Dual Status Alien - treatment of Non US Connected income prior to coming to US

[Abby0510]

I see conflicting IRS guidance in Pubs 519 and 1040NR instructions. Individual initially arrives in the US on August 1, 2024 with a green card status from a country with NO US TAX TREATY. All income received prior to that date was NOT effectively connected to the US. Multiple passages (1040NR instructions and Pub 519) indicate that such income prior to arrival is NOT taxable, but I also see a passage indicating it is subject to a 30% tax.[Pub 519 page 48, under How to Figure your Tax says: When you figure your U.S. tax for a dual-status year, you are subject to different rules for the part of the year you are a resident and the part of the year you are a nonresident.... Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate.]

I would appreciate any clarification and references for my file in case of audit.

[TaxGuyBill]

It needs to be US-sourced income to be subject to the tax.

For example, if you look under the heading "The 30% Tax", it says:


Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U.S. sources but only if the items are not effectively connected with your U.S. trade or business.

https://www.irs.gov/publications/p519#en_US_2024_publink1000222345