The U.S. imposes an annual income tax, subject to world-wide tax reporting, for U.S. taxpayers world-wide income (i.e. U.S. citizens, U.S. tax residents who are either “Green Card” holders, or are in the U.S. under the “Substantial Presence Test” for 183 days or more, in one tax year, 122 days per year for three years (current year and prior two years).

The U.S. imposes an annual flat 30% withholding tax on U.S. source income (FDAP Income) paid to non-resident aliens (NRA) with no deductions.

For U.S. income that is effectively connected with a U.S. trade or business, the NRA does not have 30% tax withheld, but pays tax at graduated U.S. tax rates, unless this income is classified as U.S. source FDAP income (“Fixed or Determinable Annual or Periodical Income) which is subject to a 30% flat tax, withheld at the source.

For more information please see the following articles:

1) Taxation of NRAs – Effectively Connected Income

2) Taxation of NRAs- FDAP Income