"foreign" individuals invest in the U.S. without fully comprehending their tax
consequences. An NRA for U.S. tax purposes is a non-U.S. resident and a non-U.S. citizen.
In most cases, with proper tax planning, taxes can be minimized or even avoided.
An NRA is taxed on his or her U.S. source income at a flat rate of 30%, unless
there is a lower treaty rate available. U.S.-source income includes, rents, wages,
dividends, interest, royalties, licenses and other ordinary income payments (called
"fixed or determinable, annual or periodic" payments). The sourcing rules are
complex and often depend on where the non-resident alien is physically present when
earning the income or the location of the person or entity paying the funds.
Gains (profits) from the sale of stocks and securities or any other non-real estate
asset by an NRA is generally not taxable to an NRA. Gains from the sale of real estate
located in the U.S. is always a taxpayer event, whether the asset is held directly by the
individual or by certain U.S. corporations or partnership. The tax is enforced through
A gift by an NRA to a U.S. taxpayer (a U.S. resident or
citizen) is usually non-taxable to the NRA or the U.S. recipient, unless the gifts
involves U.S. real property or tangible personal property located within the U.S. Although
the gift is non-taxable to either the donor (giver) or donee (recipient), there are
gift-tax reporting rules that may apply. Generally, gifts totaling less than $100,000 per
calendar year made by an NRA are not reportable.
information on the U.S. tax consequences for an NRA, see the Tax Prophet's section on Foreign Taxpayers.
The Tax Prophet