FDAP income reporting requirements as a non-resident alien - US-source only?

You're absolutely right in your understanding. As a non-resident alien, you only need to report FDAP income that comes from US sources on your US tax return. Foreign-source FDAP income (like those dividends from your home country) isn't subject to US taxation for non-resident aliens. The key factor is the source of the income, not the type. Non-resident aliens are generally only taxed on US-source income, whether it's FDAP or effectively connected income (ECI). This is different from US citizens and residents who must report worldwide income. Make sure you're filing the correct form (typically Form 1040-NR) and if you have US-source FDAP income, it's usually subject to a flat 30% withholding tax unless reduced by a tax treaty between the US and your home country.

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I was initially really skeptical about tax AI tools handling international tax matters, but I decided to try https://taxr.ai after my previous comment. I'm honestly surprised by how comprehensive the analysis was for my non-resident alien situation. The system correctly identified that my Korean bond interest (which I was about to report) was actually foreign-source FDAP that I didn't need to include on my 1040-NR. It saved me from overpaying by nearly $4,300! It even cited the specific sourcing rules under IRC 861-863 that applied to my situation. What impressed me most was the detailed explanation of how the US-Korea tax treaty applied to my US-source dividends, reducing my withholding rate. This was way more specific than what my previous accountant provided.

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One important thing to remember about FDAP income as a non-resident alien - the rules around what's considered "US-source" can be complicated depending on the type of income. For example, interest is generally sourced based on the residence of the payer, dividends are sourced based on where the company is incorporated, and royalties are sourced based on where the property is used. So just because money comes from a US bank account doesn't automatically make it US-source! Make sure you're applying the correct sourcing rules to each type of income you have.

Anyone know which form I need to use for reporting US-source FDAP income? Is it just part of the regular 1040-NR or is there some special schedule?

This is a great discussion that covers the key points really well! Just wanted to add one more consideration for non-resident aliens dealing with FDAP income - don't forget about the substantial presence test if you've been in the US for an extended period. Even if you're on a work visa and consider yourself a non-resident alien, if you meet the substantial presence test (generally 183+ days over a 3-year period with specific weighting), you might actually be considered a resident alien for tax purposes. This would completely change your reporting requirements - you'd then need to report worldwide income, not just US-source FDAP. The good news is there are exceptions and tie-breaker rules, especially if you have a closer connection to your home country. But it's definitely worth checking if you've been in the US for substantial periods across multiple years.