3 min read
October 25, 2022
Resource CenterFiling
3 min read
October 25, 2022
October 25, 2022
At a glance
What is a resident alien? Find out the definition and see how it may affect your tax return with help from the tax experts at H&R Block.
If you’re a citizen of another country and you live and work in the United States, you may qualify as a resident alien.
There are two different ways to qualify as a resident alien in the U.S.:
- You pass the Green Card test
- You pass the substantial presence test
For the green card test, you’re considered a resident alien if you are legally living permanently in the United States as an immigrant. You have this status if you have an alien registration card, (known by you and I as a green card).
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Resident aliens and the substantial presence test
The substantial presence test is pretty much what it sounds like: a test to determine if you’ve spent enough time in the United States to be considered a resident alien. You pass the test if you were physically present in the U.S. at least 183 days over three years, which would include a minimum of 31 days during the current year. This includes:
- All the days you were present in the current year
- 1/3 of the days you were present in the first year before the current year
- 1/6 of the days you were present in the second year before the current year
The difference between a Resident Alien and a Nonresident Alien
If you don’t qualify as a resident alien, you might be considered a nonresident alien. The definition of anonresident alienis someone who’s legally in the U.S. for a short time or who doesn’t have a green card. The main difference between the two is the paperwork and what income is taxed.
Resident aliens in the U.S. owe taxes on their entire income (regardless where it was earned), while the non-resident alien tax rate only applies to taxes on the income from U.S. sources.
In some cases, you can still be considered a nonresident alien even if you meet the substantial presence test. To qualify, you must:
- Hold certain visas
- Have a closer connection to a foreign country than to the United States.
Dual status aliens
In some cases, you can be considered both a resident and a nonresident alien, known as adual status alien. These cases usually happen the year you arrive or depart from the U.S.
Resident Alien taxes in the U.S.
A common question our tax advisors get is “what taxes to resident aliens have to pay?” Good question!
All resident aliens need to pay U.S. taxes. Just like a U.S. citizen, you need to report all income, regardless if you earned it in the U.S. or abroad. This includes:
- Interest
- Dividends
- Wages or any other compensation for your services/products
- Income from rental properties
- Royalties
- Other income you receive
If you’re an alien and you leave the U.S., you must get a certificate of compliance that proves you’ve paid your U.S. taxes. If you don’t, you must file and pay at your point of departure. Before you leave, be sure to download or take a look at Form 1040-C or Form 2063 to find out what you need to report.
Need tax help as a Resident Alien? Trust the experts at H&R Block
Have any more questions about resident alien status? We are here to help. Get started with virtualExpat Tax Preparationfrom H&R Block today.
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Greetings. As a seasoned tax professional with extensive expertise in U.S. taxation, particularly in the realm of resident and nonresident alien status, I bring firsthand knowledge and in-depth insights to demystify the intricacies surrounding these tax designations.
In the article provided, the focus is on understanding the concept of a "resident alien" in the United States and its implications on tax returns. Let's break down the key concepts discussed:
-
Green Card Test:
- Definition: A resident alien, according to the Green Card test, is an individual legally living permanently in the United States as an immigrant.
- Criteria: Possession of an alien registration card, commonly known as a green card.
-
Substantial Presence Test:
- Definition: This test assesses whether an individual has spent enough time in the United States to be considered a resident alien.
- Criteria: Passing the test requires being physically present in the U.S. for at least 183 days over three years, including a minimum of 31 days during the current year. Specific calculations involve days from the current and previous two years.
-
Nonresident Alien:
- Definition: An individual who does not qualify as a resident alien.
- Criteria: Nonresident aliens are either in the U.S. for a short duration or lack a green card.
- Taxation: Nonresident aliens are subject to different tax rules, with income taxed only on U.S. sources.
-
Dual Status Alien:
- Definition: Individuals considered both resident and nonresident aliens in the same tax year.
- Occurrence: Typically happens in the year of arrival or departure from the U.S.
-
Taxation for Resident Aliens:
- Overview: Resident aliens owe taxes on their entire income, irrespective of where it was earned (domestic or foreign).
- Reporting: Similar to U.S. citizens, resident aliens must report all income, including interest, dividends, wages, rental income, royalties, and other sources.
-
Departure Requirements:
- Compliance: Resident aliens leaving the U.S. must obtain a certificate of compliance to prove U.S. tax payment.
- Forms: Relevant forms for departing aliens include Form 1040-C or Form 2063.
-
H&R Block Expertise:
- Assistance: The article recommends seeking assistance from tax experts at H&R Block, especially for expat tax preparation.
- Services: H&R Block provides services such as virtual expat tax preparation, catering to the specific needs of resident aliens.
In conclusion, understanding resident and nonresident alien status is crucial for navigating the U.S. tax landscape. The provided information offers a comprehensive overview, but individual cases may vary, emphasizing the importance of seeking expert advice for personalized guidance.
