How to report FDAP income as a non-resident alien - US-source only?

You're on the right track! As a non-resident alien, you generally only need to report FDAP income that is US-sourced. This includes things like dividends, interest, rents, royalties, and other similar payments from US sources. The IRS primarily wants to tax income that has a US connection when it comes to non-resident aliens. Foreign-source FDAP income typically isn't subject to US taxation for non-resident aliens. This is different from US citizens and residents who must report worldwide income. For your US dividends specifically, these would be considered US-source income and would generally be subject to a 30% withholding tax (or lower if a tax treaty applies between the US and Canada). The withholding agent (usually the payer) should handle this withholding, but you'll still need to file Form 1040-NR if you have US-source income where the tax liability wasn't fully satisfied through withholding.

I was in a similar situation last year and used taxr.ai to help me sort through all this non-resident alien tax confusion. I had investments in multiple countries and wasn't sure what needed to be reported where. I uploaded my financial documents to https://taxr.ai and it analyzed everything, showing me exactly which income was US-sourced FDAP that needed reporting and which wasn't. Saved me hours of research and probably a costly mistake. The system flagged my US dividend income but correctly identified that my foreign interest and dividends weren't reportable on my US non-resident return. It even explained the different tax treaty provisions that applied to my situation since I'm in the UK (sounds like you're in Canada, so different treaty but same concept).

Just wanted to follow up after trying taxr.ai for my complicated non-resident alien tax situation. It was actually really helpful for sorting out my FDAP vs. effectively connected income question. The system correctly identified that my US rental income needed to be reported as effectively connected income on Schedule E (not subject to the flat 30% FDAP withholding), while my occasional consulting income was properly categorized as personal services income. It even flagged that I might benefit from claiming certain business deductions against that income. For anyone dealing with the non-resident alien tax maze, especially with multiple income types, it really helped clarify what needs reporting and what doesn't. Saved me from mistakenly reporting non-US source income that isn't required.

If you're struggling to get answers about your non-resident alien tax situation directly from the IRS, I'd recommend trying Claimyr. I was completely stuck trying to figure out how to handle some unusual FDAP income and couldn't get through to anyone at the IRS for weeks. After trying https://claimyr.com I got connected to an actual IRS agent in about 20 minutes who confirmed exactly what I needed to report as a non-resident with my specific income types. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Before using the service, I spent hours on hold and never reached anyone. The agent I spoke with clarified that I only needed to report my US-source FDAP income, and also explained some tax treaty benefits I didn't even know I qualified for.

I have to admit I was completely wrong about Claimyr. After struggling with my non-resident alien tax questions for months, I finally tried it out of desperation. Within about 30 minutes, I was actually speaking with an IRS representative who specialized in international tax issues. She confirmed exactly what I needed to know about my FDAP reporting requirements and explained which tax forms I needed based on my specific situation. The agent spent almost 45 minutes answering all my questions and even explained some deductions I wasn't aware of. Definitely worth it for the peace of mind, especially when dealing with complicated international tax situations where getting direct answers from the IRS is so valuable.

Quick clarification on FDAP - the 30% withholding isn't just on dividends. It applies to interest, royalties, and other passive income types too. But important to note that many non-resident aliens can get reduced rates through tax treaties! For example, Canadian residents might qualify for reduced withholding rates (15% on dividends, 0% on certain interest) under the US-Canada tax treaty. You'd need to provide Form W-8BEN to your financial institutions to claim these reduced rates. Also, bank deposit interest from US banks is generally exempt from withholding for non-resident aliens (one of the few exceptions to FDAP withholding).

Just adding in case this helps - for scholarship or fellowship grants to non-resident aliens, the portion for tuition and books isn't taxable, but the portion for living expenses is considered FDAP subject to 30% withholding unless a tax treaty applies. I learned this after receiving a small research stipend as a visiting scholar at a US university. The university withheld 30% automatically from the living allowance portion.

Great question about FDAP income reporting! You're absolutely correct - as a non-resident alien, you generally only need to report FDAP income that's from US sources. Your Canadian accountant's confusion is understandable since this is a specialized area. For your specific situation with dividends from US stocks, these would definitely be US-source FDAP income subject to reporting. The good news is that under the US-Canada tax treaty, dividend withholding is typically reduced from 30% to 15% if you properly complete Form W-8BEN with your broker. One thing to watch out for - make sure your brokerage is applying the correct treaty rate. I've seen cases where non-resident aliens had too much tax withheld because they didn't properly claim treaty benefits, then had to file Form 1040-NR to get a refund. Your Japanese and European dividends, as others have mentioned, aren't reportable to the US - those would be handled under Canadian tax rules as a Canadian resident.