pakistan. I have not
previously claimed an income tax
exemption under this treaty for in-
come received as a teacher or stu-
dent before the date of my arrival
in the United States.
4. I arrived in the United States on
[insert the date of your
last arrival into the United States
before beginning the teaching
services for which exemption is
claimed]. The treaty exemption is
available only for compensation
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paid during a period of 2 years be-
ginning on that date.
Portugal
1. I was a resident of Portugal on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I have accepted an invitation by
[insert the name of the
university, college, school, or other
similar educational institution] to
come to the United States solely
for the purpose of teaching or en-
gaging in research at that educa-
tional institution. I will receive com-
pensation for my teaching or
research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) qualifies for
exemption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and Portu-
gal. I have not previously claimed
an income tax exemption under
that treaty for income received as a
teacher or researcher before the
date specified in paragraph 5.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
arrival into the United States be-
fore beginning the teaching or re-
search services for which the ex-
emption is claimed]. The treaty
exemption is available only for
compensation paid during a period
of 2 years beginning on that date.
Slovenia and Venezuela
1. I was a resident of [insert
the name of the country under
whose treaty you claim exemption]
on the date of my arrival in the Uni-
ted States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am temporarily present in the Uni-
ted States for the purpose of
teaching or carrying on research at
[insert the name of the
educational or research institution],
which is a recognized educational
or research institution. I will receive
compensation for my teaching or
research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) qualifies for ex-
emption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and
[insert the name of the
country under whose treaty you
claim exemption]. I have not previ-
ously claimed an income tax ex-
emption under this treaty for in-
come received as a teacher,
researcher, or student before the
date of my arrival in the United
States.
4. Any research I perform will be un-
dertaken in the general interest
and not primarily for the private
benefit of a specific person or per-
sons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date. In no event have I claimed an
exemption under this treaty for in-
come received as a teacher or re-
searcher for more than 5 years.
Thailand
1. I was a resident of Thailand on the
date of my arrival in the United
States. I am not a U.S. citizen. I
have not been lawfully accorded
the privilege of residing perma-
nently in the United States as an
immigrant.
2. I am visiting the United States for
the purpose of teaching or engag-
ing in research at [insert
the name of the educational or re-
search institution at which you
teach or perform research] for a
period not exceeding 2 years. I will
receive compensation for my
teaching or research activities.
3. The compensation received during
the entire tax year (or during the
period from to ) for
these activities qualifies for exemp-
tion from withholding of federal tax
under the tax treaty between the
United States and Thailand. I have
not previously claimed an income
tax exemption under that treaty for
income received as a teacher, re-
searcher, or student before the
date of my arrival in the United
States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the benefit of a
specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival into the United States
before beginning the teaching or
research services for which ex-
emption is claimed]. The treaty ex-
emption is available only for com-
pensation received during a period
of 2 years beginning on that date.
Trinidad and Tobago
1. I was a resident of Trinidad and To-
bago on the date of my arrival in
the United States. I am not a U.S.
citizen. I have not been lawfully ac-
corded the privilege of residing
permanently in the United States
as an immigrant.
2. I have accepted an invitation by the
U.S. Government, or by a univer-
sity or other educational institution
in the United States, to come to the
United States for the purpose of
teaching or engaging in research
at [insert the name of the
educational institution], which is an
educational institution approved by
an appropriate governmental edu-
cation authority. No agreement ex-
ists between the government of the
United States and the government
of Trinidad and Tobago for the pro-
vision of my services. I will receive
compensation for my teaching or
research services.
3. The teaching or research compen-
sation received during the entire
tax year (or for the period from
94 Publication 519 (2023)
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to ) qualifies for ex-
emption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and
Trinidad and Tobago. I have not
previously claimed an income tax
exemption under that treaty for in-
come received as a teacher, re-
searcher, or student before the
date of my arrival in the United
States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the private benefit
of a specific person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date.
United Kingdom
1. I was a resident of the United King-
dom on the date of my arrival in the
United States. I am not a U.S. citi-
zen. I have not been accorded the
privilege of residing permanently in
the United States as an immigrant.
