Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Nonresident Taxation

Taxation of Nonresidents

Effectively Connected Income

Nonresident alien students and/or scholars are considered to be engaged in a U.S. trade or business if they are studying, teaching, or doing research. Income from such activities is "effectively connected" and must be reported on either Form 1040NR or Form 1040NR-EZ. This income is taxed at the same rates as apply to U.S. citizens and resident aliens.

Income that is not effectively connected must be reported on Form 1040NR. No deductions can be taken against it, and it is taxed at a flat rate of 30 percent, unless a lower treaty rate applies.

Collage of cropped top portions of Forms 1040NR and 1040NR-EZ