Schedule NEC (Form 1040-NR) 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 Tools down the left to expand, then click Forms Assistant. On smaller devices, click in the upper left-hand corner, then click Tools.
2. Click to expand the FEDERAL Forms folder, then click to expand the Forms & Schedules folder.
3. Click Schedule NEC - Tax on Income Not Effectively Connected With a U.S. Trade or Business, then click Add.
4. On the screen titled Social Security Benefits - Schedule NEC, click Yes.
5. On the screen titled Tax on Income Not Effectively Connected With a U.S. Trade or Business, click Schedule NEC, enter your information directly on the Quick Window, then click Save & Close.

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

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.