What Is a Resident Alien?

What Is a Resident Alien?

Let me explain what a resident alien is. If you're a foreign-born person living in the United States but not a citizen, you might qualify as a resident alien. This term also covers permanent residents or lawful permanent residents. You're considered an immigrant who's been legally recorded as a resident here. To be one, you need a green card or to pass the substantial presence test.

Key Takeaways

Here's what you need to know right away. A resident alien is a foreign-born non-U.S. citizen residing in the U.S. You must have a green card or pass the substantial presence test to qualify. As a resident alien, you're generally taxed the same way as a U.S. citizen. And remember, there are three types: permanent, conditional, and returning residents.

Understanding Resident Alien Status

Let's dive into what this status really means. You're a resident alien if you're a permanent resident in the country where you live but lack citizenship. In the U.S., this means you have a current green card or had one in the previous calendar year.

You can also qualify by passing the substantial presence test. That requires being in the U.S. for more than 31 days in the current year and at least 183 days over a three-year period including the current year.

According to USCIS, there are three types of resident aliens. A permanent resident has the legal right from the government to live in the U.S. A conditional resident gets a two-year green card, often based on marriage or entrepreneurship under programs like the golden visa. You have to apply to remove those conditions 90 days before expiration, or you lose the status. A returning resident is a lawful permanent resident coming back after being outside the U.S., and if it's been over a year, you need to apply for re-admission.

One key point: as a resident alien, you can claim foreign tax credits, which non-residents can't. You're taxed like a U.S. citizen on worldwide income, while non-residents only pay on U.S.-generated income, excluding capital gains.

Important Statistics

Just so you know, the U.S. Department of Homeland Security reported admitting 1,172,910 new permanent residents in 2023. That's a 15% jump from 2022, when 1,018,350 were admitted.

Resident Alien vs. Non-Resident Alien

You should understand the differences between resident and non-resident aliens under the law. As I mentioned, resident aliens can use foreign tax credits; non-residents cannot. You're subject to the same taxes as citizens if you're a resident, but non-residents only tax U.S.-sourced income, not including capital gains.

Resident aliens report worldwide income using Form 1040. Non-residents use Form 1040NR for domestic income. Note that Form 1040NR-EZ isn't available anymore starting from tax year 2020.

Special Considerations

There are cases where you might be exempt from resident alien status, so you don't have to meet the green card or substantial presence tests. For example, if you're in the U.S. for government-related issues, or as a temporary student or teacher.

In those situations, you could file for an adjustment of status to stay and apply for permanent residency, gaining resident alien status.

How Is a Resident Alien Defined in the United States?

For tax purposes, you're a resident alien if you meet the green card test or substantial presence test for the calendar year from January 1 to December 31. The green card test means having a current green card or one from the previous year. The substantial presence test requires more than 31 days in the current year and 183 days over three years including the current and prior two.

What Are the 3 Types of U.S. Resident Aliens?

USCIS defines three categories. A permanent resident, or green card holder, has government-granted rights to live in the U.S. A conditional resident has a two-year green card, typically from marriage or large investments. A returning resident is a permanent resident returning after time abroad, and if over a year, they might need readmission as a special immigrant.

How Does Taxation Differ for Non-Resident and Resident Aliens?

Taxation varies like this: resident aliens claim foreign tax credits, non-residents don't. Residents face the same taxes as citizens on global income, reported on Form 1040. Non-residents tax only U.S. domestic income on Form 1040NR, excluding capital gains.

The Bottom Line

To wrap this up, a resident alien is a U.S. resident who's not a citizen but is legally recorded with a green card or by passing the substantial presence test. Various rules apply to this status, with some exemptions. You're generally taxed like citizens, but the IRS has specific forms for you. If you're unsure about your status or thinking of hiring an immigrant, talk to a government rep or attorney.