Interest Income reporting for non resident ailen

[tax2185]

Please guide

I was resident alien(having SSN)  but in 2023 I did not pass a substantial presence test and am a non-resident alien now. I am residing in Canada. My income from the USA is 1500 USD (interset from cash deposit). The              US based bank issued me 1099 INT form.  Do I need to file 1040 NR in the USA? As per my understanding, the USA does not charge tax for interest income . If not then how to inform the IRS about not paying tax on interest income as I am a nonresident?

[Vanessa A]

Interest income from a bank, is taxable income in the US.  However, since you are a non-resident alien, you would need to file a form 1040-NR which TurboTax does not support.  You can use Sprintax.com to file the 1040NR and they will be able to answer all of your questions. 

[tax2185]

As per the IRS website looks like CashDeposit is not taxable

https://www.irs.gov/individuals/international-taxpayers/nontaxable-types-of-interest-income-for-nonr...

nonresident aliens (NRAs) are not taxed on certain kinds of interest income, including but not limited to certain portfolio interest and deposit interest, that is not effectively connected with a U.S. trade or business per Internal Revenue Code subsections 871 (h) and (i), respectively, provided that such interest income arises from one of the following sources:

1. A U.S. bank
2. A U.S. savings and loan association
3. A U.S. credit union
4. A U.S. insurance company
5. Portfolio Interest (Described in “3. Exclusions From Gross Income" – “Nonresident Aliens” - "Interest Income" and its subsection "Portfolio interest" of Publication 519, U.S. Tax Guide for Aliens)

[AmyC]

While interest income is taxable in the US to most people you seem to be one of the exceptions that we do not handle. Our software does not do NR returns so you would need to use software designed for your situation.

References:

Nontaxable Types of Interest Income for Nonresident Aliens

Sprintax