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ITG FAQ #10 Answer-If a tribal member is not a U.S. citizen or resident, should income tax withholding be done on per capita distributions?

Yes. Withholding of 30% applies. However, a lower rate may be appropriate, based on a treaty between the U.S. and the tribal member's country. See Publication 515, Withholding of Tax On Nonresident Aliens and Foreign Entities, for additional information on tax treaties and withholding rates.

When any payment is made to a nonresident alien, the payment and any tax withheld from the payment are reported on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. This form should be completed and a copy given to the tribal member. Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, is used to submit all Form 1042-S to the IRS, along with Form 1042-T, Annual Summary and Transmittal of Forms 1042-S.

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Page Last Reviewed or Updated: 16-Nov-2016