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Aliens - Which Income to Report

Aliens should report their income on U.S. income tax returns as follows:

Are you a Resident Alien?
- Resident Aliens report their entire worldwide income on Form 1040, 1040A, or 1040EZ like U.S. Citizens.
- Resident Aliens may not claim exclusions of income based on Tax Treaties (with certain exceptions for foreign students and foreign scholars).
Are you a Nonresident Alien?
- Nonresident Aliens use Form 1040NR or 1040NR-EZ to report only income that is sourced in the United States, or that is effectively connected with a United States trade or business. Refer to Publication 519 for definition of "effectively connected income," and to Publication 515 section "Source of Income" for a discussion of "U.S. Source Income."
- Nonresident Aliens who receive interest income from deposits with a U.S. bank, savings & loan institution, credit union, or insurance company, or who receive Portfolio Interest (described in Publication 519) are exempt from taxation on such interest income as long as such interest income is not effectively connected with a United States trade or business.
Are you a Dual Status Alien?
- Dual Status Aliens report their entire worldwide income for that portion of the year in which they are Resident Aliens, and report only income that is sourced in the United States or that is effectively connected with a U.S. trade or business for that portion of the year in which they are Nonresident Aliens.
- Dual Status Aliens report their interest income from all sources for that portion of the year in which they are Resident Aliens, and do not report interest income from deposits with U.S. banks, savings & loan institutions, credit unions, on amounts held by an insurance companies, and investments which generate portfolio interest for that portion of the year in which they are Nonresident Aliens as long as such interest income is not effectively connected with a U.S. trade or business.

References/Related Topics

Page Last Reviewed or Updated: 02-Aug-2012