# Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A1c75730c0df0ff21

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Publication 519

What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

U.S. Tax Guide
for Aliens

Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

For use in preparing

Chapter 1. Nonresident Alien or
Resident Alien? . . . . . . . . . . . . . . . . . . . . . . . . 4
Chapter 2. Source of Income . . . . . . . . . . . . . . . 14
Chapter 3. Exclusions From Gross Income . . . . 21
Chapter 4. How Income of Aliens Is Taxed . . . . . 25

2025 Returns

Chapter 5. Figuring Your Tax . . . . . . . . . . . . . . . . 35
Chapter 6. Dual-Status Tax Year . . . . . . . . . . . . . 45
Chapter 7. Filing Information . . . . . . . . . . . . . . . 48
Chapter 8. Paying Tax Through Withholding or
Estimated Tax . . . . . . . . . . . . . . . . . . . . . . . . 54
Chapter 9. Tax Treaty Benefits . . . . . . . . . . . . . . 64
Chapter 10. Employees of Foreign
Governments and International
Organizations . . . . . . . . . . . . . . . . . . . . . . . . . 68
Chapter 11. Departing Aliens and the Sailing
or Departure Permit . . . . . . . . . . . . . . . . . . . . 70
Chapter 12. How To Get Tax Help . . . . . . . . . . . . 72
Appendix A—Tax Treaty Exemption Procedure
for Students . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Appendix B—Tax Treaty Exemption Procedure
for Teachers and Researchers . . . . . . . . . . . . 85
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Future Developments
For the latest information about developments related to
Pub. 519, such as legislation enacted after it was
published, go to IRS.gov/Pub519.

Introduction

Get forms and other information faster and easier at:
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Feb 19, 2026

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For tax purposes, an alien is an individual who is not a
U.S. citizen. Aliens are classified as nonresident aliens
and resident aliens. This publication will help you determine your status and give you information you will need to
file your U.S. tax return. Resident aliens are generally
taxed on their worldwide income, the same as U.S. citizens. Nonresident aliens are taxed only on their income
from sources within the United States and on certain income connected with the conduct of a trade or business in
the United States.

Publication 519 (2025) Catalog Number 15023T
Department of the Treasury Internal Revenue Service www.irs.gov

Table A. Where To Find What You Need To
Know About U.S. Taxes
Commonly asked questions

Where to find the answer

Am I a nonresident alien or resident alien?

See chapter 1.

Can I be a nonresident alien and a resident alien in the same
year?

• See Dual-Status Aliens in chapter 1.
• See chapter 6.

I am a resident alien and my spouse is a nonresident alien. Are
there special rules for us?

• See Nonresident Spouse Treated as a Resident
in chapter 1.

• See Community Income in chapter 2.

Is all my income subject to U.S. tax?

• See chapter 2.
• See chapter 3.

Is my scholarship subject to U.S. tax?

• See Scholarships, Grants, Prizes, and Awards in chapter 2.
• See Scholarships and Fellowship Grants in chapter 3.
• See chapter 9.

Would any U.S. estate or gift taxes apply to me, my estate, or an
estate for which I am an executor, trustee, or representative?

See U.S. federal estate and gift tax in Reminders.

What is the tax rate on my income subject to U.S. tax?

See chapter 4.

I moved to the United States this year. Can I deduct my moving
expenses on my U.S. return?

See Deductions in chapter 5.

Can I claim my spouse and/or children as dependents?

See Dependents in chapter 5.

I pay income taxes to my home country. Can I get credit for these See Tax Credits and Payments in chapter 5.
taxes on my U.S. tax return?
What forms must I file and when and where do I file them?

See chapter 7.

How should I pay my U.S. income taxes?

See chapter 8.

Am I eligible for any benefits under a tax treaty?

• See Income Entitled to Tax Treaty Benefits in chapter 8.
• See chapter 9.

Are employees of foreign governments and international
organizations exempt from U.S. tax?

See chapter 10.

Is there anything special I have to do before leaving the United
States?

• See Expatriation Tax in chapter 4.
• See chapter 11.

The information in this publication is not as comprehensive for resident aliens as it is for nonresident aliens. Resident aliens are generally treated the same as U.S. citizens
and can find more information in other IRS publications at
IRS.gov/Forms.
Table A provides a list of questions and the chapter or
chapters in this publication where you will find the related
discussion.
Answers to frequently asked questions are presented in
the back of this publication.

our tax forms, instructions, and publications. Don’t send
tax questions, tax returns, or payments to the above address.

Comments and suggestions. We welcome your comments about this publication and suggestions for future
editions.
You can send us comments through IRS.gov/
FormComments. Or, you can write to the Internal Revenue
Service, Tax Forms and Publications, 1111 Constitution
Ave. NW, IR-6526, Washington, DC 20224.
Although we can’t respond individually to each comment received, we do appreciate your feedback and will
consider your comments and suggestions as we revise
2

Getting answers to your tax questions. If you have
a tax question not answered by this publication or the How
To Get Tax Help section at the end of this publication, go
to the IRS Interactive Tax Assistant page at IRS.gov/
Help/ITA where you can find topics by using the search
feature or viewing the categories listed.
Getting tax forms, instructions, and publications.
Go to IRS.gov/Forms to download current and prior-year
forms, instructions, and publications.
Ordering tax forms, instructions, and publications.
Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order
prior-year forms and instructions. The IRS will process
your order for forms and publications as soon as possible.
Don’t resubmit requests you’ve already sent us. You can
get forms and publications faster online.
Publication 519 (2025)

What’s New
Qualified disability trusts. The exemption amount for a
qualified disability trust is $5,100 for 2025.
New deduction for itemizers and nonitemizers. Recent legislation provided for new deductions that take effect beginning in 2025. If you are eligible, you can claim
these deductions if you take the standard deduction or if
you itemize on Schedule A (Form 1040). For more information on these deductions, see the Instructions for
Schedule 1-A in the Instructions for Form 1040.
The new deductions include no tax on tips, no tax on
overtime, no tax on car loan interest, and the enhanced
senior deduction. Generally, nonresident aliens are not eligible for the deduction for qualified passenger vehicle loan
interest. See the Instructions for Form 1040-NR.
New guidance regarding the section 2801 tax. Section 2801 imposes a tax on U.S. citizens and residents
who receive gifts or bequests from covered expatriates.
For more information, see Expatriation Tax, later.

Reminders
Partial suspension of Income Tax Convention with
USSR as it relates to Belarus. On December 17, 2024,
the United States provided formal notice to the Republic of
Belarus of the partial suspension of its tax treaty with the
USSR as it relates to Belarus. The United States has suspended the operation of paragraph 1, subparagraph (g),
of Article 3 of the Convention. The rest of the treaty articles will remain in place. The suspension went into effect
December 17, 2024, and will continue until December 31,
2026, or earlier if mutually determined by the two governments.
Partial suspension of Income Tax Convention with
Russia. On June 17, 2024, the United States provided
formal notice to the Russian Federation of the partial suspension of its treaty with Russia. The United States has
suspended the operation of paragraph 4 of Article 1, Articles 5 through 21, and Article 23 of the Convention, as
well as the Protocol. The suspension went into effect both
for taxes withheld at source and in respect of other taxes
on August 16, 2024, and will continue until otherwise decided by the two governments.
Beginning with payments made on or after August 16,
2024, withholding agents are required to withhold at the
statutory 30% withholding rate on payments of U.S.
source income made to recipients that may have previously qualified for treaty benefits under the U.S.-Russia income tax treaty.
Termination of 1979 Tax Convention with Hungary.
On July 15, 2022, the U.S. Treasury Department announced that Hungary was notified on July 8, 2022, that
the United States would terminate its tax treaty with Hungary. In accordance with the treaty’s provisions on termination, termination is effective on January 8, 2023. With
respect to taxes withheld at source, the treaty ceases to
Publication 519 (2025)

have effect on January 1, 2024. Therefore, starting January 1, 2024, withholding agents are required to withhold at
the statutory 30% withholding rate on payments of U.S.
source income made to recipients that may have previously qualified for treaty benefits under the U.S.-Hungary
income tax treaty. In respect of other taxes, the treaty
ceases to have effect with respect to tax periods beginning on or after January 1, 2024.
Choosing to treat a nonresident or dual-status
spouse as a U.S. resident. The Forms 1040 and
1040-SR added a checkbox in the Filing Status section to
make the choice to treat your nonresident or dual-status
spouse as a U.S. resident. For more information, see Nonresident Spouse Treated as a Resident and Choosing
Resident Alien Status, later.
Disaster tax relief. Disaster tax relief is available for
those impacted by certain Presidentially declared disasters (go to IRS.gov/DisasterTaxRelief). Aliens who are required to file a U.S. income tax return may be affected. For
more information, see the Instructions for Form 1040, or
the Instructions for Form 1040-NR.
U.S. federal estate and gift tax. An individual (or deceased person) who is (or was) a nonresident noncitizen
of the United States for estate and gift tax purposes may
still have U.S. estate and gift tax filing and payment obligations. The determination of whether an individual is a nonresident noncitizen for U.S. estate and gift tax purposes is
different from the determination of whether an individual is
a nonresident alien for U.S. federal income tax purposes.
Estate and gift tax considerations are outside of the scope
of this publication, but information is available on IRS.gov
to determine whether any U.S. estate or gift tax considerations may apply to your situation. Further information on
U.S. federal estate tax considerations for nonresidents
noncitizens is available at Estate tax for nonresidents not
citizens of the United States and Frequently asked
questions on estate taxes for nonresidents not citizens of
the United States. Further information on U.S. federal gift
tax considerations for nonresidents noncitizens of the United States is available at Gift tax for nonresidents not
citizens of the United States and Frequently asked
questions on gift taxes for nonresidents not citizens of the
United States.
Third-party designee. You can check the “Yes” box in
the Third-Party Designee section of your return to authorize the IRS to discuss your return with a friend, a family
member, or any other person you choose. This allows the
IRS to call the person you identified as your designee to
answer any questions that may arise during the processing of your return. It also allows your designee to perform
certain actions such as asking the IRS for copies of notices or transcripts related to your return. Also, the authorization can be revoked. See your income tax return instructions for details.
Change of address. If you change your mailing address, be sure to notify the IRS using Form 8822.
Photographs of missing children. The IRS is a proud
partner with the National Center for Missing & Exploited
Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on
3

pages that would otherwise be blank. You can help bring
these children home by looking at the photographs and
calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

1.

Resident Aliens
You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for calendar year 2025 (January 1–December 31). Even if you do not meet either of these tests,
you may be able to choose to be treated as a U.S. resident for part of the year. See First-Year Choice under
Dual-Status Aliens, later.

Green Card Test

Nonresident Alien or
Resident Alien?
Introduction
You should first determine whether, for income tax purposes, you are a nonresident alien or a resident alien.
If you are both a nonresident and resident in the same
year, you have a dual status. See Dual-Status Aliens, later.
Also, see Nonresident Spouse Treated as a Resident and
some other special situations explained later in this chapter.

Topics

This chapter discusses:

• How to determine if you are a nonresident, resident, or
dual-status alien; and

• How to treat a nonresident spouse as a resident alien.

