Schedule NEC - Tax on Income Not Effectively Connected With a U.S. Trade or Business

Schedule NEC is used to report income not effectively connected with a U.S. trade or business. This may include, but is not limited to, dividends, royalties, and gambling winnings. Tax must be withheld at the source, and is generally withheld at a rate of 30%. The tax must be withheld by the person that pays the income. If your country of residence and the United States have a treaty which sets lower rates, your withholding may be lower.

To enter your income on Schedule NEC:

1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal.
2. Click Tax on Income Not Effectively Connected to a U.S. Trade or Business (Schedule NEC) in the Federal Quick Q&A Topics menu
3. Indicate whether or not you received Social Security benefits
4. Click the Schedule NEC button to add or edit Schedule NEC. You can enter your information directly on the form

For additional information, see:

• IRS Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities
• IRS Publication 519 U.S. Tax Guide for Aliens
• IRS Publication 901 U.S. Tax Treaties