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View Full Version : Taxation of Dual Status Aliens


slee1234
Dec 22, 2008, 10:46 AM
Hi

I'm a bit confused about the instructions given by the IRS on taxation of Dual Status aliens:

Taxation of Dual-Status Aliens (http://www.irs.gov/businesses/small/international/article/0,,id=96433,00.html)


There is a section that says:

"For The Part of The Year You are a Nonresident Alien:

For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources only."


But then later on it says under the section "Effectively and Not Effectively Connected Income":

"..... Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate."


Isn't this a contradiction of what was said in the earlier section?



Any help would be greatly appreciated
Thanks,
Sam

IntlTax
Dec 22, 2008, 08:47 PM
U.S. source income that is effective connected is taxed at graduated rates and is after certain deductions. U.S. source income that is not effectively connected is generally subject to a flat 30% rate on gross income.

slee1234
Dec 29, 2008, 01:58 PM
Thanks for the response. It's really the US source income that is taxed at 30%. It wasn't very clear in the IRS document. Thanks again.