A nonresident alien earns $10,000 of dividends from a domestic corporation, which is the alien's only U.S. source income. Which one of the following statements is incorrect?
A)The nonresident alien's U.S. tax rate is 30% unless reduced by a tax treaty.
B)The domestic corporation must withhold the U.S. taxes from the alien's dividend payment.
C)The 30% tax rate is applied against gross income.
D)The nonresident alien must pay estimated taxes on the dividend income at a 30% rate.

Question

Quizplus · Accepted Answer

The statement "The nonresident alien must pay estimated taxes on the dividend income at a 30% rate" is incorrect. Nonresident aliens are not required to make estimated tax payments on their U.S. source income. Rather, the withholding of taxes at the source, such as from the dividend payment, is considered sufficient to cover the alien's U.S. tax liability.

A Nonresident Alien Earns $10,000 of Dividends from a Domestic