A non-resident alien (i.e. not a U.S. citizen or a Green Card Holder) is generally considered a non-resident tax payer. As such, you are required to file a non-resident tax return, and only report US source income. However, if you meet one of two test you will be required to file as a US resident, and report all of your worldwide income. One is the green card test and the other is the substantial presence test for the calendar year (i.e. January 1 to December 31).

In reality, the labyrinth surrounding tax laws, particularly non-residents, can be confusing and a difficult one to overcome. You might find it hard to go through the overall process, which is usually the case with people having little to zero knowledge about tax laws. With that said, your best chance is to work alongside a professional firm like Gamburg CPA PC – your go-to best-rated New York-based CPA company.

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Green Card Test and Substantial Presence Test

As mentioned, you need to pass one of these tests in order to be considered a U.S. resident. Here, let’s talk about what these tests are and how they differ from one another.

Green Card Test – You will be considered a lawful permanent resident of the country if you are able to obtain the privilege based on the immigration laws. These laws pertain to the act of residing permanently in the country as an immigrant. Generally, you are going to acquire this status if the USCIS or U.S. Citizenship and Immigrant Service give you an alien registration card, which is basically known as the green card. Under this test, you are expected to continue having resident status, unless you decide to voluntarily abandon and/or renounce your Green Card in writing to the said government body.

Substantial Presence Test – By being able to meet the substantial presence test, you are automatically deemed a U.S. resident for tax purposes. And in order to meet this test, it is imperative that you are physically present in the country on the following conditions:

  • You are at least 183 days in the US during the current year
  • At least 183 days during the 3-year period that will include the current year and 2 years immediately before that. With all the days counted for the current year, one-third of the days counted in the previous year, and one-sixth of the days counted in the year before the previous year. 

As a resident alien, you will be taxed in the same fashion as U.S. citizens. In other words, your worldwide income will be subject to the U.S.

Tax Filing Requirements For Non-Resident Aliens

As a non-resident in the country, you are expected to file your non-resident tax return, only if you have US source income.

U.S. Tax Treaties

The U.S. has tax treaties with different foreign countries. As far as non-resident alien tax is concerned, they are usually capable of eliminating or reducing U.S. tax on a couple of types of personal services and/or other income. This includes, but not limited to, capital gains, dividends, interests, and pensions.  These treaties must be reviewed individually in order to determine whether certain types of income are considered exempted from the country’s tax or, if not, will be taxed at a reduced rate.

We at Gamburg CPA PC want to provide you with the most efficient and reliable advocacy, counsel, and personal service. We do not just specialize in a non-resident tax return and others, but we also are your valued business partners.

To know more about how our services can help you, please give us a call. We are more than happy to speak with you!

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