Foreign individuals with U.S.-source income are generally required to file federal tax returns and, in most cases, state tax returns. The specific requirements depend on their resident status, income sources, and business and other activities.
The following are some of the filing requirements for foreign individuals:
A non-resident alien may generally file Form 1040-NR if:
File by April 15 if you received wages subject to U.S. withholding, or by June 15 if you had only income not subject to withholding (e.g., investments). You can request an extension using Form 4868.
Form 4868 provides an automatic 6-month extension to file Form 1040-NR. U.S. Non-resident Alien Income Tax Return.
Generally due by the original due date of your return. For example, the 6-month extension to file Form 1040-NR should be filed by April 15 or June 15 if you have no wages subject to U.S. withholding.
If you are a non-resident alien working in the U.S. (such as on an F-1 or J-1 visa), your income from U.S. sources is generally subject to federal tax.
However, you may be able to reduce or eliminate this tax if your home country has a tax treaty with the U.S. Form 8233 is used to claim these treaty benefits on income from personal services, such as wages or compensation.
By submitting the form to your employer, they can determine if you qualify for a partial or full exemption from withholding, and if so, they won’t withhold tax on the income covered by the treaty.
The form should be submitted to the withholding agent/ employer annually. Once approved by the employer, the form should be sent to the IRS within 5 days by the withholding agent/employer to Department of the Treasury, IRS, Philadelphia, PA 19255-0725 or fax at (877) 824-9781 or (2677) 466-1365.
Form 8833 is used to disclose to the IRS when a taxpayer is taking a treaty-based return position under an income tax treaty between the U.S. and another country. The form notifies the IRS that the taxpayer is claiming treaty benefits that may reduce or eliminate U.S. tax.
These treaty benefits can include:
Form W-8BEN, officially titled “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals),” is the form used by non-U.S. individuals to certify that they are not U.S. taxpayers.
Please note that W-BBEN should not be confused with Form W-8BEN-E, which is for corporations, as discussed above.
When a foreign individual earns certain types of U.S. source income (such as dividends, royalties, interest, or compensation for services), they may be subject to certain withholding taxes. Usually, the U.S. payer or withholding agent is generally required to withhold tax at a flat 30% rate. By submitting Form W-8BEN, the individual can:
The IRS uses the form to verify the person’s non-resident alien status and determine whether treaty benefits apply.
If a non-U.S. individual fails to submit a valid Form W-8BEN, the U.S. payor should withhold the full 30% tax rate, regardless of any treaty benefits.
The W-8 BEN form remains valid for three years from the signing date, unless there is a change in circumstances that affects the particulars provided.