Income Tax Return to Report Income Claimed to Be Effectively Connected with a U Form

Instructions and help about Income Tax Return To Report Income Claimed To Be Effectively Connected With A U

good afternoon this is sean golding with golding and golding here to discuss the basics of how non-resident aliens are tacked on eci effectively connected income and how it's different than fdap fdap is the most common type of income generated by non-resident aliens fixed determinable annual periodic you live outside the u.s you're not a u.s citizen you're not a legal permanent resident you don't meet the substantial presence test you want to invest in some mutual funds you open a vanguard account you invest they're going to withhold 30 percent unless certain treaty elections are made generally you can make down on waben or identified on a 1040 nr down the line if you have to file okay that's the general rule the rule is a little harsh if you're a non-resident alien and you're investing in the us uh and you're generating effectively connected income through a business trade or business then the rules are a little different uh you generally will get taxed at the progressive tax rates th