2. I am a professor or teacher visiting
the United States for a period of
not more than 2 years for the pur-
pose of teaching or engaging in re-
search at [insert the
name of the educational institu-
tion], which is a recognized educa-
tional institution. I will receive com-
pensation for my teaching or
research activities.
3. The teaching or research compen-
sation received during the entire
tax year (or during the period from
to ) qualifies for ex-
emption from withholding of fed-
eral tax under the tax treaty be-
tween the United States and the
United Kingdom. I have not previ-
ously claimed an income tax ex-
emption under that treaty for in-
come received as a teacher,
researcher, or student before the
date of my arrival in the United
States.
4. Any research I perform will be un-
dertaken in the public interest and
not primarily for the benefit of any
private person or persons.
5. I arrived in the United States on
[insert the date of your
last arrival in the United States be-
fore beginning the teaching or re-
search services for which exemp-
tion is claimed]. The treaty
exemption is available only for
compensation received during a
period of 2 years beginning on that
date. The entire treaty exemption
is lost retroactively if my stay in the
United States exceeds 2 years.
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To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
Index
30% Tax 31
A
Accuracy-related penalties 54
Additional Medicare Tax 63, 65
Adoption credit:
Dual-status alien 49
Nonresident alien 44
Resident alien 43
Agricultural workers 57, 64
Alien:
Nonresident 4, 15, 26
Resident 4, 15, 26
Alien status, employer notification
of 56
Amended returns 53
American Samoa, residents of 14,
38, 46
Annuities:
Income 24
Source rule 19
Assistance (See Tax help)
Athletes, professional 8
Awards 19
B
Basis of property 20
Beneficiary of estate or trust 26
Business expenses, ordinary and
necessary 39
Business operations 26
Business, U.S. 26
C
Canada:
Commuters 5
Dependents 48
Qualifying surviving spouse filing
status 38
Social security benefits 69
Transportation-related
employment 57
Capital assets, sales or
exchanges 31
Casualty and theft losses 41
Central withholding agreements 58
Charitable contributions 41
Child and dependent care credit:
Dual-status alien 48
Nonresident alien 44
Resident alien 42
Child tax credit:
Dual-Staus alien 49
Nonresident alien 44
Resident alien 43
Claims for refund 53
Commodities, trading in 27
Community income 21
Commuters from Canada or
Mexico 5
Compensation for labor or
personal services:
Geographical basis 18
Contingent interest 23
Credit for the elderly or the
disabled:
Resident alien 42
Credits against tax:
Child and dependent care
credit 44, 48
Child tax credit 43, 44, 49
Dual-status alien 48
Earned income credit 45
Education credits 42, 44
Excess social security tax
withheld 45
Foreign tax credit 43, 48
Hope credit 42, 44
Lifetime learning credit 42, 44
Retirement savings
contributions 43, 44, 48
Tax paid on undistributed long-term
capital gains 45
Tax withheld at source 45
Tax withheld on partnership
income 45
Withholding from wages 45
Crew members:
Alien status 6
Compensation 24
Currency, transporting 53
D
De minimis presence 12
Deductions 39, 40
Dependents:
Dual-status taxpayer 48
Nonresident alien 40
Resident alien 40
Depreciable property 20
Diplomats (See Foreign government
employees)
Disclosure statement 55
Dividends, U.S. source income 16
Dual-status aliens 10
Dual-status tax year 10, 46
Child care credit 48
Computation of tax 48
Foreign tax credit 48
Forms to file 49
Head of household. 47
Income subject to tax 47
Joint return 47
Residency ending date 10
Residency starting date 10
Restrictions 47
Standard deduction 47
Tax rates 47
When and where to file 49
E
Earned income credit:
Nonresident alien 45
Earned income credit (EIC):
Resident alien 43
Education credits:
Nonresident alien 44
Resident alien 42
Effectively connected income 27
Alternative minimum tax 29
Asset-use test 27
Business profits and losses and
sales transactions 28
Business-activities test 27
Direct economic relationship 28
Disposition of REIT stock. 29
Domestically controlled QIE. 29
Foreign income 30
Gain or Loss of Foreign Persons
from the Sale or Exchange of
Certain Partnership Interests 29
Investment income 27
Look-through rule for QIEs. 29
Pensions 28
Publicly traded exception 28
Qualified investment entity 29
Real property gain or loss 28
Real property income choice 32
Tax on 30
Transportation income 28
U.S. real property holding
corporation 28
U.S. real property interest 28
Wash sale 29
Withholding of tax 29
Employees, household 57
Employees, withholding exemption
under tax treaty 61
Employer identification number 37
Estate, beneficiary 26
Estimated tax 55, 66
Excess social security tax 45
Exchange visitors 64
Income from foreign employer 24
Social security and Medicare
taxes 63
Exclusions from gross income 21
Annuities 24
Compensation from a foreign
employer 24
Gambling winnings, dog or horse
racing 24
Students and exchange visitors 24
Treaty income 24, 67
Exempt individual 6
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Exemption from withholding:
Employees 61
Independent contractors 61
Students, teachers, and
researchers 61
Expatriation tax:
Certain dual-citizens 35
Certain minors 35
Covered expatriate 34
Deferral of payment of
mark-to-market tax 36
Exception for dual-citizens and
certain minors 35
Exceptions. 36
Expatriation After June 16, 2008 34
Expatriation date. 34
Expatriation Tax Return 36
Former LTR 34
Former U.S. citizen. 34
How To Figure the Expatriation Tax
If You Are a Covered Expatriate (If
You Expatriate After June 16,
2008) 35
Long-term resident (LTR)
defined 34
F
Fellowship grant:
Excludable 25
Source rule 19
Withholding tax 60
Filing requirements 51
Filing returns 36
Amended returns 53
Claims for refund 53
Commonwealth of the Northern
Mariana Islands 52
Dual-status taxpayer 49
Estimated tax 66
Form 1040-C 76
Form 1040-NR 36, 51
Form 1040-NR-EZ 36
Form 2063 75
Guam 52
Nonresident alien 36
U.S. Virgin Islands 52
Who must file 51
Filing status 38
First-year choice 11
Fixed or determinable income 31
Foreign country 8
Foreign earned income
exclusion 22
Foreign employer 23, 24
Foreign government employees:
Alien status 6
Exempt from U.S. tax 71
Tax treaty exemption 69
Foreign income subject to U.S.
tax 30
Foreign tax credit:
Dual-status alien 48
Nonresident alien 43
Resident alien 42
Form 8833 9
Form 8840 9
Forms 8
1040-C 76
1040-ES(NR) 66
1040-NR 51
1040-X 53
1042-S 61
1116 42, 43, 48
2063 75
2210 67
3903 39
4563 46
4790 (See FinCEN 105)
8233 61
8275 55
8288 62
8288-A 62
8288-B 62
8801 45
8805 59, 61
8833 69
8843 8
FinCEN 105 53
W-4 56, 60
W-7 37
W-8BEN 61
W-8ECI 57
W-9 56
Forms to file:
Dual-status alien 49
Nonresident aliens 51
Resident alien 50
Sailing permits 75
Frequently Asked Questions 81
G
Gambling winnings, dog or horse
racing 24
German social security benefits 69
Green card test 4
H
Head of household:
Nonresident alien 38
Resident alien 38
Home, sale of 24
Household employees 57
I
Identification number, taxpayer:
Defined 37
Penalty for failure to supply 55
Income:
Community 21
Effectively connected 27
Exclusions 21
Fixed or determinable 31
Foreign 30
From real property 32
Income affected by treaties 24
Interest 22
Investment 27
Personal services 28
Reporting 39
Sale of home 24
Tip 57
Income code:
28 31
Income from U.S. sources 15
Dividends 16
Interest 16
Pensions and annuities 19
Personal property 20
Personal services 17
Real property 20
Rents or royalties 20
Independent contractors:
Withholding exemption under tax
treaty 61
Withholding rules 58
India, students and business
apprentices from:
Standard deduction 41
Withholding allowances 57
Individual retirement arrangement