You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during
calendar year 2025. (However, see Dual-Status Aliens,
later.) This is known as the green card test. You are a lawful permanent resident of the United States at any time if
you have been given the privilege, according to U.S. immigration laws, of residing permanently in the United States
as an immigrant. You generally have this status if the U.S.
Citizenship and Immigration Services (USCIS) (or its predecessor organization) has issued you a Form I-551, Permanent Resident Card, also known as a green card. You
continue to have resident status under this test unless the
status is taken away from you or is administratively or judicially determined to have been abandoned.
Note: Even if an individual meets the green card test, if
the individual claims foreign residency under a U.S. tax
treaty tiebreaker rule, they would be treated as a nonresident for purposes of their tax liability. See section 7701(b)
(6)(B).
Resident status taken away. Resident status is considered to have been taken away from you if the U.S. Government issues you a final administrative or judicial order of
exclusion or deportation. A final judicial order is an order
that you may no longer appeal to a higher court of competent jurisdiction.

Useful Items

You may want to see:
Form (and Instructions)
1040 U.S. Individual Income Tax Return
1040

1040-SR U.S. Tax Return for Seniors
1040-SR

1040-NR U.S. Nonresident Alien Income Tax Return
1040-NR

8833 Treaty-Based Return Position Disclosure
Under Section 6114 or 7701(b)
8833

8840 Closer Connection Exception Statement for
Aliens
8840

8843 Statement for Exempt Individuals and
Individuals With a Medical Condition
8843

See chapter 12 for information about getting these forms.

Resident status abandoned. An administrative or judicial determination of abandonment of resident status may
be initiated by you, the USCIS, or a U.S. consular officer.
If you initiate the determination, your resident status is
considered to be abandoned when you file either of the
following documents with your Permanent Resident Card
(green card or Form I-551) attached with the USCIS or a
U.S. consular officer.

• Form I-407, Record of Abandonment of Lawful Permanent Resident Status.

• A letter stating your intent to abandon your resident
status.

Nonresident Aliens

When filing by mail, you must send by certified mail, return receipt requested (or the foreign equivalent), and
keep a copy and proof that it was mailed and received.

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 below.

Caution: Until you have proof your letter was received,
you remain a resident alien for tax purposes even if the
USCIS would not recognize the validity of your green card

4

Chapter 1

Nonresident Alien or Resident Alien?

Publication 519 (2025)

because it is more than 10 years old or because you have
been absent from the United States for a period of time.
If the USCIS or U.S. consular officer initiates this determination, your resident status will be considered to be
abandoned when the final administrative order of abandonment is issued. If you are granted an appeal to a federal court of competent jurisdiction, a final judicial order is
required.
Under U.S. immigration law, a lawful permanent resident who is required to file a tax return as a resident and
fails to do so may be regarded as having abandoned status and may lose permanent resident status.
Caution: A long-term resident (LTR) who ceases to be a
lawful permanent resident may be subject to special reporting requirements and tax provisions. See Expatriation
Tax in chapter 4.
Termination of residency after June 16, 2008. For
information on your residency termination date, see Former LTR under Expatriation After June 16, 2008 in chapter 4.
Note: Requirements for taxpayers who expatriated before June 17, 2008, are no longer discussed in the Instructions for Form 8854 or Pub. 519. For information on expatriation before June 17, 2008, see the 2018 Instructions for
Form 8854, and chapter 4 of the 2018 Pub. 519.

You are a resident for tax purposes if you meet the substantial presence test for calendar year 2025. To meet this
test, you must be physically present in the United States
on at least:
1. 31 days during 2025; and
2. 183 days during the 3-year period that includes 2025,
2024, and 2023, counting:
a. All the days you were present in 2025,
b. 1/3 of the days you were present in 2024, and
c. 1/6 of the days you were present in 2023.
Example. You were physically present in the United
States on 120 days in each of the years 2025, 2024, and
2023. To determine if you meet the substantial presence
test for 2025, count the full 120 days of presence in 2025,
40 days in 2024 (1/3 of 120), and 20 days in 2023 (1/6 of
120). Because the total for the 3-year period is 180 days,
you are not considered a resident under the substantial
presence test for 2025.
The term “United States” includes the following areas.

• All 50 states and the District of Columbia.
• The territorial waters of the United States.
• The seabed and subsoil of those submarine areas that
are adjacent to U.S. territorial waters and over which
the United States has exclusive rights under international law to explore and exploit natural resources.

The term does not include U.S. territories or U.S. airspace.
Chapter 1

You are treated as present in the United States on any day
you are physically present in the country at any time during the day. However, there are exceptions to this rule. Do
not count the following as days of presence in the United
States for the substantial presence test.

• Days you commute to work in the United States from a
residence in Canada or Mexico if you regularly commute from Canada or Mexico.

• Days you are in the United States for less than 24

hours when you are in transit between two places outside the United States.

• Days you are in the United States as a crew member
of a foreign vessel.

• Days you are unable to leave the United States be-

cause of a medical condition that arose while you are
in the United States.

• Days you are in the United States under a NATO visa

as a member of a force or civilian component to
NATO. However, this exception does not apply to an
immediate family member who is present in the United
States under a NATO visa. A dependent family member must count every day of presence for purposes of
the substantial presence test.

• Days you are an exempt individual.

Substantial Presence Test

Publication 519 (2025)

Days of Presence in the United States

The specific rules that apply to each of these categories
are discussed next.
Regular commuters from Canada or Mexico. Do not
count the days on which you commute to work in the United States from your residence in Canada or Mexico if you
regularly commute from Canada or Mexico. You are considered to commute regularly if you commute to work in
the United States on more than 75% (0.75) of the workdays during your working period.
For this purpose, “commute” means to travel to work
and return to your residence within a 24-hour period.
“Workdays” are the days on which you work in the United
States or Canada or Mexico. “Working period” means the
period beginning with the first day in the current year on
which you are physically present in the United States to
work and ending on the last day in the current year on
which you are physically present in the United States to
work. If your work requires you to be present in the United
States only on a seasonal or cyclical basis, your working
period begins on the first day of the season or cycle on
which you are present in the United States to work and
ends on the last day of the season or cycle on which you
are present in the United States to work. You can have
more than one working period in a calendar year, and your
working period can begin in one calendar year and end in
the following calendar year.
Example. Maria Perez lives in Mexico and works for
Compañía ABC in its office in Mexico but was temporarily
assigned to the firm's office in the United States from February 1 through June 1. On June 2, Maria resumed employment in Mexico. For 69 workdays, Maria commuted

Nonresident Alien or Resident Alien?

5

each morning from home in Mexico to work in Compañía
ABC’s U.S. office and returned home in Mexico on each of
those evenings. For 7 workdays, Maria worked in her firm’s
Mexico office. For purposes of the substantial presence
test, Maria does not count the days commuting to work in
the United States because those days equal more than
75% (0.75) of the workdays during the working period (69
workdays in the United States divided by 76 workdays in
the working period equals 90.8%).
Days in transit. Do not count the days you are in the
United States for less than 24 hours and you are in transit
between two places outside the United States. You are
considered to be in transit if you engage in activities that
are substantially related to completing travel to your foreign destination. For example, if you travel between airports in the United States to change planes en route to
your foreign destination, you are considered to be in
transit. However, you are not considered to be in transit if
you attend a business meeting while in the United States.
This is true even if the meeting is held at the airport.
Crew members. Do not count the days you are temporarily present in the United States as a regular crew member
of a foreign vessel (boat or ship) engaged in transportation between the United States and a foreign country or a
U.S. territory. However, this exception does not apply if
you otherwise engage in any trade or business in the United States on those days.
Medical condition. Do not count the days you intended
to leave, but could not leave, the United States because of
a medical condition or problem that arose while you were
in the United States. Whether you intended to leave the
United States on a particular day is determined based on
all the facts and circumstances. For example, you may be
able to establish that you intended to leave if your purpose
for visiting the United States could be accomplished during a period that is not long enough to qualify you for the
substantial presence test. However, if you need an extended period of time to accomplish the purpose of your visit
and that period would qualify you for the substantial presence test, you would not be able to establish an intent to
leave the United States before the end of that extended
period.
In the case of an individual who is judged mentally incompetent, proof of intent to leave the United States can
be determined by analyzing the individual’s pattern of behavior before they were judged mentally incompetent.
If you qualify to exclude days of presence because of a
medical condition, you must file a fully completed Form
8843 with the IRS. See Form 8843, later.
You cannot exclude any days of presence in the United
States under the following circumstances.

• You were initially prevented from leaving, were then
able to leave, but remained in the United States beyond a reasonable period for making arrangements to
leave.
• You returned to the United States for treatment of a
medical condition that arose during a prior stay.

6

Chapter 1

• The condition existed before your arrival in the United

States and you were aware of the condition. It does
not matter whether you needed treatment for the condition when you entered the United States.

Exempt individual. Do not count days for which you are
an exempt individual. The term “exempt individual” does
not refer to someone exempt from U.S. tax, but instead refers to anyone in the following categories.

• An individual temporarily present in the United States
as a foreign government-related individual under an
“A” or “G” visa other than individuals holding “A-3” or
“G-5” class visas.

• A teacher or trainee temporarily present in the United
States under a “J” or “Q” visa who substantially complies with the requirements of the visa.

• A student temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa who substantially complies with the requirements of the visa.

• A professional athlete temporarily present in the United States to compete in a charitable sports event.

The specific rules for each of these four categories (including any rules on the length of time you will be an exempt individual) are discussed next.
Foreign government-related individuals. A foreign
government-related individual is an individual (or a member of the individual’s immediate family) who is temporarily
present in the United States:

• As a full-time employee of an international organization,

• By reason of diplomatic status, or
• By reason of a visa (other than a visa that grants lawful
permanent residence) that the Secretary of the Treasury determines represents full-time diplomatic or consular status.

Note: You are considered temporarily present in the
United States regardless of the actual amount of time you
are present in the United States.
An international organization is any public international
organization that the President of the United States has
designated by Executive order as being entitled to the
privileges, exemptions, and immunities provided for in the
International Organizations Immunities Act. An individual
is a full-time employee if their work schedule meets the organization’s standard full-time work schedule.
An individual is considered to have full-time diplomatic
or consular status if they:

• Have been accredited by a foreign government that is
recognized by the United States;

• Intend to engage primarily in official activities for that
foreign government while in the United States; and

• Have been recognized by the President, the Secretary
of State, or a consular officer as being entitled to that
status.

Nonresident Alien or Resident Alien?

Publication 519 (2025)

Members of the immediate family include the individual’s spouse and unmarried children (whether by blood or
adoption) but only if the spouse’s or unmarried children’s
visa statuses are derived from, and dependent on, the exempt individual’s visa classification. Unmarried children
are included only if they:

• Are under 21 years of age,
• Reside regularly in the exempt individual’s household,
and

• Are not members of another household.
Note: Generally, if you are present in the United States
under an “A” or “G” class visa, you are considered a foreign government-related individual (with full-time diplomatic or consular status). None of your days count for purposes of the substantial presence test.
Household staff exception. If you are present in the
United States under an “A-3” or “G-5” class visa as a personal employee, attendant, or domestic worker for either a
foreign government or international organization official,
you are not considered a foreign government-related individual and must count all your days of presence in the United States for purposes of the substantial presence test.
Teachers and trainees. A teacher or trainee is an individual, other than a student, who is temporarily in the
United States under a “J” or “Q” visa and substantially
complies with the requirements of that visa. You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are
prohibited by U.S. immigration laws and could result in the
loss of your visa status.
Also included are immediate family members of exempt
teachers and trainees. See the definition of “immediate
family,” earlier, under Foreign government-related individuals.
You will not be an exempt individual as a teacher or
trainee in 2025 if you were exempt as a teacher, trainee, or
student for any part of 2 of the 6 preceding calendar years.
However, you will be an exempt individual if all of the following conditions are met.

