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?

Question

Quizplus · Accepted Answer

Nonresident aliens are subject to a flat 30% tax rate on their U.S. source income, unless a lower rate applies under a tax treaty. The domestic corporation must withhold the 30% tax from the dividend payment. The tax is applied on net income, not gross income. However, nonresident aliens are not required to make estimated tax payments on their U.S. source income, including dividend income.

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