(IRA) 39
Individual taxpayer identification
number (ITIN) 37
Intangible property 21
Interest:
Portfolio 22, 23
Interest income:
Contingent 23
Excludable 22
Source rule 16
International organization
employees 72
Alien status 7
Exempt from U.S. tax 71
International social security
agreements 65
Interrupted period of residence 33
Inventory 20
Investment income 27
Itemized deductions 40
K
Korea, South:
Dependents 48
Married filing separately 38
Qualifying surviving spouse filing
status 38
L
Last year of residency 12
Long-term U.S. resident:
Defined 34
Expatriation tax 34
Losses:
Capital Assets 31
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Casualty and theft 41
Of nonresident aliens 39
Real property 28
M
Married filing jointly:
Nonresident alien 38
Resident alien 38
Medical condition:
Travel exception 6
Medicare tax 63
Mexico:
Commuters 5
Dependents 48
Qualifying surviving spouse filing
status 38
Transportation-related
employment 57
Monetary instruments,
transporting 53
Moving expenses 39
Services or reimbursements
provided by government to
members of the U.S. Armed
Forces 39
Multi-level marketing 17, 58
Municipal bonds 22
N
National of the United States 47
Natural resources (See Real
property)
Non-registered obligations 22
Nonresident alien 4
Annuity income 24
Business expenses 39
Casualty and theft losses 41
Charitable contributions 41
Child care credit 44
Child tax credit and the additional
child tax credit 44
Credit for excess social security tax
withheld 45
Credit for income tax withheld 45
Credit for other dependents 44
Credit for prior-year minimum
tax 45
Defined 4
Earned income credit 45
Education credits 44
Effectively connected income, tax
on 30
Filing Form 1040-NR 36
Filing Form 1040-NR-EZ 36
Foreign tax credit 43
Gambling winnings, dog or horse
racing 24
Head of household 38
How income is taxed 26
Individual retirement arrangement
(IRA) 39
Interest income 16
Losses 39
Married filing jointly 38
Qualified business income
deduction. 39
Qualifying surviving spouse 38
Standard deduction 41
State and local income taxes 41
Students 63
Tax paid on undistributed long-term
capital gains 45
Tax withheld at source 45
Withholding from partnership
income 45
Withholding tax 55
Nonresident alien dependents:
Canada, Mexico. South Korea,
Residents of India 40
Nonresident spouse treated as a
resident 13
O
Obligations:
Not in registered form 22
Registered 22
Original issue discount 31
P
Partnership Income, tax withheld
on 59
Partnerships 26
Payment against U.S. tax 49
Tax withheld at the source 45
Withholding from wages 45
Penalties 53
Accuracy-related 54
Failure to file 54
Failure to pay 54
Failure to supply taxpayer
identification number 55
Fraud 55
Frivolous tax submission 55
Negligence 54
Substantial understatement of
income tax 54
Penalty for failure to pay estimated
income tax 67
Penalty on early withdrawal of
savings 40
Pensions:
Disaster tax relief 19
Source rule 19
Withholding on 57
Personal property 20
Personal services income:
Connected with U.S. business 28
Paid by foreign employer 23
Source rule 17
Tax treaty exemption 68
Withholding on wages 56
Portfolio interest 22, 23
Prizes 19
Professional athletes 8
Property:
Depreciable 20
Intangible 21
Inventory 20
Personal 20
Real 20, 28
Protective return 52
Publications (See Tax help)
Puerto Rico, residents of 14, 38, 46,
57
Q
Qualified business income
deduction. 39
R
Railroad retirement benefits 31, 48
Real estate (See Real property)
Real property:
Definition 20
Income from 32
Natural resources 20
Sale or exchange of 28
Source rule 20
Real property income 31
Refunds, claims for 53
Registered obligations 22
Rents 20
Researchers, wage withholding
exemption under tax treaty 61,
89
Residence, interrupted 33
Residency:
First year 10
Last year 12
Starting date 10
Termination date 12
Tests 4
Resident alien 4
Child tax credit 49
Child tax credit and the additional
