this is from IRS also: Foreign source income (non-U.S. source income) paid to a nonresident alien is normally not subject to U.S. tax. Income from sources outside of the United States is exempt from NRA withholding under Internal Revenue Code Section 1441(a). It is normally not required to be reported on an information return. If you choose to report the income item on a Form 1042-S, use Exemption Code 03, Income is not from U.S. sources, when entering an amount for information reporting purposes