Reporting Your Income You must report each item of income that is taxable according tothe rules in chapters 2,3, and 4. For resident aliens, this includesincome from sources both within and outside the United States. Fornonresident aliens, this includes both income that is effectivelyconnected with a trade or business in the United States (subject tograduated tax rates) and income from U.S. sources that is noteffectively connected (subject to a flat 30% tax rate or lower taxtreaty rate).