Nonresident Income, Withholding & Tax Treaties
A nonresident is taxed only on U.S.-source income, but through two different systems: graduated rates on business income and a flat 30 percent withheld at source on the rest.
We determine what is taxable, apply the treaty where one helps, prepare the certifications payers need and recover tax that was withheld in error.
Withholding is the default. Treaties and elections are the exceptions, and they must be claimed.
Income effectively connected with a U.S. trade or business is taxed at the same graduated rates as a resident’s, after deductions. Fixed or determinable income such as dividends, interest, royalties and rent is taxed at 30 percent of the gross amount, withheld by the payer.
A tax treaty can reduce or eliminate the 30 percent rate, but only if the recipient qualifies and gives the payer the right form.
When the form is missing, the payer withholds in full. Getting the money back takes a return, documentation and time.
The nonresident rules in numbers.
From IRS guidance for nonresident aliens.
Which treaty applies, and whether its limitation-on-benefits article is met, is decided case by case. The IRS maintains the texts of all U.S. treaties. Sources: IRS, Taxation of Nonresident Aliens; IRS, Substantial Presence Test; IRS, About Form 8833; IRS, About Form W-8 BEN.
What we do for nonresidents with U.S. income.
Source and character of income
What is U.S.-source, what is effectively connected and what falls under withholding.
Treaty analysis and claims
Residence, limitation on benefits, reduced rates and the certifications that make them effective.
W-8 series and Form 8833
Certifications for payers, brokers and platforms, and treaty disclosures on returns.
Form 1040-NR and dual-status years
Annual returns, the year of arrival or departure, and elections that change the result.
Recovering over-withheld tax
Claims for withholding that should not have been taken, with the documentation the IRS requires.
Withholding agents
Advice to U.S. businesses and platforms on what to withhold from foreign payees and how to document it.
How a nonresident matter runs.
Classification first; everything follows from it.
Status
Resident or nonresident, and which treaty country, established for each year.
Classify
Each income stream sourced and characterized.
Document
Certifications delivered to payers; treaty positions prepared.
File
Returns, disclosures and refund claims filed and tracked.
Lawyers who plan the structure and defend it.
Structure before the move, the investment or the sale.
Residency timing, entity choice, trusts and elections are decided together, with the home-country result in view. We coordinate with your accountants and counsel abroad so the plan works in both places.
Compliance and controversy in the same hands.
Foreign asset reporting, penalty exposure, streamlined and voluntary disclosures and IRS examinations. The firm also litigates and arbitrates, so a plan is written knowing how it will be tested.
Withholding happens when the payment is made. Fixing it afterward is slower.
The certification has to reach the payer first.
- Give every U.S. payer a current W-8 form before the first payment
- Keep records of where work was performed and days spent in the United States
- Check whether a treaty applies before assuming the 30 percent rate
- File a return to claim refunds; they are not automatic
- Sign a W-9 if you are not a U.S. person
- Assume a U.S. client means U.S.-source income
- Ignore IRS notices sent to a foreign address
- Let a treaty position go undisclosed on the return
From the firm’s writing.
How to Open a U.S. Bank Account as a Non-Resident in 2026
Documentation and tax forms banks require.
Read the articleU.S. Pre-Immigration Tax Planning: What to Know Before You Move
When nonresident status is about to end.
Read the articleFrequently asked.
Income from a trade or business conducted in the United States, including services performed here. It is taxed at graduated rates after deductions, on a return. Passive income such as dividends and royalties is instead taxed at a flat rate withheld at source.
Give the payer a W-8BEN or W-8BEN-E that identifies your treaty country and the article you rely on, before payment. If you take a treaty position on a return that overrides the Code, Form 8833 is generally required.
Capital gains on U.S. stocks are generally not taxed to a nonresident who is not present 183 days or more in the year. Dividends are subject to 30 percent withholding unless a treaty reduces it. Brokers withhold based on your W-8.
The year you arrive or leave, when you are a resident for part of the year and a nonresident for the rest. Each part is taxed under its own rules on a single return. Elections can simplify it.
Yes, by filing a return with the withholding documented. Refunds take time and require a U.S. taxpayer identification number. The better fix is correct certifications before the payment.
Other areas of the practice.
Inbound and outbound services, from pre-immigration planning to offshore compliance. Back to the overview.
U.S. income as a nonresident?
A confidential consultation. We will tell you what is taxable, what the treaty does and what should be filed.
