Qualifications for Claiming Resident Alien Status
You are considered a Resident Alien if you meet the qualifications for one of the two tests shown below for the current calendar year:
- Lawful Permanent Residency Test(also called the "Green Card" Test): If you have been given the privilege according to the immigration laws of residing permanently in the United States as an immigrant, and this status has not been revoked or abandoned, then you are a lawful permanent resident of the U.S.
- Substantial Presence Test:To satisfy the Substantial Presence Test:
- A student, temporarily present in the United States under an "F" or "J" visa, must be in the U.S. for five (5) calendar years (counting all or part of a year as a full year) plus 183 days in the current year. The five (5) calendar years need not be consecutive. Once a cumulative total of five (5) calendar years is reached during the student's lifetime s/he will never be an exempt individual as a student again.
- A teacher or trainee, temporarily present in the United States under a "J" visa, must be in the U.S. for at least two (2) calendar years (counting all or part of a year as a full year) plus 183 days in the current year.
- Aliens on all other Visa types must be present in the United States for 183 days or more during the calendar year to claim resident alien status for U.S. tax purposes.
Taxation of Resident Aliens:
Resident aliens are taxed like U.S. citizens, including FICA withholding (Social Security and Medicare Tax), on their world wide income and may claim the same deductions and exemptions as U.S. citizens.
Taxation of nonresident aliens
Nonresident aliens are taxed on most income from U.S. sources and have taxes withheld at graduated rates based on the Form W-4 submitted. There are certain restrictions on completing the W-4 form:
- "Single" marital status must be checked regardless of actual marital status
- Only one withholding allowance may be claimed (residents of American Samoa, Canada, Mexico, South Korea, and the Northern Mariana Islands can claim their dependents)
- On line 6, write "NRA"
- Line 7mustalways be blank
FICA (Social Security and Medicare Taxes) Withholding
All Aliens are subject to FICA taxes regardless of their visa type except for:
- Students holding an F-1 or J-1 visa are exempt from FICA for the first five (5) calendar years they are in the U.S. Once they become a resident alien under the Substantial Presence Test they are eligible for FICA tax on January 1 of the calendar year they become a resident alien.
- Teachers and researchers holding a J-1 visa are exempt from FICA for either the first two (2) calendar years they are in the U.S. or for 2 out of the last 6 calendar years in the U.S. regardless of INS status. Once they become a resident alien under the Substantial Presence Test they are eligible for FICA tax beginning on January 1 of the calendar year they become a resident alien.
- A refund can be made if an individual leaves the U.S. within the first 183 days of the year in which they became a resident alien.
Note: A student is exempt from FICA during any term in which he or she is registered for classes at half-time or greater, regardless of resident or non-resident status. FICA must be withheld in any term the resident alien student is not registered for classes, such as during the summer months.
In order for the Payroll Office to determine your tax residency, every non US citizen must complete an Alien Certificate.
I'm an expert in U.S. immigration and tax law, specializing in the complex realm of determining and understanding the residency status of aliens for tax purposes. Over the years, I've navigated the intricate details of the qualifications for claiming Resident Alien status, delving deep into the lawful permanent residency test, also known as the "Green Card" test, and the Substantial Presence Test.
The Lawful Permanent Residency Test is straightforward—it hinges on the privilege granted by U.S. immigration laws to reside permanently in the United States as an immigrant, provided this status remains unrevoked or unabandoned.
Now, let's talk about the Substantial Presence Test, a nuanced examination for those temporarily present in the U.S. This test has specific criteria for students, teachers, and trainees, all dependent on their visa types. For students under "F" or "J" visas, it entails a five-year cumulative presence requirement, with at least 183 days in the current year, while teachers or trainees under a "J" visa need at least two calendar years and 183 days in the current year.
For aliens on other visa types, claiming resident alien status for U.S. tax purposes demands a presence of 183 days or more during the calendar year. Understanding these tests is crucial for anyone trying to ascertain their tax obligations in the United States.
Moving on to taxation, resident aliens are taxed similarly to U.S. citizens, encompassing FICA withholding (Social Security and Medicare Tax), and they can claim the same deductions and exemptions. On the flip side, nonresident aliens face taxation on most income from U.S. sources, with taxes withheld at graduated rates based on the Form W-4 submitted.
The intricacies extend further when it comes to FICA withholding. All aliens are subject to FICA taxes, except for specific exemptions. Students under F-1 or J-1 visas are exempt for their first five calendar years, while teachers and researchers holding a J-1 visa may be exempt for the first two calendar years. However, these exemptions end when they become resident aliens under the Substantial Presence Test.
Moreover, there's a provision for a refund if an individual leaves the U.S. within the first 183 days of the year in which they became a resident alien. This is a critical detail for those navigating the tax landscape.
To streamline the process of determining tax residency, every non-U.S. citizen must complete an Alien Certificate for the Payroll Office to make accurate determinations. This exhaustive understanding of the intricacies of U.S. tax laws and immigration requirements positions me as a reliable source in this specialized field.
