Yes, non-resident aliens do pay U.S. taxes, but only on income tied to the United States. Two rules do most of the work: income from a U.S. trade or business is taxed at the same graduated rates that apply to citizens, and passive U.S.-source income like dividends, interest, rents, and royalties is taxed at a flat 30% unless a tax treaty lowers the rate. Worldwide income is not on the table the way it is for citizens and residents.
Who Counts as a Non-Resident Alien
Tax status turns on two tests in the Internal Revenue Code. Fail both and you are a non-resident alien for the year.1Office of the Law Revision Counsel. 26 USC 7701 – Definitions
The green card test is the simpler one. If you held lawful permanent resident status at any point during the calendar year, you are a resident for the whole year, whether you set foot in the country or not.
The substantial presence test counts days. You become a resident if you were physically in the U.S. for at least 31 days in the current year and a weighted total of 183 days over three years: all days this year, one-third of last year’s days, and one-sixth of the year before. Come in under that total and you stay a non-resident alien.
Some visa holders never count their days at all. Foreign government personnel, teachers and trainees on J or Q visas, and students on F, J, M, or Q visas are treated as “exempt individuals” for the day-counting formula. That label does not exempt them from tax on U.S. income; it only keeps them from tipping into resident status by presence alone.
Even if the day-count says you’re a resident, you can hold on to non-resident status by filing Form 8840 and showing a closer connection to another country. You qualify if you were in the U.S. fewer than 183 days this year, kept a tax home abroad the entire year, and have not applied for a green card. The IRS weighs where your home, family, belongings, bank accounts, and social ties actually sit.2Internal Revenue Service. Closer Connection Exception to the Substantial Presence Test
Business and Wage Income: Graduated Rates
Income you earn by working or running a business in the United States is called effectively connected income (ECI). Wages, self-employment profits, partnership distributions from a U.S. business, and professional fees all fall in this bucket when they are tied to domestic activity. ECI is taxed at the same graduated brackets that apply to citizens, and you can reduce the taxable amount by deductions connected to that business income.3Internal Revenue Service. Effectively Connected Income (ECI)
One catch matters for almost everyone: non-resident aliens generally cannot claim the standard deduction. You are limited to itemized deductions tied to your U.S. income, such as state and local income taxes, charitable gifts to U.S. nonprofits, and casualty losses from federally declared disasters. Students and business apprentices from India are the sole exception, allowed the standard deduction under the U.S.-India treaty.4Internal Revenue Service. Nonresident — Figuring Your Tax
Passive Income: A Flat 30%
Interest, dividends, rents, royalties, annuities, pensions, and gambling winnings from U.S. sources sit in a separate category the IRS calls fixed, determinable, annual, or periodical (FDAP) income. FDAP is taxed at a flat 30% on the gross payment, with no deductions.5Internal Revenue Service. Fixed, Determinable, Annual, or Periodical (FDAP) Income The rate comes straight from the statute and applies before expenses. Collect $10,000 in U.S.-source rent, owe $3,000, regardless of what the property cost you to maintain.6Office of the Law Revision Counsel. 26 USC 871 – Tax on Nonresident Alien Individuals
Capital gains work differently, and the result surprises people. Gains from selling stocks and other personal property generally are not taxed to a non-resident alien at all. The exception: if you were physically present in the U.S. for 183 days or more during the year, your U.S.-source capital gains outside a business get hit with the flat 30% (or a lower treaty rate).7Internal Revenue Service. The Taxation of Capital Gains of Nonresident Students, Scholars and Employees of Foreign Governments The rule can catch exempt individuals who spend long stretches in the country even though their days do not count toward substantial presence.
How the Tax Gets Collected
The U.S. usually collects on FDAP income at the source, not through a return. Whoever pays you, a bank, brokerage, employer, or tenant, must withhold 30% and send it to the Treasury directly.8Internal Revenue Service. Characterization of Income of Nonresident Aliens
To document your status with the payer, you give them one of two forms. Form W-8BEN certifies your foreign status for payers of passive income and lets you claim a reduced treaty rate where one applies. Skip it and the payer will withhold at the full 30% or apply backup withholding.9Internal Revenue Service. Instructions for Form W-8BEN (10/2021) Form W-8ECI covers income effectively connected with a U.S. business and tells the payer to skip the flat 30% because graduated rates will apply through your return instead.10Internal Revenue Service. Instructions for Form W-8ECI If you receive both types from the same payer, file both. These forms go to the payer, not the IRS.
