How is the source of income determined?
The source of income is a key issue in determining whether a nonresident alien is subject to U.S. income tax. A nonresident alien usually is subject to U.S. income tax only on U.S. source income. U.S. source income is income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States.
The source of income is a key issue in determining whether a nonresident alien is subject to U.S. income tax. A nonresident alien usually is subject to U.S. income tax only on U.S. source income. U.S. source income is income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States. The source of income varies with the type of income involved. The source of compensation for personal services, for example, is determined based on the place where the services were performed. Thus, amounts earned as a result of work performed in the United States are sourced to the United States even if paid in another country. The source of dividends and interest are determined by the residence of the paying corporation or bank. The source of rental income or gain from the sale of real property is based on where the property is located. The source of pension income is based on where the services were performed. The source of income f