• You were exempt as a teacher, trainee, or student for
any part of 3 (or fewer) of the 6 preceding calendar
years.

• A foreign employer paid all of your compensation during 2025.

• You were present in the United States as a teacher or
trainee in any of the 6 prior years.

• A foreign employer paid all of your compensation during each of the preceding 6 years you were present in
the United States as a teacher or trainee.

A foreign employer includes an office or place of business
of an American entity in a foreign country or a U.S. territory.
If you qualify to exclude days of presence as a teacher
or trainee, you must file a fully completed Form 8843 with
the IRS. See Form 8843, later.
Publication 519 (2025)

Chapter 1

Example. Carla was temporarily in the United States
during the year as a teacher on a “J” visa. Carla’s compensation for the year was paid by a foreign employer. Carla
was treated as an exempt teacher for the previous 2 years,
but compensation was not paid by a foreign employer.
Carla will not be considered an exempt individual for the
current year because of being exempt as a teacher for at
least 2 of the past 6 years.
If Carla’s compensation for the past 2 years had been
paid by a foreign employer, Carla would be an exempt individual for the current year.
Students. A student is any individual who is temporarily in the United States on an “F,” “J,” “M,” or “Q” visa and
who substantially complies with the requirements of that
visa. You are considered to have substantially complied
with the visa requirements if you have not engaged in activities that are prohibited by U.S. immigration laws and
could result in the loss of your visa status.
Also included are immediate family members of exempt
students. See the definition of “immediate family,” earlier,
under Foreign government-related individuals.
You will not be an exempt individual as a student in
2025 if you have been exempt as a teacher, trainee, or
student for any part of more than 5 calendar years unless
you meet both of the following requirements.

• You establish that you do not intend to reside permanently in the United States.

• You have substantially complied with the requirements
of your visa.

The facts and circumstances to be considered in determining if you have demonstrated an intent to reside permanently in the United States include, but are not limited
to, the following.

• Whether you have maintained a closer connection to a
foreign country (discussed later).

• Whether you have taken affirmative steps to change

your status from nonimmigrant to lawful permanent
resident, as discussed later under Closer Connection
to a Foreign Country.

If you qualify to exclude days of presence as a student,
you must file a fully completed Form 8843 with the IRS.
See Form 8843, later.
Professional athletes. A professional athlete who is
temporarily in the United States to compete in a charitable
sports event is an exempt individual. A charitable sports
event is one that meets the following conditions.

• The main purpose is to benefit a qualified charitable
organization.

• The entire net proceeds go to charity.
• Volunteers perform substantially all the work.
In figuring the days of presence in the United States,
you can exclude only the days on which you actually competed in a sports event. You cannot exclude the days on
which you were in the United States to practice for the
event, to perform promotional or other activities related to
the event, or to travel between events.

Nonresident Alien or Resident Alien?

7

If you qualify to exclude days of presence as a professional athlete, you must file a fully completed Form 8843
with the IRS. See Form 8843 next.
Form 8843. If you exclude days of presence in the United
States because you fall into any of the following categories, you must file a fully completed Form 8843.

• You were unable to leave the United States as planned because of a medical condition or problem.

• You were temporarily in the United States as a teacher
or trainee on a “J” or “Q” visa.

• You were temporarily in the United States as a student
on an “F,” “J,” “M,” or “Q” visa.

• You were a professional athlete competing in a charitable sports event.

Attach Form 8843 to your 2025 income tax return. If you
do not have to file a return, send Form 8843 to the following address.
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
You must file Form 8843 by the due date for filing Form
1040-NR. The due date for filing is discussed in chapter 7.
If you are required to file Form 8843 and you do not timely
file Form 8843, you cannot exclude the days you were
present in the United States as a professional athlete or
because of a medical condition that arose while you were
in the United States. This does not apply if you can show
by clear and convincing evidence that you took reasonable actions to become aware of the filing requirements and
significant steps to comply with those requirements.

Closer Connection to a Foreign Country
Even if you meet the substantial presence test, you can be
treated as a nonresident alien if you:

• Are present in the United States for less than 183 days
during the year,

• Maintain a tax home in a foreign country during the
year, and

• Have a closer connection during the year to one for-

eign country in which you have a tax home than to the
United States (unless you have a closer connection to
two foreign countries, discussed next).

Closer connection to two foreign countries. You can
demonstrate that you have a closer connection to two foreign countries (but not more than two) if you meet all of
the following conditions.

• You maintained a tax home beginning on the first day
of the year in one foreign country.

• You changed your tax home during the year to a second foreign country.

• You continued to maintain your tax home in the sec-

• You had a closer connection to each foreign country

than to the United States for the period during which
you maintained a tax home in that foreign country.

• You are subject to tax as a resident under the tax laws

of either foreign country for the entire year or subject
to tax as a resident in both foreign countries for the period during which you maintained a tax home in each
foreign country.

Tax home. Your tax home is the general area of your
main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax
home is the place where you permanently or indefinitely
work as an employee or a self-employed individual. If you
do not have a regular or main place of business because
of the nature of your work, then your tax home is the place
where you regularly live. If you do not fit either of these
categories, you are considered an itinerant and your tax
home is wherever you work.
For determining whether you have a closer connection
to a foreign country, your tax home must also be in existence for the entire current year and must be located in the
same foreign country to which you are claiming to have a
closer connection.
Foreign country. In determining whether you have a
closer connection to a foreign country, the term “foreign
country” means:

• Any territory under the sovereignty of the United Nations or a government other than that of the United
States,

• The territorial waters of the foreign country (determined under U.S. law),

• The seabed and subsoil of those submarine areas that
are adjacent to the territorial waters of the foreign
country and over which the foreign country has exclusive rights under international law to explore and exploit natural resources, and

• Territories of the United States.
Establishing a closer connection. You will be considered to have a closer connection to a foreign country than
the United States if you or the IRS establishes that you
have maintained more significant contacts with the foreign
country than with the United States. In determining
whether you have maintained more significant contacts
with the foreign country than with the United States, the
facts and circumstances to be considered include, but are
not limited to, the following.
1. The country of residence you designate on forms and
documents.
2. The types of official forms and documents you file,
such as Form W-9, Form W-8BEN, or Form W-8ECI.
3. The location of:

• Your permanent home;
• Your family;

ond foreign country for the rest of the year.

8

Chapter 1

Nonresident Alien or Resident Alien?

Publication 519 (2025)

• Your personal belongings, such as cars, furniture,
clothing, and jewelry;

• Your current social, political, cultural, professional,
or religious affiliations;

• Your business activities (other than those that
constitute your tax home);

• The jurisdiction in which you hold a driver’s license;

• The jurisdiction in which you vote; and
• Charitable organizations to which you contribute.
It does not matter whether your permanent home is a
house, an apartment, or a furnished room. It also does not
matter whether you rent or own it. It is important, however,
that your home be available at all times, continuously, and
not solely for short stays.
When you cannot have a closer connection. You cannot claim you have a closer connection to a foreign country if either of the following applies.

• You personally applied, or took other steps during the

year, to change your status to that of a permanent resident.

• You had an application pending for adjustment of status during the current year.

For more information on forms and other steps used to
change the status to that of a permanent resident, go to
USCIS.gov and DOL.gov.
Form 8840. You must attach a fully completed Form 8840
to your income tax return to claim you have a closer connection to a foreign country or countries.
If you do not have to file a return, send the form to:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

Effect of Tax Treaties
Dual residents. The rules given here to determine if you
are a U.S. resident do not override tax treaty definitions of
residency. If you are a dual-resident taxpayer, you can still
claim the benefits under an income tax treaty. A dual-resident taxpayer is one who is a resident of both the United
States and another country under each country’s tax laws.
The income tax treaty between the two countries must
contain a provision that provides for resolution of conflicting claims of residence (tiebreaker rule). If you are treated
Chapter 1

Note: In certain instances when an individual is treated
as a nonresident alien pursuant to a tiebreaker rule in a
relevant tax treaty, it can trigger section 877A expatriation
tax. See Expatriation Tax, later.
Information to be reported. If you are a dual-resident
taxpayer and you claim treaty benefits, you must file a return using Form 1040-NR with Form 8833 attached, and
compute your tax as a nonresident alien. A dual-resident
taxpayer may also be eligible for U.S. competent authority
assistance. See Revenue Procedure 2015-40, 2015-35
I.R.B.
236,
available
at
IRS.gov/irb/
2015-35_IRB#RP-2015-40, or its successor.
See Reporting Treaty Benefits Claimed in chapter 9 for
more information on reporting treaty benefits.
Certain students and trainees from Barbados and Jamaica. Nonresident alien students from Barbados and
Jamaica, as well as trainees from Jamaica, may qualify for
an election to be treated as a resident alien for U.S. tax
purposes under the U.S. income tax treaties with those
countries. See Pub. 901 for additional information. If you
qualify for this election, you can make it by filing a Form
1040 and attaching a signed election statement to your return. The rules about resident aliens described in this publication apply to you. Once made, the election applies as
long as you remain eligible, and you must obtain permission from the U.S. competent authority in order to terminate the election.

Dual-Status Aliens

You must file Form 8840 by the due date for filing Form
1040-NR. The due date for filing is discussed later in
chapter 7.
If you do not timely file Form 8840, you cannot claim a
closer connection to a foreign country or countries. This
does not apply if you can show by clear and convincing
evidence that you took reasonable actions to become
aware of the filing requirements and significant steps to
comply with those requirements.

Publication 519 (2025)

as a resident of a foreign country under a tax treaty, you
are treated as a nonresident alien in figuring your U.S. income tax. For purposes other than figuring your tax, you
will be treated as a U.S. resident. For example, the rules
discussed here do not affect your residency time periods,
as discussed under Dual-Status Aliens, later.

You can be both a nonresident alien and a resident alien
during the same tax year. This usually occurs in the year
you arrive in, or depart from, the United States. Aliens who
have dual status should see chapter 6 for information on
filing a return for a dual-status tax year.

First Year of Residency
If you are a U.S. resident for the calendar year, but you
were not a U.S. resident at any time during the preceding
calendar year, you are a U.S. resident only for the part of
the calendar year that begins on the residency starting
date. You are a nonresident alien for the part of the year
before that date.
Residency starting date under substantial presence
test. If you meet the substantial presence test for a calendar year, your residency starting date is generally the first
day you are present in the United States during that calendar year. However, you do not have to count up to 10 days

Nonresident Alien or Resident Alien?

9

of actual presence in the United States if on those days
you establish that:

• You had a closer connection to a foreign country than
to the United States, and

• Your tax home was in that foreign country.
See Closer Connection to a Foreign Country, earlier.
In determining whether you can exclude up to 10 days,
the following rules apply.

• You can exclude days from more than one period of
presence as long as the total days in all periods are
not more than 10.

• You cannot exclude any days in a period of consecu-

tive days of presence if all the days in that period cannot be excluded.

• Although you can exclude up to 10 days of presence

in determining your residency starting date, you must
include those days when determining whether you
meet the substantial presence test.

