Money

30% US Withholding for Nonresident Aliens: When It Applies and How to Reduce It

2 min read

In this guide
  1. Quick answer
  2. When does the 30% apply?
  3. How can you reduce it?
  4. Common mistakes
  5. FAQ
    1. Is this the same as W-4 withholding on wages?
  6. Key takeaways
  7. Related guides
  8. Sources

Nonresident alien withholding is the tax a US payer holds back before paying you US-source income. If you live abroad or are a nonresident in the US, this affects dividends, royalties and similar payments. Here is how it works, based on IRS guidance.

Quick answer

  • The standard rate is 30% on US-source fixed, determinable, annual or periodic (FDAP) income.
  • A reduced rate or exemption may apply under a tax treaty.
  • You tell the payer by giving Form W-8BEN.
  • Payers report with Forms 1042 and 1042-S.

When does the 30% apply?

It applies to US-source FDAP income paid to foreign persons unless a reduced rate or exemption applies. Without a valid form, the payer must assume the full rate.

How can you reduce it?

Step What to do
1 Check whether your country has a tax treaty with the US
2 Give the payer a completed Form W-8BEN
3 Keep the Form 1042-S the payer sends you

Common mistakes

  • Not giving a W-8BEN, so the full 30% is withheld.
  • Assuming a treaty rate applies to every income type.
  • Losing the 1042-S you may need for your home-country return.

FAQ

Is this the same as W-4 withholding on wages?

No. Wages follow different rules; see our W-4 guide.

Key takeaways

  • Know your income type.
  • File the W-8BEN before payments start.
  • Keep your 1042-S.

Last updated: October 2026. General information, not tax advice. Confirm with the IRS or a qualified adviser.

Sources

  • IRS: Nonresident alien withholding, Form W-8BEN, Forms 1042 and 1042-S

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