How do governments tax the income of non-residents?

In the state of Florida, non-residents are subject to taxation on any income they receive from either a Florida source or from a foreign source. A non-resident is someone who does not live and physically reside in Florida but derives income from Florida sources or from sources outside of the state. For taxation of non-residents, the federal government and Florida’s state government both have different tax rules. At the federal level, the Tax Cuts and Jobs Act of 2017 has some specific rules about taxing the income of non-residents. Generally, non-residents are subject to the same tax rates as other taxpayers—meaning they pay taxes on their worldwide income. Non-residents are then allowed a foreign income deduction to reduce their taxable income. In the state of Florida, non-resident individuals are taxed on their income derived from a Florida source at a flat rate of 5.5%. All income from sources outside of Florida is exempt from taxation. If a non-resident taxpayer has income from both a Florida source and a foreign source, it will be treated as one type of income and treated accordingly. Non-resident corporations are taxed in Florida differently than individuals. Non-resident corporations are taxed on their income from a Florida source at the same rate as other corporations, which is 6% on the first $50,000 of income and 7.5% on income over $50,000. Additionally, they are not allowed a foreign income deduction, as individuals are, so their entire worldwide income is subject to taxation. Overall, non-residents are subject to taxation in Florida, though there are some differences for individuals and corporations. It is important to understand how non-residents are taxed in order to comply with all applicable laws.

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How do governments tax the income of non-residents?

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