Example. Ivan Ivanovich is a citizen of Russia. Ivan
came to the United States for the first time on January 6,
2025, to attend a business meeting and returned to Russia on January 10, 2025. Ivan’s tax home remained in
Russia. On March 1, 2025, Ivan moved to the United
States and resided here for the rest of the year. Ivan is
able to establish a closer connection to Russia for the period January 6–10, 2025. Thus, Ivan’s residency starting
date is March 1, 2025.
Statement required to exclude up to 10 days of
presence. You must file a statement with the IRS if you
are excluding up to 10 days of presence in the United
States for purposes of your residency starting date. You
must sign and date this statement and include a declaration that it is made under penalties of perjury. The statement must contain the following information (as applicable).

• Your name, address, U.S. taxpayer identification number (TIN) (if any), and U.S. visa number (if any).

• Your passport number and the name of the country
that issued your passport.

• The tax year for which the statement applies.
• The first and the last day that you were present in the
United States during the year.

• The dates of the days you are excluding in figuring
your first day of residency.

• Sufficient facts to establish that you have maintained

your tax home in, and a closer connection to, a foreign
country during the period you are excluding.

Attach the required statement to your income tax return. If you are not required to file a return, send the statement to the following address.
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
10

Chapter 1

You must submit the statement on or before the due
date for filing Form 1040-NR. The due date for filing is discussed in chapter 7.
If you do not file the required statement as explained
above, you cannot claim that you have a closer connection
to a foreign country or countries. Therefore, your first day
of residency will be the first day you are present in the United States. This does not apply if you can show by clear
and convincing evidence that you took reasonable actions
to become aware of the requirements for filing the statement and significant steps to comply with those requirements.
Residency starting date under green card test. If you
meet the green card test at any time during a calendar
year, but do not meet the substantial presence test for that
year, your residency starting date is the first day in the calendar year on which you are present in the United States
as a lawful permanent resident.
If you meet both the substantial presence test and the
green card test, your residency starting date is the earlier
of the first day during the year you are present in the United States under the substantial presence test or as a lawful permanent resident.
Residency during the preceding year. If you were a
U.S. resident during any part of the preceding calendar
year and you are a U.S. resident for any part of the current
year, you will be considered a U.S. resident at the beginning of the current year. This applies whether you are a
resident under the substantial presence test or green card
test.
Example. Robert Bach is a citizen of Switzerland.
Robert came to the United States as a U.S. resident for
the first time on May 1, 2024, and remained until November 5, 2024, when Robert returned to Switzerland. Robert
came back to the United States on March 5, 2025, as a
lawful permanent resident and still resides here. In calendar year 2025, Robert’s U.S. residency is deemed to begin on January 1, 2025, because Robert qualified as a
resident in calendar year 2024.

First-Year Choice
If you do not meet either the green card test or the substantial presence test for 2024 or 2025 and you did not
choose to be treated as a resident for part of 2024, but
you meet the substantial presence test for 2026, you can
choose to be treated as a U.S. resident for part of 2025. To
make this choice, you must:
1. Be present in the United States for at least 31 days in
a row in 2025, and
2. Be present in the United States for at least 75% of the
number of days beginning with the first day of the
31-day period and ending with the last day of 2025.
For purposes of this 75% requirement, you can treat
up to 5 days of absence from the United States as
days of presence in the United States.

Nonresident Alien or Resident Alien?

Publication 519 (2025)

When counting the days of presence in (1) and (2)
above, do not count the days you were in the United
States under any of the exceptions discussed earlier under Days of Presence in the United States.
If you make the first-year choice, your residency starting date for 2025 is the first day of the earliest 31-day period (described in (1) above) that you use to qualify for the
choice. You are treated as a U.S. resident for the rest of
the year. If you are present for more than one 31-day period and you satisfy condition (2) above for each of those
periods, your residency starting date is the first day of the
first 31-day period. If you are present for more than one
31-day period but you satisfy condition (2) above only for
a later 31-day period, your residency starting date is the
first day of the later 31-day period.
Note: You do not have to be married to make this
choice.
Example 1. Juan DaSilva is a citizen of the Philippines. Juan came to the United States for the first time on
November 1, 2025, and was here on 31 consecutive days
(from November 1 through December 1, 2025). Juan returned to the Philippines on December 1 and came back
to the United States on December 17, 2025. Juan stayed
in the United States for the rest of the year. During 2026,
Juan is a resident of the United States under the substantial presence test. Juan can make the first-year choice for
2025 because Juan was in the United States in 2025 for a
period of 31 days in a row (November 1 through December 1) and for at least 75% (0.75) of the days following
(and including) the first day of Juan’s 31-day period (46 total days of presence in the United States divided by 61
days in the period from November 1 through December 31
equals 75.4% (0.754)). If Juan makes the first-year
choice, Juan’s residency starting date will be November 1,
2025.
Example 2. The facts are the same as in Example 1,
except that Juan was also absent from the United States
on December 24, 25, 29, 30, and 31. Juan can make the
first-year choice for 2025 because up to 5 days of absence are considered days of presence for purposes of
the 75% (0.75) requirement.
Statement required to make the first-year choice
for 2025. You must attach a statement to Form 1040 or
1040-SR to make the first-year choice for 2025. The statement must contain your name and address and specify
the following.

• That you are making the first-year choice for 2025.
• That you were not a resident in 2024.
• That you are a resident under the substantial presence test in 2026.

• The date or dates of absence from the United States

during 2025 that you are treating as days of presence.

You cannot file Form 1040 or 1040-SR or the statement
until you meet the substantial presence test for 2026. If
you have not met the test for 2026 as of April 15, 2026,
you can request an extension of time for filing your 2025
Form 1040 or 1040-SR until a reasonable period after you
have met that test. To request an extension to file until October 15, 2026, use Form 4868. You can file the paper
form or use one of the electronic filing options explained in
the Form 4868 instructions. You should pay with this extension the amount of tax you expect to owe for 2025 figured as if you were a nonresident alien the entire year. You
can use Form 1040-NR to figure the tax. Enter the tax on
Form 4868. If you do not pay the tax due, you will be
charged interest on any tax not paid by the regular due
date of your return, and you may be charged a penalty on
the late payment.
Once you make the first-year choice, you may not revoke it without the approval of the IRS.
If you do not follow the procedures discussed here for
making the first-year choice, you will be treated as a nonresident alien for all of 2025. However, this does not apply
if you can show by clear and convincing evidence that you
took reasonable actions to become aware of the filing procedures and significant steps to comply with the procedures.

Choosing Resident Alien Status
If you are a dual-status alien, you can choose to be treated
as a U.S. resident for the entire year if all of the following
apply.

• You were a nonresident alien at the beginning of the
year.

• You are a resident alien or U.S. citizen at the end of
the year.

• You are married to a U.S. citizen or resident alien at
the end of the year.

• Your spouse joins you in making the choice.
This includes situations in which both you and your
spouse were nonresident aliens at the beginning of the tax
year and both of you are resident aliens at the end of the
tax year.
Note: If you are single at the end of the year, you cannot make this choice.
If you make this choice, the following rules apply.

• You and your spouse are treated as U.S. residents for
the entire year for income tax purposes.

• The number of days of presence in the United States

• You and your spouse are taxed on worldwide income.
• You and your spouse must file a joint return for the

• The date or dates of your 31-day period of presence

• Neither you nor your spouse can make this choice for

during 2026.

and the period of continuous presence in the United
States during 2025.

Publication 519 (2025)

Chapter 1

year of the choice.

any later tax year, even if you are separated, divorced,
or remarried.

Nonresident Alien or Resident Alien?

11

• The special instructions and restrictions for dual-sta-

closer connection to that foreign country. See Closer Connection to a Foreign Country, earlier.

Note: A similar choice is available if, at the end of the
tax year, one spouse is a nonresident alien and the other
spouse is a U.S. citizen or resident. See Nonresident
Spouse Treated as a Resident, later. If you previously
made that choice and it is still in effect, you do not need to
make the choice explained here.

Note: Claiming residency status under an applicable
treaty tiebreaker provision in another country may also
lead to a residency termination date that is earlier than
December 31.

tus taxpayers in chapter 6 do not apply to you.

Making the choice. If you and your spouse are making
this choice, check the box in the Filing Status section of
the Form 1040 or 1040-SR and enter the name of the
dual-status spouse(s) in the entry space, and attach a
statement signed by both spouses to your joint return for
the year of the choice. The statement must contain the following information.

• A declaration that you both qualify to make the choice

and that you choose to be treated as U.S. residents for
the entire tax year.

• The name, address, and TIN (social security number
(SSN) or individual taxpayer identification number
(ITIN)) of each spouse. (If one spouse died, include
the name and address of the person who makes the
choice for the deceased spouse.)

You generally make this choice when you file your joint
return. However, you can also make the choice by filing
Form 1040-X, Amended U.S. Individual Income Tax Return. Attach Form 1040 or 1040-SR and enter “Amended”
across the top of the corrected return. If you make the
choice with an amended return, you and your spouse
must also amend any returns that you may have filed after
the year for which you made the choice.
You must generally file the amended joint return within
3 years from the date you filed your original U.S. income
tax return or 2 years from the date you paid your income
tax for that year, whichever is later.

Last Year of Residency
If you were a U.S. resident in 2025 but are not a U.S. resident during any part of 2026, you cease to be a U.S. resident on your residency termination date. Your residency
termination date is December 31, 2025, unless you qualify
for an earlier date, as discussed later.
Earlier residency termination date. You may qualify for
a residency termination date that is earlier than December
31. This date is:
1. The last day in 2025 that you are physically present in
the United States, if you met the substantial presence
test;
2. The first day in 2025 that you are no longer a lawful
permanent resident of the United States, if you met
the green card test; or
3. The later of (1) or (2), if you met both tests.
You can use this date only if, for the remainder of 2025,
your tax home was in a foreign country and you had a
12

Chapter 1

Caution: An LTR who ceases to be a lawful permanent
resident may be subject to special reporting requirements
and tax provisions. See Expatriation Tax in chapter 4.
Termination of residency. For information on your
residency termination date, see Former LTR under Expatriation After June 16, 2008 in chapter 4.
De minimis presence. If you are a U.S. resident because of the substantial presence test and you qualify to
use the earlier residency termination date, you can exclude up to 10 days of actual presence in the United
States in determining your residency termination date. In
determining whether you can exclude up to 10 days, the
following rules apply.

• You can exclude days from more than one period of
presence as long as the total days in all periods are
not more than 10.

• You cannot exclude any days in a period of consecu-

tive days of presence if all the days in that period cannot be excluded.

• Although you can exclude up to 10 days of presence
in determining your residency termination date, you
must include those days when determining whether
you meet the substantial presence test.

Example. Lola Bovary is a citizen of Malta. Lola came
to the United States for the first time on March 1, 2025,
and resided here until August 25, 2025. On December 12,
2025, Lola came to the United States for vacation and returned to Malta on December 16, 2025. Lola is able to establish a closer connection to Malta for the rest of 2025
beginning August 25, 2025, when she leaves the United
States. Lola is a resident under the substantial presence
test because Lola was present in the United States for 183
days (178 days for the period March 1 to August 25 plus 5
days in December). However, Lola is able to exclude her
visit to the United States in December in determining her
residency termination date and therefore Lola’s residency
termination date is August 25, 2025.
Residency during the next year. If you are a U.S. resident during any part of 2026 and you are a resident during
any part of 2025, you will be treated as a resident through
the end of 2025. This applies whether you have a closer
connection to a foreign country than the United States
during 2025, and whether you are a resident under the
substantial presence test or green card test.
Statement required to establish your residency termination date. You must file a statement with the IRS to
establish your residency termination date. You must sign
and date this statement and include a declaration that it is

Nonresident Alien or Resident Alien?

