Do I need to pay taxes if I bank in the states?
- Thread starter RichieN
- Start date
No they won't. Since you are not the citizen of the USA. You have to pay only in your own country.
Enjoy!
For tax purposes, an alien is an individual who is not a U.S. citizen. Aliens are classified as nonresident aliens and resident aliens.
If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of the two tests described under Resident Aliens.
For U.S. income tax purposes, persons who are not U.S. citizens are considered to be either residents or nonresidents of the U.S. The importance of this distinction is that persons considered to be residents are subject to U.S. income tax on their worldwide income, while nonresidents are taxed only on their U.S. source income.
The rules for determining whether a person is a resident for tax purposes are not necessarily the same as the rules for immigration purposes.
Nonresidents are subject to U.S. income tax on two different categories of income:
1. Income that is effectively connected with a U.S. trade or business, (often referred to as "ECTB" income, which after certain deductions is taxed at graduated rates, similar to the income tax rates that apply for U.S. citizens and residents. This income generally consists of salary and wages, commissions, and net earnings from a trade or business in which the nonresident actively participates.
2. Income that is not effectively connected with a U.S. trade or business. This income is taxed at a flat 30% rate, or at a lower rate if the provisions of a tax treaty apply.
Fixed, Determinable, Annual, Periodical (FDAP) Income
The 30% (or lower treaty) rate applies on what is termed U.S. source "fixed or determinable income", provided this income is not effectively connected with a U.S. trade or business. Income is considered "fixed" when it is paid in amounts that are known ahead of time, and is determinable when there is a basis for figuring the amount to be paid. The income can be periodic, but does not have to be paid annually or at regular intervals to be considered fixed and determinable.
According to the Internal Revenue Service (IRS), FDAP income includes: · Dividends, · Interest and original issue discounts on bonds, · Rents from real or personal property (but not gains on sales) · Royalties, · Salary, wages, and other compensation for personal services, · Commissions, · Scholarships or fellowships (the taxable portion) · Pensions and annuities, · Distributions from a partnership, · Distributions from an estate or trust, · Alimony, · Prizes and awards.
If these types of income are not effectively connected with a U.S. trade or business, and are U.S. source income, they would be subject to the flat 30% tax, or a lower rate if a tax treaty applies.
Nonresident aliens, for tax purposes, unlike U.S. citizens and residents, are only subject to tax on income that is considered U.S. Source Income by the IRS. Foreign Source Income received by nonresident aliens is not subject to U.S. taxation.
• U.S. Source Income - income is generally considered U.S. Source if the location of the activity for which the payment is being made is in the U.S.
• Foreign Source Income - income is generally considered foreign source if the location of the activity for which the payment is being made is outside the U.S.
In most cases, income is from U.S. sources if it is paid by domestic corporations, U.S. citizens or resident aliens, or entities formed under the laws of the United States or a state. Income is also from U.S. sources if the property that produces the income is located in the United States or the services for which the income is paid were performed in the United States
For tax purposes, an alien is an individual who is not a U.S. citizen. Aliens are classified as nonresident aliens and resident aliens.
If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of the two tests described under Resident Aliens.
For U.S. income tax purposes, persons who are not U.S. citizens are considered to be either residents or nonresidents of the U.S. The importance of this distinction is that persons considered to be residents are subject to U.S. income tax on their worldwide income, while nonresidents are taxed only on their U.S. source income.
The rules for determining whether a person is a resident for tax purposes are not necessarily the same as the rules for immigration purposes.
Nonresidents are subject to U.S. income tax on two different categories of income:
1. Income that is effectively connected with a U.S. trade or business, (often referred to as "ECTB" income, which after certain deductions is taxed at graduated rates, similar to the income tax rates that apply for U.S. citizens and residents. This income generally consists of salary and wages, commissions, and net earnings from a trade or business in which the nonresident actively participates.
2. Income that is not effectively connected with a U.S. trade or business. This income is taxed at a flat 30% rate, or at a lower rate if the provisions of a tax treaty apply.
Fixed, Determinable, Annual, Periodical (FDAP) Income
The 30% (or lower treaty) rate applies on what is termed U.S. source "fixed or determinable income", provided this income is not effectively connected with a U.S. trade or business. Income is considered "fixed" when it is paid in amounts that are known ahead of time, and is determinable when there is a basis for figuring the amount to be paid. The income can be periodic, but does not have to be paid annually or at regular intervals to be considered fixed and determinable.
According to the Internal Revenue Service (IRS), FDAP income includes: · Dividends, · Interest and original issue discounts on bonds, · Rents from real or personal property (but not gains on sales) · Royalties, · Salary, wages, and other compensation for personal services, · Commissions, · Scholarships or fellowships (the taxable portion) · Pensions and annuities, · Distributions from a partnership, · Distributions from an estate or trust, · Alimony, · Prizes and awards.
If these types of income are not effectively connected with a U.S. trade or business, and are U.S. source income, they would be subject to the flat 30% tax, or a lower rate if a tax treaty applies.
Nonresident aliens, for tax purposes, unlike U.S. citizens and residents, are only subject to tax on income that is considered U.S. Source Income by the IRS. Foreign Source Income received by nonresident aliens is not subject to U.S. taxation.
• U.S. Source Income - income is generally considered U.S. Source if the location of the activity for which the payment is being made is in the U.S.
• Foreign Source Income - income is generally considered foreign source if the location of the activity for which the payment is being made is outside the U.S.
In most cases, income is from U.S. sources if it is paid by domestic corporations, U.S. citizens or resident aliens, or entities formed under the laws of the United States or a state. Income is also from U.S. sources if the property that produces the income is located in the United States or the services for which the income is paid were performed in the United States
