What Is a Nonresident Alien?
Let me tell you directly: a nonresident alien is a noncitizen who hasn't passed the green card test or the substantial presence test, as defined by the IRS. You, as a nonresident alien, must pay taxes on income earned in the US. Common examples include teachers, people here for medical treatment, and students.
Key Takeaways
Nonresident aliens are noncitizens of the US who either pass the substantial presence test or are exempt from having a green card—wait, actually, it's those who do not pass those tests. Foreign nationals get classified as either resident or nonresident aliens for tax purposes. If you've been in the US for at least 31 days and resided here for over 183 days in a three-year period, you might qualify as a resident alien. As a nonresident alien, you only pay taxes if your income is effectively connected to a trade or business in the US.
Understanding Nonresident Aliens
Once you've been in the US for a certain period, you might qualify as a resident alien under the substantial presence test. Foreign nationals are classified as either resident or nonresident aliens. To pass the substantial presence test, you need to stay in the US for more than 31 days in the current year and have resided here for more than 183 days over a three-year period, including the current year. If you don't pass this test or don't have or qualify for a green card, you file your taxes as a nonresident alien.
Special Considerations
Now, on taxes for nonresident aliens: like US citizens, resident aliens pay taxes on all their earned income. But as a nonresident alien, you're taxed only under specific circumstances. Your income gets taxed based on whether it's effectively connected with a trade or business in the US. Effectively connected income includes things like wages, salaries, commissions, certain investment income, and business income. This type of income is taxed at the same rates as for US citizens and residents. Income not connected to US trade or business gets taxed at a flat 30%. You might also get tax benefits from international treaties.
More on Taxes for Nonresident Aliens
Your income sources as a nonresident alien can be taxable if they come from the US—for instance, rent from properties you own here, or royalties from natural resources extracted on those properties. You have to submit tax filings for your US income-generating activities. You must file Form 1040NR, or Form 1040NR-EZ if you have no dependents. The deadline is April 15 if you were an employee with wages subject to US withholding; otherwise, it's June 15.
Departing Nonresident Aliens
Before you leave the US as a nonresident alien, you might need to file Form 1040-C to confirm you've paid all your tax obligations. This form gets you a certificate of compliance, also known as a sailing or departure permit. The certificate shows you comply with tax laws up to your departure date. However, filing Form 1040-C doesn't replace the need to file your annual Form 1040NR.
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