U.S. Taxes for Alien Residents and Alien Non-residents

A non-U.S. citizen is taxed in a number of ways in the U.S. depending on his or her; visa type, marital situation, and residency status in the U.S. The tax payer may also have the ability to make several elections which could lower their overall U.S. tax liability.

Depending on circumstances a non-U.S. citizen could be taxed as a full-year resident, full-year non-resident or dual status (both part-year resident and part-year non-resident). The proper filing status depends on the facts and circumstances along with the tax elections made.

Non-U.S. citizens will be considered a resident alien and taxed the same as a U.S. citizen if they meet the green card test or the substantial presence test. There may however be exceptions to these normal residency determinations based on certain visa types, tax treats, and tax elections.

Non-U.S. file Form 1040 or Form 1040NR, they may be required to file both forms for any years that dual status exists.

Foreign persons that are determined to be U.S. residents are taxed the same as U.S. citizens during their period of residency. This means they are taxable on their world wide income, the same as a U.S. citizen and may be entitled to foreign tax credits for non-U.S. taxes paid.

It should also be noted that special rules apply to foreign rental properties and to U.S. real property owned by non-U.S. citizens. It is also important to remember that all income and or expenses received or paid in foreign currency must be converted to U.S. dollars at the exchange rate applicable to the date of receipt or payment.

In addition ownership of foreign assets that cumulatively total more $10,000 at any time during the year has additional reporting requirements.

Since filing a U.S. tax return requires a tax identification number and not all non-U.S. citizens are eligible for a social security number the IRS will issue a Taxpayer Identification Number (ITIN) for those that need to file a tax return and do not qualify for a Social Security Number (SSN).