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

Nonresident Taxation

Taxation of Nonresidents

Dividend Income

If a nonresident student or scholar invests in the stock market and receives dividend income, it is not considered effectively connected with the person's trade or business. This income is reported on Form 1040NR, page 4.

The brokerage firm should have reported that income to the taxpayer on Form 1042-S and withheld a percentage of it for income tax.

If the student or scholar did not tell the brokerage firm that they are a nonresident alien, it may have been reported on a Form 1099-DIV, in which case it is likely nothing was withheld from it.

Top of Form 1040NR page 4