I am a Non resident alien (student on F1) from India. I has some income from capital gain, which comes under "income not effectively connected to US trade or business" for federal purpose. This income is taxed at flat 30% rate, and it doesn't gets counted towards my federal adjusted gross income. There is separate schedule for this income in 1040NR.

I want to know what's my tax liability for this income towards a state (Georgia in my case). As Georgia form only ask for federal adjusted gross income.

Thanks in advance for help.

Capital gain on the sale of personal property (like stock) by a nonresident alien is free of any tax both under US domestic tax law and the India/US treaty.
1. Fill out the 1040NR page 4, line 83. Put the withheld tax in column a, and put 0% and the gain in column e.
2. Follow the directions on line 85
3. Put the amount of withheld tax on line 65 and get a refund.
4. Fill out a W8-BEN and send to your broker.
5. If you have no SS or ITIN fill out a W7, get a certified copy of your passport, and send the W7 and your 1040NR to:
Internal Revenue Service
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342

There is no State liability since you have no AGI.

Five Rings, section 871(a)(2) provides for tax on capital gains where a person is present in the U.S. for more than 183 days. Although students on F1 visas are not considered present in the U.S. for purposes of determining residency, they are present in the U.S. for section 871(a)(2) purposes. Also, the U.S.-India Income Tax Treaty does not prevent the U.S. from taxing these capital gains.

Dinesh, the net capital gain does count towards federal adjusted gross income.

Thank you IntlTax for pointing that out and correcting my error. I am not used to all those domestic issues and will pay closer attention in the future.

I found 871(c) the critical part of the statute since that overrides the provisions of sec. 865(a)(2)

I filled my Federal taxes through CINTAX and it didn't added the income from capital gain (not affcetively connected to US trade... ) to the federal adjusted gross income. So I guess it doesn't get added.

IntlTax: If its OK with you, I would like to get my state tax done by you. Let me know.

Thanks for your help.

Dinesh:

I assume IntlTax helped you with your return.

If not, contact me at [email protected].