Tax Tips For Non U.S. Residents and Foreigners

August 2, 2017

Whether you’re a non U.S. resident or a foreigner living in America, you still need to pay your taxes irrespective of your alien status. 

The IRS has two tests that it uses to determine your alien status, and they’re called the 'green card' test, and the 'substantial presence' test. If you meet the requirements of either test, you’ll be registered as a resident alien for income taxes, but if you meet the requirements of neither, then you’ll be classed as a non-resident alien; read on for tips and answers to any questions that you might have, about tackling your taxes as an alien or foreigner: 

If I’m classed as an alien with a green card, what does it mean? 

This means that the U.S Citizenship and Immigration service have deemed you permissible to legally reside in the country, and you are a resident alien. However, if you don’t have a green card and you go on to spend at least 31 days in the U.S. during the current tax year, and have spent 183 days in total in the U.S. during the last 3 tax years, then this usually means that you’ll also be treated as a resident alien, and should satisfy the 'physical presence' test. 

How to properly count 183 days: 

When totting up the amount of days that you’ve been present in the U.S. during the period of 3 years, you must not include every day. Rather, you should only count some of the days over a period of 2 of the 3 years. Also, you should not count days when you have been in the U.S. for the following purposes: 

  • Regular commuting from a residence in Canada or Mexico 
  • In the U.S. for less than 24 hours when in transit between two places outside of the U.S. 
  • When you are a crew member of a foreign vessel 
  • A medical condition that arose when you were in the U.S. prevented you from leaving 

There are one or two other exceptions when calculating the total amount of days spent in the U.S. over a period of 3 years, but to ensure that you get it right when filing your taxes, it’s best to consult the opinion and expert guidance of a tax professional. 

What tax rules am I subject to if I’m a resident alien? 

If you’re classed as a U.S. resident who is residing in the country legally, then you’ll be required to adhere to the same tax rules as any other U.S. citizen. So, you need to report all income that you earn on annual tax returns, even if you earned it in another country. 

Must you pay income taxes as a non-resident? 

As a non-resident you must still pay income taxes, but it is usually only on earnings generated while you were in the U.S. The IRS have no authority to impose taxes on any income that you might have earned as a non-resident when in your home country, though, or while in any foreign country.

You must use either form 1040NR or form 1040NR-EZ, depending on your eligibility. Remember that there will deductions and credits that you may be able to claim on your taxable income, just as if you were a resident alien or U.S citizen. 

What is a dual-status taxpayer? 

Between the transitional year that you are a non-resident and a resident for tax purposes, you will usually be classed as a dual status taxpayer, and you will need to file 2 tax returns for the year. To avoid having to file twice, you may be able to be treated as a full-year resident in that transitional period.

Taxes can be mind boggling, and rules and regulations can quickly change, too. Whether you’re a non-U.S. resident or a foreigner living in the U.S. you really should engage the services of a tax professional to help you get the most from your deductions and exemptions, and to avoid making overpayments.

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