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    slee1234's Avatar
    slee1234 Posts: 5, Reputation: 1
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    #1

    Dec 22, 2008, 10:46 AM
    Taxation of Dual Status Aliens
    Hi

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

    Taxation of Dual-Status Aliens


    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's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert
    		  
    #2

    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's Avatar
    slee1234 Posts: 5, Reputation: 1
    New Member
    		  
    #3

    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.
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