Treaty Relief
The United States has income tax treaties with dozens of countries, and they frequently cut or eliminate the 30% withholding on specific income types.11Office of the Law Revision Counsel. 26 USC 894 – Income Affected by Treaty Each treaty is its own document. One country’s agreement might drop dividend withholding to 15%; another might eliminate tax on a student’s scholarship income for a set number of years.
When you claim a treaty position that reduces your tax, you generally have to disclose it by attaching Form 8833 to your return, naming the treaty article, the income type, and the tax reduced. Missing this disclosure can trigger a $1,000 penalty per position, even when the benefit itself is uncontroversial.
Selling U.S. Real Estate
Real estate sales get their own withholding regime under the Foreign Investment in Real Property Tax Act (FIRPTA). The buyer must withhold 15% of the gross sale price, not 15% of your profit, and send it to the IRS at closing.12Internal Revenue Service. FIRPTA Withholding On a $500,000 sale, that is $75,000 held back before the seller sees anything.
Two carve-outs apply to residential purchases:
- No withholding is required if the sale price is $300,000 or less and the buyer will use the property as a residence.13Office of the Law Revision Counsel. 26 USC 1445 – Withholding of Tax on Dispositions of United States Real Property Interests
- Withholding drops to 10% on residence-use sales between $300,001 and $1,000,000.13Office of the Law Revision Counsel. 26 USC 1445 – Withholding of Tax on Dispositions of United States Real Property Interests
FIRPTA withholding is a prepayment, not the final bill. If your actual tax on the gain comes in lower, you file a return to recover the difference. You can also apply to the IRS before closing for a withholding certificate to lower the amount held back, though the process takes time and requires showing the expected tax.
Social Security and Medicare
Non-resident aliens working in the U.S. generally owe Social Security and Medicare tax on their wages, the same as anyone else. A few exemptions matter.
Students on F-1, J-1, or M-1 visas within their first five calendar years in the U.S. are exempt on wages from qualifying employment, such as on-campus work and USCIS-authorized practical training. The exemption ends when the student becomes a resident alien, switches to a non-exempt status, or takes work outside the scope of the visa.14Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes Dependents on F-2, J-2, or M-2 visas do not get it.
Workers from countries with a totalization agreement can also be exempt. These bilateral agreements route your social security contributions through one country’s system rather than both. To claim it, get a Certificate of Coverage from your home country’s agency and give it to your U.S. employer.15Internal Revenue Service. Totalization Agreements
Estate and Gift Tax on U.S. Assets
Owning U.S. property as a non-resident brings estate tax exposure that citizens rarely face at the same level. The filing threshold is just $60,000 in U.S.-situs assets, not adjusted for inflation, against a multi-million-dollar exemption for citizens and residents. The top rate reaches 40%.16Internal Revenue Service. Estate Tax for Nonresidents Not Citizens of the United States U.S.-situs assets include U.S. real estate, cash in U.S. accounts, securities issued by U.S. companies, and business interests here. Some estate tax treaties widen the available exemption; check whether your home country has one.
Gift tax also reaches transfers of U.S.-situs property. For 2026, the annual exclusion is $19,000 per recipient. Gifts to a non-citizen spouse get a larger $194,000 annual exclusion.17Internal Revenue Service. Frequently Asked Questions on Gift Taxes for Nonresidents Not Citizens of the United States Exceed those and a gift tax return is due.
Filing, Deadlines, and Penalties
Non-resident aliens with U.S. business or wage income generally file Form 1040-NR to report effectively connected income, apply deductions, and reconcile withholding. You also file if your passive income tax was not fully covered by the 30% withheld at the source.18Internal Revenue Service. 2025 Instructions for Form 1040-NR
The deadline depends on the income:
- April 15, 2026, if you received wages subject to U.S. income tax withholding during 2025.
- June 15, 2026, if you did not receive wages subject to withholding.
Paper returns go to the Department of the Treasury, Internal Revenue Service, Austin, TX 73301-0215. Electronic filing is available, and paid preparers are generally required to e-file Form 1040-NR.
Exempt individuals who kept days off the substantial presence count, and anyone claiming they could not leave for medical reasons, must file Form 8843, even with no U.S. income and no tax owed.19Internal Revenue Service. About Form 8843, Statement for Exempt Individuals
Missing the deadline is expensive. The failure-to-file penalty runs 5% of the unpaid tax for each month late, up to 25%.20Internal Revenue Service. Failure to File Penalty Non-compliance can also complicate future visa applications and status adjustments, since the IRS and immigration agencies share information.
If you need to file but do not qualify for a Social Security number, you will apply for an Individual Taxpayer Identification Number (ITIN) on Form W-7, submitted with your return and identity documents.21Internal Revenue Service. How to Apply for an ITIN