Publication 519 (2025)

made under penalties of perjury. The statement must contain the following information (as applicable).

that issued your passport.

If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire
tax year. Neither you nor your spouse can claim under any
tax treaty not to be a U.S. resident. You are both taxed on
worldwide income. You must file a joint income tax return
for the year you make the choice, but you and your spouse
can file joint or separate returns in later years.

States during the year.

Caution: If you file a joint return under this provision, the
special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you.

• Your name, address, U.S. TIN (if any), and U.S. visa
number (if any).

• Your passport number and the name of the country
• The tax year for which the statement applies.
• The last day that you were present in the United
• Sufficient facts to establish that you have maintained

your tax home in, and that you have a closer connection to, a foreign country following your last day of
presence in the United States during the year or following the abandonment or rescission of your status
as a lawful permanent resident during the year.

• The date that your status as a lawful permanent resident was abandoned or rescinded.

• Sufficient facts (including copies of relevant docu-

ments) to establish that your status as a lawful permanent resident has been abandoned or rescinded.

• If you can exclude days, as discussed earlier under De
minimis presence, include the dates of the days you
are excluding and sufficient facts to establish that you
have maintained your tax home in, and that you have a
closer connection to, a foreign country during the period you are excluding.
Attach the required statement to your income tax return. If you are not required to file a return, send the statement to the following address.
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

Nonresident Spouse Treated
as a Resident
If, at the end of your tax year, you are married and one
spouse is a U.S. citizen or a resident alien and the other
spouse is a nonresident alien, you can choose to treat the
nonresident spouse as a U.S. resident. This includes situations in which one spouse is a nonresident alien at the
beginning of the tax year, but a resident alien at the end of
the year, and the other spouse is a nonresident alien at
the end of the year.
Chapter 1

How To Make the Choice
If you and your spouse are making this choice, check the
box in the Filing Status section of Form 1040 or 1040-SR
and enter the name of the nonresident spouse in the entry
space, and attach a statement, signed by both spouses, to
your joint return for the first tax year for which the choice
applies. It should contain the following information.

• A declaration that one spouse was a nonresident alien

and the other spouse a U.S. citizen or resident alien
on the last day of your tax year, and that you choose to
be treated as U.S. residents for the entire tax year.

• The name, address, and TIN of each spouse. (If one

You must submit the statement on or before the due
date for filing Form 1040-NR. The due date for filing is discussed in chapter 7.
If you do not file the required statement as explained
above, you cannot claim that you have a closer connection
to a foreign country or countries. This does not apply if
you can show by clear and convincing evidence that you
took reasonable actions to become aware of the requirements for filing the statement and significant steps to comply with those requirements.

Publication 519 (2025)

Example. Bob and Sharon Williams are married and
both are nonresident aliens at the beginning of the year. In
June, Bob became a resident alien and remained a resident for the rest of the year. Bob and Sharon both choose
to be treated as resident aliens by checking the appropriate box on Form 1040 or 1040-SR and attaching a statement to their joint return. Bob and Sharon must file a joint
return for the year they make the choice, but they can file
either joint or separate returns for later years.

spouse died, include the name and address of the
person making the choice for the deceased spouse.)

Also, check the box and enter their name if you and
your nonresident spouse made the choice to be treated as
residents in a prior year and the choice remains in effect.
Amended return. You generally make this choice when
you file your joint return. However, you can also make the
choice by filing a joint amended return on Form 1040-X.
Attach Form 1040 or 1040-SR and enter “Amended”
across the top of the corrected return. If you make the
choice with an amended return, you and your spouse
must also amend any returns that you may have filed after
the year for which you made the choice.
You must generally file the amended joint return within
3 years from the date you filed your original U.S. income
tax return or 2 years from the date you paid your income
tax for that year, whichever is later.

Suspending the Choice
The choice to be treated as a resident alien is suspended
for any tax year (after the tax year you made the choice) if
neither spouse is a U.S. citizen or resident alien at any
time during the tax year. This means each spouse must
file a separate return as a nonresident alien for that year if

Nonresident Alien or Resident Alien?

13

either meets the filing requirements for nonresident aliens
discussed in chapter 7.
Example. Dick Brown was a resident alien on December 31, 2022, and married to Judy, a nonresident alien.
They chose to treat Judy as a resident alien and filed joint
2022 and 2023 income tax returns. On January 10, 2024,
Dick became a nonresident alien. Judy had remained a
nonresident alien throughout the period. Dick and Judy
could have filed joint or separate returns for 2024 because
Dick was a resident alien for part of that year. However,
because neither Dick nor Judy is a resident alien at any
time during 2025, their choice is suspended for that year.
If either meets the filing requirements for nonresident aliens discussed in chapter 7, they must file separate returns
as nonresident aliens for 2025. If Dick becomes a resident
alien again in 2026, their choice is no longer suspended.

Ending the Choice
Once made, the choice to be treated as a resident applies
to all later years unless suspended (as explained earlier
under Suspending the Choice) or ended in one of the following ways.
If the choice is ended in one of the following ways, neither spouse can make this choice in any later tax year.
1. Revocation. Either spouse can revoke the choice for
any tax year, provided they make the revocation by
the due date for filing the tax return for that tax year.
The spouse who revokes the choice must attach a
signed statement declaring that the choice is being
revoked. The statement must include the name, address, and TIN of each spouse. (If one spouse dies,
include the name and address of the person who is
revoking the choice for the deceased spouse.) The
statement must also include a list of any states, foreign countries, and territories that have community
property laws in which either spouse is domiciled or
where real property is located from which either
spouse receives income. File the statement as follows.
a. If the spouse revoking the choice must file a return, attach the statement to the return for the first
year the revocation applies.
b. If the spouse revoking the choice does not have to
file a return, but does file a return (for example, to
obtain a refund), attach the statement to the return.
c. If the spouse revoking the choice does not have to
file a return and does not file a claim for refund,
send the statement to the Internal Revenue Service Center where you filed the last joint return.
2. Death. The death of either spouse ends the choice,
beginning with the first tax year following the year the
spouse died. However, if the surviving spouse is a
U.S. citizen or resident and is entitled to the joint tax
rates as a surviving spouse, the choice will not end
until the close of the last year for which these joint
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Chapter 2

rates may be used. If both spouses die in the same
tax year, the choice ends on the first day after the
close of the tax year in which the spouses died.
3. Legal separation. A legal separation under a decree
of divorce or separate maintenance ends the choice
as of the beginning of the tax year in which the legal
separation occurs.
4. Inadequate records. The IRS can end the choice for
any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to
provide adequate access to those records.

Aliens From American Samoa
or Puerto Rico
If you are a nonresident alien in the United States and a
bona fide resident of American Samoa or Puerto Rico during the entire tax year, you are taxed, with certain exceptions, according to the rules for resident aliens of the United States. For more information, see Bona Fide
Residents of American Samoa or Puerto Rico in chapter 5.
If you are a nonresident alien from American Samoa or
Puerto Rico who does not qualify as a bona fide resident
of American Samoa or Puerto Rico for the entire tax year,
you are taxed as a nonresident alien.
Resident aliens who formerly were bona fide residents
of American Samoa or Puerto Rico are taxed according to
the rules for resident aliens.

2.
Source of Income
Introduction
After you have determined your alien status, you must determine the source of your income. This chapter will help
you determine the source of different types of income you
may receive during the tax year.

Topics

This chapter discusses:

• Income source rules, and
• Community income.
This chapter also discusses special rules for married individuals who are domiciled in a country with community
property laws.
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Interest Income

Resident Aliens
A resident alien’s income is generally subject to tax in the
same manner as a U.S. citizen. If you are a resident alien,
you must report all interest, dividends, wages, or other
compensation for services; income from rental property or
royalties; and other types of income on your U.S. tax return. You must report these amounts from sources within
and outside the United States.

Nonresident Aliens
Nonresident aliens are taxed only on their income from
sources within the United States and on certain income
connected with the conduct of a trade or business in the
United States (see chapter 4).
The general rules for determining U.S. source income
that apply to most nonresident aliens are shown in Table 2-1. The following discussions cover the general rules
as well as the exceptions to these rules.
Tip: Not all items of U.S. source income are taxable. See
chapter 3.

Generally, U.S. source interest income includes the following items.

• Interest on bonds, notes, or other interest-bearing obligations of U.S. residents or domestic corporations.

• Interest paid by a domestic or foreign partnership or
foreign corporation engaged in a U.S. trade or business at any time during the tax year.

• Original issue discount (OID).
• Interest from a state, the District of Columbia, or the

U.S. Government.
The place or manner of payment is immaterial in determining the source of the income.
A substitute interest payment made to the transferor of
a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as
the interest on the transferred security.
Exceptions. U.S. source interest income does not include the following items.
1. Interest paid by a resident alien or a domestic corporation on obligations issued before August 10, 2010,
if, for the 3-year period ending with the close of the
payer’s tax year preceding the interest payment, at
least 80% (0.80) of the payer’s total gross income:
a. Is from sources outside the United States, and
b. Is attributable to the active conduct of a trade or
business by the individual or corporation in a
foreign country or a U.S. territory.

Table 2-1. Summary of Source Rules for Income of Nonresident Aliens
Item of income

Factor determining source

Salaries, wages, other compensation

Where services performed

Business income:
Personal services
Sale of inventory—purchased
Sale of inventory—produced

Where services performed
Where sold
Where produced

Interest

Residence of payer

Dividends

Whether a U.S. or foreign corporation*

Rents

Location of property

Royalties:
Natural resources
Patents, copyrights, etc.

Location of property
Where property is used

Sale of real property

Location of property

Sale of personal property

Seller’s tax home (but see Personal Property, later, for exceptions)

Pension distributions attributable to contributions

Where services were performed that earned the pension

Investment earnings on pension contributions

Location of pension trust

Sale of natural resources

Allocation based on fair market value of product at export terminal.
For more information, see Regulations section 1.863-1(b).

* Exceptions include part of a dividend paid by a foreign corporation is U.S. source if at least 25% of the corporation’s gross income is effectively
connected with a U.S. trade or business for the 3 tax years before the year in which the dividends are declared. Special rules apply for dividend
equivalent payments.

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Chapter 2

Source of Income

15

However, the interest will be considered U.S.
source interest income if either of the following applies.

• A payment that references a U.S. source dividend

a. The recipient of the interest is related to the resident alien or domestic corporation. See section
954(d)(3) for the definition of “related person.”

• A payment that references a U.S. source dividend

b. The terms of the obligation are significantly modified after August 9, 2010. Any extension of the
term of the obligation is considered a significant
modification.

A payment of a dividend equivalent amount includes
any gross amount that references a U.S. source dividend
and that is used to compute any net amount transferred to
or from the taxpayer under a contract, if the taxpayer is the
long party under the contract. As a result, a taxpayer may
be treated as having received a dividend equivalent payment even if the taxpayer makes a net payment or no
amount is paid because the net amount is zero.
In 2025, an NPC or ELI will generally be a specified
NPC or specified ELI, respectively, if the contract is a delta
one transaction. Generally, delta is the ratio of change in
the fair market value of an NPC or ELI to a small change in
the fair market value of the number of shares of the stock
referenced by the contract. Generally, the amount of a dividend equivalent for a specified NPC or specified ELI is
the per share dividend amount multiplied by the number of
shares of stock referenced by the contract multiplied by
the delta of the contract. Special rules apply to complex
contracts. See Regulations section 1.871-15 and Notice
2024-44 (or its successors) for additional information.

made pursuant to a specified equity-linked instrument
(ELI).

