U.S. Sourced Income
Frequently Asked Questions
About U.S. Sourced Income
Suppose you are not a U.S. citizen or U.S. legal permanent resident alien (commonly known as “Green Card holders”), and you do not meet the substantial presence test. In that case, generally, you are a nonresident alien (NRA) by the IRS for U.S. tax purposes. Unlike U.S. tax persons, you are not required to pay U.S. tax on incomes that you received from non-U.S. sources. However, you need to pay taxes on your income from U.S. sources. As can be inferred, as a nonresident alien, you need to determine your income sources to determine your U.S. tax. To assist taxpayers, the IRS has provided a chart that outlines the determining factors of the source of certain incomes.
Item of Income Factor
Determining Source
Salaries, wages, other compensation
Where services performed
Business income: Personal Services
Where services performed
Business income: sale of inventory-purchased
Where sold
Business income: sale of inventory-produced
Where produced (allocation may be necessary)
Interest
Residence of payer
Dividends
Whether a U.S. or foreign corporation-(exception 25% look-thru look)
Rent
Location of the property
Royalties: Natural resources
Location of the property
Royalties: Patents, copyrights, etc.
Where property is used
Sale of real property
Location of the property
Sale of personal property
Seller’s tax home (exceptions may apply)
Pensions
Where the services were performed that earned the pension
Scholarship-Fellowships
Generally, the residence of the payer
Sale of natural resources
Allocation based on fair market value of product at export terminal.
Suppose you are not a U.S. citizen or U.S. legal permanent resident alien (commonly known as “Green Card holders”), and you do not meet the substantial presence test. In that case, generally, you are a nonresident alien (NRA) by the IRS for U.S. tax purposes. Unlike U.S. tax persons, you are not required to pay U.S. tax on incomes that you received from non-U.S. sources. However, you need to pay taxes on your income from U.S. sources. As can be inferred, as a nonresident alien, you need to determine your income sources to determine your U.S. tax. To assist taxpayers, the IRS has provided a chart that outlines the determining factors of the source of certain incomes.
THEVOZ & Partners specializes in the area of Tax Law
This area of law is particularly complex and requires a high level of training. For this reason, our attorneys train continuously and hold a significant amount of experience in the field of tax law. THEVOZ & Partners is a law firm with offices in Austin and Lausanne specializing in the provision of tax and legal services to individuals and companies in the United States and Europe. We help clients navigate a litany of domestic and international tax issues ranging from compliance to planning and even litigation. We understand that each client has unique needs and goals, and we pride ourselves on taking a personalized approach to tailor our services to meet those needs.
Olivier Thevoz
Partner and Founder
Anthony E. Parent
Partner
Stephen M. Tannenbaum
Partner
Olivier Francioli
Partner
Fabrice Kuhn
Partner
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THEVOZ & Partners is an international law firm best known for its practice in international tax, civil litigation, and business transaction structuring. We are committed to providing our clients with tailored and competent services.
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