Tax
Non-Resident Alien (NRA)
Also known as: NRA, Non-Resident Alien, Tax Non-Resident
A Non-Resident Alien is the default US tax classification for any non-citizen who does not meet a US tax-residency test. NRAs are taxed on two distinct income types:
• US-source income not effectively connected with a US trade or business (FDAP — Fixed, Determinable, Annual, Periodical income). Examples: US-source dividends, US-source interest (with portfolio-interest exception), US-source royalties, certain US rental income on a gross basis. Taxed at a flat 30% federal rate, often reduced under tax treaty (e.g., 15% under most US treaties for dividends, 0% for treaty-qualifying interest). Withheld at source, no Form 1040-NR filing typically required if withholding fully discharges the tax.
• US-source effectively connected income (ECI). Earnings from a US trade or business — including most US employment income, self-employment income from US clients, and US real estate operations under the IRC § 871(d) net election. Taxed at standard graduated rates. Filed on Form 1040-NR.
NRAs do NOT pay US tax on: • Foreign-source income (foreign salary, foreign dividends, foreign capital gains). • US-source capital gains on most equity sales (excluded from § 871 unless the NRA is a US-trade-or-business participant or holds US-real-property interests under FIRPTA). • US bank interest (portfolio-interest exception, US Treasury obligations).
NRAs are NOT subject to: • FBAR (only US persons file FBARs — NRAs are not US persons). • FATCA Form 8938 (same — only US persons file 8938). • Worldwide-income taxation. • Full FEIE/FTC eligibility (FEIE is for resident aliens and citizens; FTC is available to NRAs only against ECI taxed at graduated rates).
Common NRA scenarios: foreign owners of US real estate (FIRPTA withholding on sale), foreign students in F/J/M/Q status during their exempted years, athletes and entertainers performing in the US, treaty-rate-eligible passive-income recipients.
Sources
Last factual review: 2026-05-08.
Related terms
Resident Alien
A Resident Alien is a non-US-citizen who meets either the Green Card Test or the Substantial Presence Test for US tax purposes. Resident aliens are taxed on worldwide income on the same terms as US citizens — including FEIE/FTC eligibility, FBAR/FATCA obligations, and standard Form 1040 filing. Distinct from immigration "resident alien" status (the green-card-holder term) — the IRS definition is purely fiscal.
Substantial Presence Test (SPT)
The Substantial Presence Test is the IRS's primary test for determining whether a non-US citizen is a US tax resident. It applies a weighted formula: count all days physically present in the US in the current year + 1/3 of days in the prior year + 1/6 of days two years prior. If the total reaches 183, you are a US tax resident — subject to certain exemptions and the closer-connection exception.
Tax Treaty
A tax treaty is a bilateral agreement between two countries that allocates taxing rights over cross-border income, prevents double taxation, and provides mechanisms to resolve disputes. Treaties typically follow the OECD or UN Model Convention. The US has tax treaties with about 70 countries; the UK with about 130. Treaty benefits often require formal claim on a tax return (e.g., IRS Form 8833 for treaty-based positions on a US return).
Tax Residency
Tax residency determines which country has primary right to tax your worldwide income. Each country sets its own tests — typically based on physical presence (often 183+ days/year), domicile, primary economic interests, or family ties. Holding a residence permit does not automatically establish tax residency, and tax residency does not require a residence permit. Dual tax residency is resolved by tax-treaty tie-breaker rules.