Non -Resident Alien

If you are a nonresident alien visiting the United States only for pleasure and receive no income from U.S. sources, you do not have to file a U.S. income tax return. If, in 1999, you are a nonresident alien and you work or are ENGAGED OR CONSIDERED TO BE ENGAGED IN A TRADE OR BUSINESS in the United States, you must file a U.S. income tax return even if:

1. Your income did not come from a trade or business conducted in the United States,
2. You have no income from U.S. sources, or
3. Your income is exempt from U.S. income tax.

If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States.

EMPLOYEES OF FOREIGN PERSONS, ORGANIZATIONS, OR OFFICES. If three conditions exist, income for personal services performed in the United States as a nonresident alien is not considered to be from U.S. sources and is tax exempt. If you do not meet ALL THREE conditions, your income from personal services performed in the United States is U.S. source income and is taxed according to the rules found in chapter 4 of Publication 519.

The three conditions are as follows.

1. You either:

   (a) Perform personal services as an employee of, or under a contract with, a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in a trade or business in the United States, or
   (b) Work for an office or place of business maintained in a foreign country or possession of the United States by a U.S. corporation, a U.S. partnership, or a U.S. citizen or resident.

2. You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year.
3. Your pay for these services is not more than $3,000.

OTHERS WHO MUST FILE. If you are not engaged in a trade or business in the United States, you must file a return if you have U.S. income on which the tax liability was not satisfied by the withholding of tax at the source. You must file a return if you are claiming a refund of income taxes withheld or overpaid. Also, you must file a return if you want to claim the benefit of any deductions or credits. For example, if you do not have a job or trade or business in the United States, but you do have rental or royalty income from an interest in U.S. real property, you may choose to treat that activity as a U.S. trade or business. To claim a deduction for any allowable expenses related to that business, you must file a return. With certain exceptions, you must file a return when you take the position that a U.S. tax treaty overrules or modifies a U.S. tax law. You must provide special information with the return, including a statement of facts supporting your position.

IDENTIFICATION NUMBER. A taxpayer identification number must be furnished on returns, statements, and other tax related documents. You can get a taxpayer identification number by filing Form W-7, APPLICATION FOR IRS INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER, with the IRS.

WHAT INCOME IS TAXED

A nonresident alien usually is subject to U.S. income tax only on U.S. source income. Under limited circumstances, certain foreign source income is subject to U.S. tax. See FOREIGN INCOME in chapter 4 of Publication 519. Taxable income from U.S. sources includes, but is not limited to:

1. Wages, salaries, commissions, fees, tips, etc., for services performed in the United States,
2. Interest (with certain exceptions) and dividends,
3. Rents and royalties,
4. Profits or losses from the sale of inventory property within the United States, and
5. Gains and losses from the sale of real property located in the United States.

WHAT TAX FORMS YOU MAY NEED

If you are a nonresident alien and you must file an income tax return, use Form 1040NR, U.S. NONRESIDENT ALIEN INCOME TAX RETURN, unless you qualify to use Form 1040NR-EZ, U.S. INCOME TAX RETURN FOR CERTAIN NONRESIDENT ALIENS WITH NO DEPENDENTS. If you have income from which no (or not enough) U.S. tax is withheld, you also may need to file Form 1040-ES(NR), U.S. ESTIMATED TAX FOR NONRESIDENT ALIEN INDIVIDUALS. Before leaving the United States, you may have to file Form 1040-C, U.S. DEPARTING ALIEN INCOME TAX RETURN, or Form 2063, U.S. DEPARTING ALIEN INCOME TAX STATEMENT. These forms are briefly discussed later. Be sure to get Publication 519, which is a complete tax guide for aliens.

DEPARTING ALIENS AND THE SAILING OR DEPARTURE PERMIT

Before leaving the United States, you must come to an IRS office to file Form 1040-C or Form 2063. These forms must be filed to get a certificate of compliance or clearance (known as a sailing or departure permit) from the Internal Revenue Service. However, see the discussion, later, under ALIENS NOT REQUIRED TO OBTAIN SAILING OR DEPARTURE PERMITS. A certificate of compliance certifies that you have satisfied the U.S. income tax laws. THIS IS NOT YOUR FINAL TAX RETURN. If you are required to file a U.S. income tax return for the year, file Form 1040NR or Form 1040NR-EZ after the end of the year. You have to file this form whether or not you owe more tax or are entitled to a refund of tax paid. Treat the tax you paid with Form 1040-C as a credit against the tax on your income tax return. WHEN TO GET A SAILING OR DEPARTURE PERMIT. You should get your sailing or departure permit at least 2 weeks before you plan to leave the United States. The clearance, however, may not be issued more than 30 days before you leave. If both you and your spouse are aliens and are leaving together, both of you must go to the IRS office.