The IRS uses two tests, the green card test and the substantial presence test, to assess your status as a foreigner. If you meet the requirements of any of them, you are considered a foreigner resident for tax purposes, otherwise, they treat you as a non-resident foreigner.
If you are a foreigner with a green card, that is, when the Immigration and Citizenship Service of the United States allows you to reside legally in the country, you are a resident alien. However, if you do not have a green card and you spend at least 31 days in the US During the current fiscal year and a total of 183 days, during the last three fiscal years (including the current fiscal year), you will most likely satisfy the physical presence requirement and also be treated as a resident alien.
Counting 183 days
By counting the number of days you are present in the US During the three year period, you do not have to include each day. Instead, it counts only a fraction of the days in two of the three years. Suppose, for example, that you are trying to find out your status for fiscal year 2017, since you lived in the USA. for 60 days. Count the 60 days for 2017, one third of the days in 2016 and one sixth of the days in 2015. Therefore, if you were in the US during 120 days in 2016 and 180 days in 2015, it only includes 40 days for 2016 and 30 days in 2015, with the total for the period of three years, being 130 days. In this scenario, income tax is paid as a non-resident alien.
In addition, the days when they are physically present in the US are not taken into account. under the following circumstances:
- Days that you travel to work in the United States from a residence in Canada or Mexico, if you regularly travel from Canada or Mexico.
- Days you are in the United States for less than 24 hours when you are in transit between two places outside of the United States.
- Days that you are in the United States as a member of the crew of a foreign vessel.
- Days that you can not leave the United States due to a medical condition that arose during your stay.
- Days that you are an “exempt individual”.
An “exempt individual” for the purposes of this essay refers to the following persons:
- An individual temporarily present in the United States as an individual of a foreign government under an “A” or “G” visa.
- A teacher or apprentice temporarily in the United States under a “J” or “Q” visa, which substantially meets the requirements of the visa.
- A student temporarily in the United States under an “F”, “J”, “M” or “Q” visa, which substantially meets the requirements of the visa.
- A professional athlete temporarily in the United States to compete in a charity sports event.
Taxes for foreign residents
As a legal resident of the United States, you are subject to the tax regulations of US citizens. This means that you have to report all the income you earn on annual tax returns, regardless of the country in which you earn it. When preparing your statement, you can always use the 1040, or if you are eligible, the 1040A or the 1040EZ.
Taxes for non-residents
A non-resident must also pay income taxes to the IRS, but only on income that is effectively linked to the US, which usually includes the money he earns while in the US. However, the IRS does not have the authority to impose taxes on the income that non-residents earn in their countries of origin or in any foreign country for this case. When preparing your US tax return, you must use Form 1040NR or a shorter one such as 1040NR-EZ, if you are eligible. Regardless of the form you use, you will only report amounts that are considered US source income. Like resident foreigners and US citizens, there are deductions and credits that you can claim to reduce your taxable income.
Double condition of taxpayers
In the year of transition between being a non-resident and a resident for tax purposes, a Dual State Taxpayer is generally considered. A Dual State Taxpayer presents two tax returns for the year, a statement for the portion of the year that was considered a non-resident and another for the portion of the year considered resident. In some situations, the taxpayer may choose to be treated as a resident throughout the year in the transition year to avoid having to file two separate returns.