child tax credit 43
Credit for other dependents 43
Defined 4
Education credits 42
Head of household 38
Married filing jointly 38
Qualifying surviving spouse 38
Resident aliens:
Dependents 40
Retirement savings contributions
credit:
Dual-status alien 48
Nonresident alien 44
Resident alien 43
Royalties 20
S
Sailing permits, departing aliens:
Aliens not requiring 73
Bond furnished, insuring tax
payment 76
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Form 1040-C 76
Form 2063 75
Forms to file 75
When and Where To Get a Sailing
or Departure Permit. 75
Salary (See Personal services
income)
Sale of home, income from 24
Sales or exchanges, capital
assets 31
Scholarship:
Excludable 25
Source rule 19
Withholding tax 60
Securities, trading in 27
Self-employed retirement plans 40
Self-employment tax 64
Social security benefits:
Dual-status alien 48
Nonresident alien 31
Social security number 37
Social security tax:
Credit for excess tax withheld 63
Excess withheld 45
Foreign students and exchange
visitors 63
International agreements 65
Self-employment tax 64
Totalization agreements 65
Withheld in error 64
Source of compensation for labor
or personal services:
Alternative basis 19
Multi-year compensation 17
Time basis 17
Source of income 15
Standard deduction 41
State and local income taxes 41
Stocks, trading in 27
Student loan interest deduction 40
Students:
Alien status 7
Engaged in U.S. business 26
Fellowship grant 19, 60
Income from foreign employer 24
Scholarship 19, 60
Social security and Medicare
taxes 63
Tax treaty exemption 69
Wage withholding exemption under
tax treaty 61, 84
Students and business apprentices
from India 41, 57
Substantial presence test 5
T
Tax credits and payments:
Nonresident aliens 43
Resident aliens 42
Tax help 76
Tax home 8, 20
Tax paid on undistributed
long-term capital gains 45
Tax treaties:
Benefits 67, 68
Capital gains 69
Employees of foreign
governments 69
Exclusions from income 24
Income affected by 24
Reporting benefits claimed 70
Teachers and professors 68
Trainees, students, and
apprentices 69
Tax Treaties:
Effect of 9
Income entitled to benefits 61
Tax withheld on gain from the sale
or exchange of certain
partnership interests 45
Tax year 37, 47
Tax, transportation 33
Taxpayer identification number:
Defined 37
Penalty for failure to supply 55
Teachers:
Alien status 7
Tax treaty exemption 68
Wage withholding exemption under
tax treaty 61, 89
Tie-breaker rule 9
Tip income 57
Totalization agreements 65
Trade or business, U.S. 26
Beneficiary of estate or trust 26
Business operations 26
Income from U.S. sources 27
Partnerships 26
Personal services 26
Students and trainees 26
Trading in stocks, securities, and
commodities 27
Trading in stocks, securities, and
commodities 27
Trainees 7, 26
Transportation income:
Connected with U.S. business 28
Source rule 19
Transportation of currency or
monetary instruments 53
Transportation tax 33
Transportation-related
employment, residents of
Canada or Mexico 57
Treaties, income affected by 24
Treaty benefits for resident
aliens 69
Treaty benefits, reporting benefits
claimed 70
Trust, beneficiary 26
U
U.S Virgin Islands, residents of:
Withholding on wages 57
U.S. Armed Forces:
Moving expenses 39
U.S. national 47
U.S. Virgin Islands, residents of:
Where to file 52
W
Wages (See Personal services
income)
Wages exempt from withholding 57
Wages, withholding on 56
Waiver of filing deadline 52
When to file 51, 52
Where to file 51
Who must file 51
Withholding 55, 59
Withholding tax:
Central withholding agreements 58
Notification of alien status 56
Pensions 57
Puerto Rico, residents of 57
Real property sales 61
Scholarships and grants 60
Social security taxes 63
Tax treaty benefits 61
Tip income 57
U.S. Virgin Islands, residents of 57
Wages 56
Wages exempt from 57
Where to report on the return 45
Withholding from compensation 56
Publication 519 (2023) 99
