Salaries, wages, or any other pay for personal services (referred to collectively as wages) paid to nonresident alien (NRA) employees that are not exempt from U.S. taxation via an income tax treaty or another applicable exemption are subject to graduated U.S. federal income tax withholding under IRC section 3402 in the same way as for U.S. citizens and residents if such wages are effectively connected with the conduct of a trade or business within the United States. Under IRC section 864(b), with certain exceptions, the term "trade or business within the United States" includes the performance of personal services within the United States. Any wages subject to graduated U.S. federal income tax withholding paid to an NRA individual for personal services performed as an employee for an employer are generally exempt from the 30% "NRA withholding" under IRC section 1441. For more information on employer-employee relationships and what constitutes wages, refer to U.S. Citizens and Resident Aliens Employed Abroad - Employees and Wages Paid to U.S. Citizens and Resident Aliens Employed Abroad. Persons Employed Abroad by a U.S. Person Aliens Employed in the U.S. Persons Employed in U.S. Possessions Persons Employed by a Foreign Person Persons Employed by a Foreign Government or International Organization Special Withholding Rules for U.S. Federal Agency Employers with Employees in CNMI or Puerto Rico Withholding Exemptions - Form W-4 Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.