2. Interest paid by a foreign branch of a domestic corporation or a domestic partnership on deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and
loan associations, and other savings institutions chartered and supervised as savings and loan or similar
associations under federal or state law if the interest
paid or credited can be deducted by the association.
3. Interest on deposits with a foreign branch of a domestic corporation or domestic partnership, but only if the
branch is in the commercial banking business.

Dividends
In most cases, dividend income received from domestic
corporations is U.S. source income. Dividend income from
foreign corporations is usually foreign source income. An
exception to the second rule is discussed later.
A substitute dividend payment made to the transferor of
a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as a
distribution on the transferred security. See Dividend
equivalent payments, discussed below.
Exception. Part of the dividends received from a foreign corporation is U.S. source income if 25% or more of
its total gross income for the 3-year period ending with the
close of its tax year preceding the declaration of dividends
was effectively connected with a trade or business in the
United States. If the corporation was formed less than 3
years before the declaration, use its total gross income
from the time it was formed. Determine the part that is
U.S. source income by multiplying the dividend by the following fraction.
Foreign corporation’s gross income connected with
a U.S. trade or business for the 3-year period
Foreign corporation’s gross income from all sources
for that period

Dividend equivalent payments. U.S. source dividends
also include dividend equivalent payments. Dividend
equivalent payments include:

• Substitute dividends paid pursuant to a securities

lending transaction, sale-repurchase transaction, or
substantially similar transaction that, directly or indirectly, are contingent on or determined by reference to
the payment of a dividend from U.S. sources;

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Chapter 2

made pursuant to a specified notional principal contract (NPC); or

Guarantee of Indebtedness
Amounts received directly or indirectly, for the provision of
a guarantee of indebtedness issued after September 27,
2010, are U.S. source income if they are paid by:
1. A noncorporate resident or U.S. corporation, or
2. Any foreign person if the amounts are effectively connected with the conduct of a U.S. trade or business.
For more information, see section 861(a)(9).

Personal Services
All wages and any other compensation for services performed in the United States are considered to be from
sources in the United States. The only exceptions to this
rule are discussed under Employees of foreign persons,
organizations, or offices, later, and under Crew members,
earlier.
If you are an employee and receive compensation for
labor or personal services performed both inside and outside the United States, special rules apply in determining
the source of the compensation. Compensation (other
than certain fringe benefits) is sourced on a time basis.
Certain fringe benefits (such as housing and education)
are sourced on a geographical basis.
Or you may be permitted to use an alternative basis to
determine the source of compensation. See Alternative
Basis, later.
Multilevel marketing. Certain companies selling products through a multilevel marketing arrangement, such

Source of Income

Publication 519 (2025)

that an upper-tier distributor, who has sponsored a
lower-tier distributor, are entitled to a payment from the
company based on certain activities of that lower-tier distributor. Generally, depending on the facts, payments from
such multilevel marketing companies to independent
(nonemployee) distributors (upper-tier distributors) that
are based on the sales or purchases of persons whom
they have sponsored (lower-tier distributors) constitute income for the performance of personal services in recruiting, training, and supporting the lower-tier distributors.
The source of such income is generally based on where
the services of the upper-tier distributor are performed
and may, depending on the facts, be considered multiyear
compensation, with the source of income determined over
the period to which such compensation is attributable.
Self-employed individuals. If you are self-employed,
you determine the source of compensation for labor or
personal services from self-employment on the basis that
most correctly reflects the proper source of that income
under the facts and circumstances of your particular case.
In many cases, the facts and circumstances will call for an
apportionment on a time basis, as explained next.

Time Basis
Use a time basis to figure your U.S. source compensation
(other than the fringe benefits discussed under Geographical Basis, later). Do this by multiplying your total compensation (other than the fringe benefits sourced on a geographical basis) by the following fraction.
Number of days you performed services in the
United States during the year

Multiyear compensation. The source of multiyear compensation is generally determined on a time basis over the
period to which the compensation is attributable. Multiyear
compensation is compensation that is included in your income in 1 tax year but that is attributable to a period that
includes 2 or more tax years.
You determine the period to which the compensation is
attributable based on the facts and circumstances of your
case. For example, an amount of compensation that specifically relates to a period of time that includes several
calendar years is attributable to the entire multiyear period.
The amount of compensation treated as from U.S.
sources is figured by multiplying the total multiyear compensation by a fraction. The numerator of the fraction is
the number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in
the United States in connection with the project. The denominator of the fraction is the total number of days (or
unit of time less than a day, if appropriate) that you performed labor or personal services in connection with the
project.

Geographical Basis

Total number of days you performed services
during the year

You can use a unit of time less than a day in the above
fraction, if appropriate. The time period for which the compensation is made does not have to be a year. Instead,
you can use another distinct, separate, and continuous
time period if you can establish to the satisfaction of the
IRS that this other period is more appropriate.
Example 1. Christina Brooks, a resident of the Netherlands, worked 240 days for a U.S. company during the tax
year. Christina received $80,000 in compensation. None
of it was for fringe benefits. Christina performed services
in the United States for 60 days and performed services in
the Netherlands for 180 days. Using the time basis for determining the source of compensation, $20,000 ($80,000
× 60/240) is Christina’s U.S. source income.
Example 2. Rob Waters, a resident of South Africa, is
employed by a corporation. Rob’s annual salary is
$100,000. None of it is for fringe benefits. During the first
quarter of the year, Rob worked entirely within the United
States. On April 1, Rob was transferred to Singapore for
the remainder of the year. Rob is able to establish that the
first quarter of the year and the last 3 quarters of the year
are two separate, distinct, and continuous periods of time.
Accordingly, $25,000 of Rob’s annual salary is attributable
Publication 519 (2025)

to the first quarter of the year (0.25 × $100,000). All of it is
U.S. source income because Rob worked entirely within
the United States during that quarter. The remaining
$75,000 is attributable to the last 3 quarters of the year.
During those quarters, Rob worked 150 days in Singapore
and 30 days in the United States. Rob’s periodic performance of services in the United States did not result in distinct, separate, and continuous periods of time. Of this
$75,000, $12,500 ($75,000 × 30/180) is U.S. source income.

Chapter 2

Compensation you receive as an employee in the form of
the following fringe benefits is sourced on a geographical
basis.

• Housing.
• Education.
• Local transportation.
• Tax reimbursement.
• Hazardous or hardship duty pay, as defined in Regulations section 1.861-4(b)(2)(ii)(D)(5).

• Moving expense reimbursement.
The amount of fringe benefits must be reasonable and you
must substantiate them by adequate records or by sufficient evidence.
Principal place of work. The above fringe benefits, except for tax reimbursement and hazardous or hardship
duty pay, are sourced based on your principal place of
work. Your principal place of work is usually the place
where you spend most of your working time. This could be
your office, plant, store, shop, or other location. If there is
no one place where you spend most of your working time,

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17

your main job location is the place where your work is centered, such as where you report for work or are otherwise
required to “base” your work.
If you have more than one job at any time, your main
job location depends on the facts in each case. The most
important factors to be considered are:

• The total time you spend at each place,
• The amount of work you do at each place, and
• How much money you earn at each place.

• Rent.
• Utilities (except telephone charges).
• Real and personal property insurance.
• Occupancy taxes not deductible under section 164 or
216(a).

• Nonrefundable fees for securing a leasehold.
• Rental of furniture and accessories.
• Household repairs.
• Residential parking.
• Fair rental value of housing provided in kind by your

ices for a special needs student, books, supplies, and
other equipment.

• Room and board and uniforms that are required or

Local transportation. The source of a local transportation fringe benefit is determined based on the location of
your principal place of work. Your local transportation
fringe benefit is the amount that you receive as compensation for local transportation for you or your spouse or dependents at the location of your principal place of work.
The amount treated as a local transportation fringe benefit
is limited to actual expenses incurred for local transportation and the fair rental value of any employer-provided vehicle used predominantly by you, your spouse, or your dependents for local transportation. Actual expenses do not
include the cost (including interest) of any vehicle purchased by you or on your behalf.
Tax reimbursement. The source of a tax reimbursement
fringe benefit is determined based on the location of the
jurisdiction that imposed the tax for which you are reimbursed.

employer.

A housing fringe benefit does not include:

• Deductible interest and taxes (including deductible interest and taxes of a tenant-stockholder in a cooperative housing corporation);

• The cost of buying property, including principal payments on a mortgage;

• The cost of domestic labor (maids, gardeners, etc.);
• Pay television subscriptions;
• Improvements and other expenses that increase the
value or appreciably prolong the life of property;

• Purchased furniture or accessories;
• Depreciation or amortization of property or improvements;

• The value of meals or lodging that you exclude from
gross income; or

• The value of meals or lodging that you deduct as moving expenses.

The deduction for moving expenses is available only if
you are a member of the U.S. Armed Forces on active
duty and move due to a permanent change of duty station.
Education. The source of an education fringe benefit for
the education expenses of your dependents is determined
based on the location of your principal place of work. An
education fringe benefit includes payments only for the folChapter 2

• Tuition, fees, academic tutoring, special needs serv-

provided by the school in connection with enrollment
or attendance.

Housing. The source of a housing fringe benefit is determined based on the location of your principal place of
work. A housing fringe benefit includes payments to you or
on your behalf (and your family’s if your family resides with
you) only for the following.

18

lowing expenses for education at an elementary or secondary school.

Moving expense reimbursement. The source of a moving expense reimbursement is generally based on the location of your new principal place of work. However, the
source is determined based on the location of your former
principal place of work if you provide sufficient evidence
that such determination of source is more appropriate under the facts and circumstances of your case. Sufficient
evidence generally requires an agreement between you
and your employer, or a written statement of company policy, which is reduced to writing before the move and which
is entered into or established to induce you or other employees to move to another country. The written statement
or agreement must state that your employer will reimburse
you for moving expenses that you incur to return to your
former principal place of work regardless of whether you
continue to work for your employer after returning to that
location. It may contain certain conditions upon which the
right to reimbursement is determined as long as those
conditions set forth standards that are definitely ascertainable and can only be fulfilled prior to, or through completion of, your return move to your former principal place of
work.

Alternative Basis
If you are an employee, you can determine the source of
your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and
circumstances of your case, the alternative basis more
properly determines the source of your compensation
than the time or geographical basis. If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more

Source of Income

Publication 519 (2025)

properly determines the source of your compensation.
Also, if your total compensation from all sources is
$250,000 or more, check “Yes” to both questions on line K
of Schedule OI (Form 1040-NR), and attach a written
statement to your tax return that sets forth all of the following.
1. Your name and SSN (entered across the top of the
statement).
2. The specific compensation income, or the specific
fringe benefit, for which you are using the alternative
basis.

Payments made by an entity designated as a public international organization under the International Organizations Immunities Act are from foreign sources.
Activities to be performed outside the United States.
Scholarships, fellowship grants, targeted grants, and achievement awards received by nonresident aliens for activities performed, or to be performed, outside the United
States are not U.S. source income.
Caution: These rules do not apply to amounts paid as
salary or other compensation for services. See Personal
Services, earlier, for the source rules that apply.

