[US] Nonresident Alien (NRA) Withholding

The term Nonresident Alien (NRA) withholding is used to refer to withholding required from a foreign person who is subject to U.S. tax on its U.S. source income under sections 1441, 1442, and 1443 of the Internal Revenue Code (IRC).

Generally, NRA withholding requires 30% withholding on a payment of U.S. source income. Most types of U.S. source income received by a foreign person are subject to U.S. tax of 30%. 

Subject Payments
Payments to all foreign persons, including nonresident alien individuals, foreign entities and governments, may be subject to NRA withholding tax up to 30%. A reduced rate, including exemption, may apply if an Internal Revenue Code Section provides for a lower rate. 

Tax treaty
A reduced rate, including exemption may apply if there is a tax treaty between the foreign person's country of residence and the United States.

Reporting Requirements
Generally  Form 1042 and related Form 1042-S are required for NRA withholding.

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