If you’re a non-U.S. resident receiving income from U.S. investments, stock plans, or securities, you may receive one or more tax forms such as Form 1099-DIV, Form 1099-B, or Form 1042-S. Each form reports different types of income or transactions and has specific U.S. tax implications.
Form 1099-DIV – Dividends and Distributions
You’ll receive Form 1099-DIV if you earned dividend income from U.S. stocks or mutual funds.
Key details reported:
- Box 1a: Total ordinary dividends
- Box 1b: Qualified dividends
- Box 2a: Capital gain distributions
- Box 6: Foreign tax paid (if applicable)
For nonresident shareholders, this income is generally U.S.-sourced and taxable, often subject to 30% withholding, unless reduced by a tax treaty.
If tax is withheld and you believe you qualify for a lower rate, you may be eligible to file Form 1040NR to reclaim the excess tax.
Form 1099-B – Proceeds from Broker Transactions
This form is issued when you sell U.S. securities, such as company shares or ETFs.
It reports:
- Sale proceeds
- Cost basis (purchase price)
- Gain or loss on the transaction
Nonresidents selling U.S. stocks are generally not taxed on capital gains, except when related to U.S. real property interests or in specific FIRPTA cases.
If Form 1099-B is issued in your name, it’s important to determine whether a U.S. return is required or whether it should be reported for informational purposes only.
Form 1042-S – U.S. Source Income Subject to Withholding
This form is issued to nonresident aliens and foreign entities receiving U.S.-source income, which may include:
- Dividends
- Royalties
- Interest
- Prizes, awards, or scholarship payments
- Compensation for services
It details:
- Gross income paid
- Federal tax withheld
- Withholding agent details
If tax is withheld at 30%, and you’re eligible for a reduced rate or exemption under a treaty, you may be able to claim a refund by filing Form 1040NR with the IRS.
Final Thoughts
Understanding which U.S. tax form you’ve received — Form 1099-DIV, 1099-B, or 1042-S — is the first step in managing your U.S. tax obligations and reclaiming any overpaid taxes. Each form carries different rules depending on your residency status, income type, and treaty eligibility.
For professional assistance with the forms, treaty benefits, or U.S. tax compliance, contact our team today.
We are one of the IRS Enrolled Agent with many years of experience in US 1040/1040NR personal tax compliance reporting and Fatca Compliance FBAR Reporting, We are happy to assist our clients in a timely, efficient, and cost-effective way.