3. For each item in (2), the alternative basis of allocation
of source used.

Pensions and Annuities

4. For each item in (2), a computation showing how the
alternative allocation was computed.
5. A comparison of the dollar amount of the U.S. compensation and foreign compensation sourced under
both the alternative basis and the time or geographical basis, discussed earlier.

Transportation Income
Transportation income is income from the use of a vessel
or aircraft or for the performance of services directly related to the use of any vessel or aircraft. This is true whether
the vessel or aircraft is owned, hired, or leased. The term
“vessel or aircraft” includes any container used in connection with a vessel or aircraft.
All income from transportation that begins and ends in
the United States is treated as derived from sources in the
United States. If the transportation begins or ends in the
United States, 50% of the transportation income is treated
as derived from sources in the United States.
For transportation income from personal services, 50%
of the income is U.S. source income if the transportation is
between the United States and a U.S. territory. For nonresident aliens, this only applies to income derived from,
or in connection with, an aircraft.
For information on how U.S. source transportation income is taxed, see chapter 4.

Scholarships, Grants, Prizes, and
Awards

If you receive a pension from a domestic trust for services
performed both in and outside the United States, part of
the pension payment is from U.S. sources. That part is the
amount attributable to earnings of the pension plan and
the employer contributions made for services performed in
the United States. This applies whether the distribution is
made under a qualified or nonqualified stock bonus, pension, profit-sharing, or annuity plan (whether or not funded).
If you performed services as an employee of the United
States, you may receive a distribution from the U.S. Government under a plan, such as the Civil Service Retirement System, that is treated as a qualified pension plan.
Your U.S. source income is the otherwise taxable amount
of the distribution that is attributable to your total U.S. Government basic pay other than tax-exempt pay for services
performed outside the United States.
Disaster tax relief. If you are required to file a U.S.
federal income tax return, you may be entitled to some
special disaster-related rules regarding the use of retirement funds. For more information, see Pub. 590-B. Also,
go to IRS.gov/DisasterTaxRelief.
Tax relief for qualified disaster distributions and
repayments. Special rules provide for tax-favored withdrawals and repayments to certain retirement plans (including individual retirement arrangements (IRAs)) for taxpayers who suffered economic losses because of certain
major disasters. For information about reporting qualified
disaster distributions and repayments, see Form 8915-F,
Qualified Disaster Retirement Plan Distributions and
Repayments, and its instructions.

Generally, the source of scholarships, fellowship grants,
grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. However,
see Activities to be performed outside the United States,
later.

Rents or Royalties

For example, payments for research or study in the United States made by the United States, a noncorporate
U.S. resident, or a domestic corporation are from U.S.
sources. Similar payments from a foreign government or
foreign corporation are foreign source payments even
though the funds may be disbursed through a U.S. agent.

U.S. source income also includes rents or royalties for
the use of, or for the privilege of using, in the United
States, intangible property such as patents, copyrights,
secret processes and formulas, goodwill, trademarks,
franchises, and similar property.

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Chapter 2

Your U.S. source income includes rent and royalty income
received during the tax year from property located in the
United States or from any interest in that property.

Source of Income

19

Real Property
Real property is land and buildings and generally anything
built on, growing on, or attached to land.
Gross income from sources in the United States includes gains, profits, and income from the sale or other
disposition of real property located in the United States.
Natural resources. The income from the sale of products of any farm, mine, oil or gas well, other natural deposit, or timber located in the United States and sold in a
foreign country, or located in a foreign country and sold in
the United States, is partly from sources in the United
States. For information on determining that part, see Regulations section 1.863-1(b).

Personal Property
Personal property is property, such as machinery, equipment, or furniture, that is not real property.
Gain or loss from the sale or exchange of personal
property generally has its source in the United States if
you have a tax home in the United States. If you do not
have a tax home in the United States, the gain or loss is
generally considered to be from sources outside the United States.
Tax home. Your tax home is the general area of your
main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax
home is the place where you permanently or indefinitely
work as an employee or a self-employed individual. If you
do not have a regular or main place of business because
of the nature of your work, then your tax home is the place
where you regularly live. If you do not fit either of these
categories, you are considered an itinerant and your tax
home is wherever you work.
Inventory property. Inventory property is personal property that is stock in trade or that is held primarily for sale to
customers in the ordinary course of your trade or business. Income from the sale of inventory that you purchased is sourced where the property is sold. Generally,
this is where title to the property passes to the buyer. For
example, income from the sale of inventory in the United
States is U.S. source income, whether you purchased it in
the United States or in a foreign country.
Income from the sale of inventory property that you produced in the United States and sold outside the United
States (or vice versa) is sourced where the property is
produced.
These rules apply even if your tax home is not in the
United States.
Depreciable property. To determine the source of any
gain from the sale of depreciable personal property, you
must first figure the part of the gain that is not more than
the total depreciation adjustments on the property. You allocate this part of the gain to sources in the United States
based on the ratio of U.S. depreciation adjustments to total depreciation adjustments. The rest of this part of the
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Chapter 2

gain is considered to be from sources outside the United
States.
For this purpose, “U.S. depreciation adjustments” are
the depreciation adjustments to the basis of the property
that are allowable in figuring taxable income from U.S.
sources. However, if the property is used predominantly in
the United States during a tax year, all depreciation deductions allowable for that year are treated as U.S. depreciation adjustments. But there are some exceptions for
certain transportation, communications, and other property used internationally.
Gain from the sale of depreciable property that is more
than the total depreciation adjustments on the property is
sourced as if the property were inventory property, as discussed above.
A loss is sourced in the same way as the depreciation
deductions were sourced. However, if the property was
used predominantly in the United States, the entire loss
reduces U.S. source income.
The “basis of property” usually means the cost (money
plus the fair market value of other property or services) of
property you acquire. Depreciation is an amount deducted
to recover the cost or other basis of a trade or business
asset. The amount you can deduct depends on the property’s cost, when you began using the property, how long it
will take to recover your cost, and which depreciation
method you use. A depreciation deduction is any deduction for depreciation or amortization or any other allowable
deduction that treats a capital expenditure as a deductible
expense.
Intangible property. Intangible property includes patents, copyrights, secret processes or formulas, goodwill,
trademarks, trade names, or other like property. The gain
from the sale of amortizable or depreciable intangible
property, up to the previously allowable amortization or depreciation deductions, is sourced in the same way as the
original deductions were sourced. This is the same as the
source rule for gain from the sale of depreciable property.
See Depreciable property, earlier, for details on how to apply this rule.
Gain in excess of the amortization or depreciation deductions is sourced in the country where the property is
used if the income from the sale is contingent on the productivity, use, or disposition of that property. If the income
is not contingent on the productivity, use, or disposition of
the property, the income is sourced according to your tax
home (discussed earlier). If payments for goodwill do not
depend on its productivity, use, or disposition, their source
is the country in which the goodwill was generated.
Sales through offices or fixed places of business.
Despite any of the earlier rules, if you do not have a tax
home in the United States, but you maintain an office or
other fixed place of business in the United States, treat the
income from any sale of personal property (including inventory property) that is attributable to that office or place
of business as U.S. source income. However, this rule
does not apply to sales of inventory property for use, disposition, or consumption outside the United States if your
office or other fixed place of business outside the United
States materially participated in the sale.

Source of Income

Publication 519 (2025)

If you have a tax home in the United States but maintain
an office or other fixed place of business outside the United States, income from sales of personal property, other
than inventory, depreciable property, or intangibles, that is
attributable to that foreign office or place of business may
be treated as U.S. source income. The income is treated
as U.S. source income if an income tax of less than 10%
of the income from the sale is paid to a foreign country.
This rule also applies to losses if the foreign country would
have imposed an income tax of less than 10% had the
sale resulted in a gain.

Community Income
If you are married and you or your spouse is subject to the
community property laws of a foreign country, U.S. state,
or U.S. territory, you must generally follow those laws to
determine the income of yourself and your spouse for U.S.
tax purposes. But you must disregard certain community
property laws if:

• Both you and your spouse are nonresident aliens; or
• One of you is a nonresident alien and the other is a

U.S. citizen or resident and you do not both choose to
be treated as U.S. residents as explained in Nonresident Spouse Treated as a Resident, earlier.

In these cases, you and your spouse must report community income as explained later.
Earned income. Earned income of a spouse, other than
trade or business income and a partner’s distributive
share of partnership income, is treated as the income of
the spouse whose services produced the income. That
spouse must report all of it on their separate return.
Trade or business income. Trade or business income,
other than a partner’s distributive share of partnership income, is treated as the income of the spouse carrying on
the trade or business. That spouse must report all of it on
their separate return.
Partnership income (or loss). A partner’s distributive
share of partnership income (or loss) is treated as the income (or loss) of the partner. The partner must report all
of it on their separate return.
Separate property income. Income derived from the
separate property of one spouse (and which is not earned
income, trade or business income, or partnership distributive share income) is treated as the income of that spouse.
That spouse must report all of it on their separate return.
Use the appropriate community property law to determine
what is separate property.
Other community income. All other community income
is treated as provided by the applicable community property laws.

Publication 519 (2025)

Chapter 3

3.
Exclusions From Gross
Income
Introduction
Resident and nonresident aliens are allowed exclusions
from gross income if they meet certain conditions. An exclusion from gross income is generally income you receive
that is not included in your U.S. income and is not subject
to U.S. tax. This chapter covers some of the more common exclusions allowed to resident and nonresident aliens.

Topics

This chapter discusses:

• Nontaxable interest,
• Nontaxable dividends,
• Certain compensation paid by a foreign employer,
• Gain from sale of home, and
• Scholarships and fellowship grants.
Useful Items

You may want to see:
Publication
54

Tax Guide for U.S. Citizens and Resident Aliens
Abroad

54

523 Selling Your Home
523

See chapter 12 for information about getting these publications.

Resident Aliens
Resident aliens may be able to exclude the following items
from their gross income.

Foreign Earned Income and Housing
Amount
If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. The exclusion is $130,000 in 2025. In
addition, you may be able to exclude or deduct certain foreign housing amounts. You may also qualify if you are a
bona fide resident of a foreign country and you are a citizen or national of a country with which the United States

Exclusions From Gross Income

21

has an income tax treaty. For more information, see Pub.
54.
Foreign country. A foreign country is any territory under
the sovereignty of a government other than that of the United States.
The term “foreign country” includes the country’s territorial waters and airspace, but not international waters and
the airspace above them. It also includes the seabed and
subsoil of those submarine areas adjacent to the country’s
territorial waters over which it has exclusive rights under
international law to explore and exploit the natural resources.
The term “foreign country” does not include U.S. territories. It does not include the Antarctic region.

Nonresident Aliens

To qualify as portfolio interest, the interest must be paid
on obligations issued after July 18, 1984, and otherwise
subject to withholding. For obligations issued after March
18, 2012, portfolio interest does not include interest paid
on debt that is not in registered form. Before March 19,
2012, portfolio interest included interest on certain registered and nonregistered (bearer) bonds if the obligations
meet the requirements described below.
Obligations in registered form. Portfolio interest includes interest paid on an obligation that is in registered
form, and for which you have received documentation that
the beneficial owner of the obligation is not a U.S. person.
Generally, an obligation is in registered form if:

• The obligation is registered as to both principal and

any stated interest with the issuer (or its agent) and
any transfer of the obligation may be effected only by
surrender of the old obligation and reissuance to the
new holder,

Nonresident aliens can exclude the following items from
their gross income.

• The right to principal and stated interest with respect

Note: Some tax treaties also offer exclusions from income (or reduced tax rates) to individuals that qualify for
benefits under the tax treaties. See chapter 9 for more information.

• The obligation is registered as to both principal and

Interest Income
Interest income that is not connected with a U.S. trade or
business is excluded from income if it is from:

• Deposits (including certificates of deposit) with persons in the banking business;

• Deposits or withdrawable accounts with mutual sav-

ings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings
institutions chartered and supervised as savings and
loan or similar associations under federal or state law
(if the interest paid or credited can be deducted by the
association); and

• Amounts held by an insurance company under an
agreement to pay interest on them.

State and local government obligations. Interest on
obligations of a state or political subdivision, the District of
Columbia, or a U.S. territory is generally not included in income. However, interest on certain private activity bonds,
arbitrage bonds, and certain bonds not in registered form
is included in income.
Portfolio interest. Interest and OID that qualifies as portfolio interest are not subject to chapter 3 (of the Internal
Revenue Code) withholding under sections 1441 through
1443. However, such interest may be subject to withholding if it is a withholdable payment, and there is no exception to chapter 4 (of the Internal Revenue Code) withholding under sections 1471 through 1474. For more
information, see the discussion of portfolio interest under
Withholding on Specific Income in Pub. 515.

22

Chapter 3

to the obligation may be transferred only through a
book entry system maintained by the issuer or its
agent, or

stated interest with the issuer or its agent and can be
transferred both by surrender and reissuance and
through a book entry system.

An obligation that would otherwise be considered to be
in registered form is not considered to be in registered
form as of a particular time if it can be converted at any
time in the future into an obligation that is not in registered
form. For more information on whether obligations are
considered to be in registered form, see the discussion of
portfolio interest under Withholding on Specific Income in
Pub. 515.
Obligations not in registered form. For obligations
issued before March 19, 2012, interest on an obligation
that is not in registered form (bearer obligation) is portfolio
interest if the obligation is foreign targeted. A bearer obligation is foreign targeted if:

• There are arrangements to ensure that the obligation

will be sold, or resold in connection with the original issue, only to a person who is not a U.S. person;

• Interest on the obligation is payable only outside the
United States and its territories; and

• The face of the obligation contains a statement that

any U.S. person who holds the obligation will be subject to limits under the U.S. income tax laws.

Documentation is not required for interest on bearer obligations to qualify as portfolio interest. In some cases,
however, you may need documentation for purposes of
Form 1099 reporting and backup withholding.
Interest that does not qualify as portfolio interest.
Payments to certain persons and payments of contingent
interest do not qualify as portfolio interest. You must withhold at the statutory rate on such payments unless some
other exception, such as a treaty provision, applies.

Exclusions From Gross Income

Publication 519 (2025)

Contingent interest. Portfolio interest does not include contingent interest. Contingent interest is either of
the following.
1. Interest that is determined by reference to:

• Any receipts, sales, or other cash flow of the
debtor or related person;

• Income or profits of the debtor or related person;
• Any change in value of any property of the debtor
or a related person; or

• Any dividend, partnership distributions, or similar

payments made by the debtor or a related person.
For exceptions, see section 871(h)(4)(C).

2. Any other type of contingent interest that is identified
by the Secretary of the Treasury in regulations.
Related persons. Related persons include the following.

• Members of a family, including only brothers, sisters,

half brothers, half sisters, spouse, ancestors (parents,
grandparents, etc.), and lineal descendants (children,
grandchildren, etc.).

• Any person who is a party to any arrangement under-

taken for the purpose of avoiding the contingent interest rules.

• Certain corporations, partnerships, and other entities.
For details, see Nondeductible Loss in chapter 2 of
Pub. 544.

Exception for existing debt. Contingent interest
does not include interest paid or accrued on any debt with
a fixed term that was issued:

• On or before April 7, 1993; or
• After April 7, 1993, pursuant to a written binding contract in effect on that date and at all times thereafter
before that debt was issued.

Dividend Income
The following dividend income is exempt from the 30%
tax.
Certain dividends paid by foreign corporations.
There is no 30% tax on U.S. source dividends you receive
from a foreign corporation. See Exception under Dividends in chapter 2 for how to figure the amount of U.S.
source dividends. This exemption does not apply to dividend equivalent payments.
Certain interest-related dividends. There is no 30%
tax on interest-related dividends from sources within the
United States that you receive from a mutual fund or other
regulated investment company (RIC). The mutual fund will
designate in writing which dividends are interest-related
dividends.
Certain short-term capital gain dividends. There may
not be any 30% tax on certain short-term capital gain dividends from sources within the United States that you rePublication 519 (2025)

Chapter 3

ceive from a mutual fund or other RIC. The mutual fund
will designate in writing which dividends are short-term
capital gain dividends. This tax relief will not apply to you if
you are present in the United States for 183 days or more
during your tax year.

Services Performed for Foreign
Employer
If you were paid by a foreign employer, your U.S. source
income may be exempt from U.S. tax, but only if you meet
one of the situations discussed next.
Employees of foreign persons, organizations, or offices. Income for personal services performed in the United States as a nonresident alien is not considered to be
from U.S. sources and is tax exempt if you meet all three
of the following conditions.
1. You perform personal services as an employee of or
under a contract with a nonresident alien individual,
foreign partnership, or foreign corporation not engaged in a trade or business in the United States; or
you work for an office or place of business maintained
in a foreign country or territory of the United States by
a U.S. corporation, U.S. partnership, or U.S. citizen or
resident.
2. You perform these services while you are a nonresident alien temporarily present in the United States for
a period or periods of not more than a total of 90 days
during the tax year.
3. Your pay for these services is not more than $3,000.
If you do not meet all three conditions, your income from
personal services performed in the United States is U.S.
source income and is taxed according to the rules in chapter 4.
If your pay for these services is more than $3,000, the
entire amount is income from a trade or business within
the United States. To find if your pay is more than $3,000,
do not include any amounts you get from your employer
for advances or reimbursements of business travel expenses, if you were required to and did account to your employer for those expenses. If the advances or reimbursements are more than your expenses, include the excess in
your pay for these services.
A “day” means a calendar day during any part of which
you are physically present in the United States.
Example 1. During 2025, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U.S. partnership. Henry, who uses the calendar year as his tax year, was temporarily present in the
United States for 60 days during 2025 performing personal services for the overseas office of the partnership.
That office paid Henry a total gross salary of $2,800 for
those services. During 2025, Henry was not engaged in a
trade or business in the United States. The salary is not
considered U.S. source income and is exempt from U.S.
tax.

Exclusions From Gross Income

23

Example 2. The facts are the same as in Example 1,
except that Henry’s total gross salary for the services performed in the United States during 2025 was $4,500.
Henry received $2,875 in 2025, and $1,625 in 2026. During 2025, Henry was engaged in a trade or business in the
United States because the compensation for his personal
services in the United States was more than $3,000.
Henry’s salary is U.S. source income and is taxed under
the rules in chapter 4.
Crew members. Compensation for services performed
by a nonresident alien in connection with the individual’s
temporary presence in the United States as a regular crew
member of a foreign vessel (for example, a boat or ship)
engaged in transportation between the United States and
a foreign country or U.S. territory is not U.S. source income and is exempt from U.S. tax. This exemption does
not apply to compensation for services performed on foreign aircraft.
Students and exchange visitors. Nonresident alien students and exchange visitors present in the United States
under “F,” “J,” “M,” or “Q” visas can exclude from gross income pay received from a foreign employer.
This group includes bona fide students, scholars, trainees, teachers, professors, research assistants, specialists,
or leaders in a field of specialized knowledge or skill, or
persons of similar description. It also includes the alien’s
spouse and minor children if they come with the alien or
come later to join the alien.
A nonresident alien temporarily present in the United
States under a “J” visa includes an alien individual entering the United States as an exchange visitor under the
Mutual Educational and Cultural Exchange Act of 1961.
Foreign employer. A foreign employer is:

• A nonresident alien individual, foreign partnership, or
foreign corporation; or

• An office or place of business maintained in a foreign

country or in a U.S. territory by a U.S. corporation, a
U.S. partnership, or an individual who is a U.S. citizen
or resident.

2. At the time the first amount is paid as an annuity under the plan (or by the trust), 90% or more of the employees for whom contributions or benefits are provided under the annuity plan (or under the plan of which
the trust is a part) are U.S. citizens or residents.
If the annuity qualifies under condition (1) but not condition (2) above, you do not have to include the amount in
income if:

• You are a resident of a country that gives a substan-

tially equal exclusion to U.S. citizens and residents, or

• You are a resident of a beneficiary developing country
under Title V of the Trade Act of 1974.

If you are not sure whether the annuity is from a qualified annuity plan or qualified trust, ask the person who
made the payment.
Income affected by treaties. Income of any kind that is
exempt from U.S. tax under a treaty to which the United
States is a party is excluded from your gross income. Income on which the tax is only limited by treaty, however, is
included in gross income. See chapter 9.

Gambling Winnings From Dog or
Horse Racing
You can exclude from your gross income winnings from legal wagers initiated outside the United States in a pari-mutuel pool with respect to a live horse or dog race in the
United States.

Gain From the Sale of Your
Main Home
If you sold your main home, you may be able to exclude
up to $250,000 of the gain on the sale of your home. If you
are married and file a joint return, you may be able to exclude up to $500,000. For information on the requirements
for this exclusion, see Pub. 523.

The term “foreign employer” does not include a foreign
government. Pay from a foreign government that is exempt
from U.S. income tax is discussed in chapter 10.

Caution: This exclusion does not apply if you are subject
to the expatriation tax rules discussed in chapter 4.

Income from certain annuities. Do not include in income any annuity received under a qualified annuity plan
or from a qualified trust exempt from U.S. income tax if you
meet both of the following conditions.

Scholarships and Fellowship
Grants

1. You receive the annuity only because:
a. You performed personal services outside the United States while you were a nonresident alien; or
b. You performed personal services inside the United
States while you were a nonresident alien and you
met the three conditions, described earlier, under
Employees of foreign persons, organizations, or
offices.

24

Chapter 3

If you are a candidate for a degree, you may be able to exclude from your income part or all of the amounts you receive as a qualified scholarship. The rules discussed here
apply to both resident and nonresident aliens.
Tip: If a nonresident alien receives a grant that is not from
U.S. sources, it is not subject to U.S. tax. See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your grant is from U.S. sources.

Exclusions From Gross Income

Publication 519 (2025)

A scholarship or fellowship is excludable from income
only if:

must be paid to the institution as a condition of enrollment
or attendance.

1. You are a candidate for a degree at an eligible educational institution, and

Payment for services. You cannot exclude from income
the portion of any scholarship, fellowship, or tuition reduction that represents payment for past, present, or future
teaching, research, or other services. This is true even if
all candidates for a degree are required to perform the
services as a condition for receiving the degree.

2. You use the scholarship or fellowship to pay qualified
education expenses.
Candidate for a degree. You are a candidate for a degree if you:
1. Attend a primary or secondary school or are pursuing
a degree at a college or university; or
2. Attend an accredited educational institution that is authorized to prov

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A1c75730c0df0ff21. Public record. Not legal advice.