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First Time International Taxpayer

First Time International Taxpayer

If you are a non-national who first files a U.S. tax return or a U.S. citizen who has moved overseas, you might be wondering what the filing process looks like. Below, we'll explain some of the preliminary issues you might encounter, such as figuring out the filing conditions and obtaining an identification number.


Filing Requirements for Expats

Expats are green card holders or U.S. citizens who have moved overseas and/or are working overseas. As an expatriate, you must complete a U.S. federal income tax return (Form 1040) and report your worldwide income each year you meet the applicable reporting threshold. In addition, foreign information statements may be required, such as the FBAR and Form 8938.


Definition of terms for Inpats

If you are not a citizen of America, you are likely in one of three tax groups: resident alien, non-resident alien, or dual-status taxpayer. Usually, if you have a United States Visa holder, you are called an Inpat. It is important to note that your marital status does not change or affect your immigration status for tax purposes.


Determine which group you belong to as an Inpat

If you have a green card, the answer is simple: you are a resident abroad. You'll be required to use the substantial presence test to determine your tax filing status for tax purposes if you don't have a green card,

You will need to know:

  • The amount of days you spent in the United States in the current tax year.

  • The amount of days you have spent in the United States in each of the past two years.

  • The date you first arrived in the United States.

  • The type of visa you have.

  • What type of visa do the spouse and dependents have?

Your visa status can help you determine your filing status for tax filing purposes, as certain categories of visas must be treated as nonresident aliens for a period of time. In certain exemption categories, presence in the United States will not be considered days of presence for tax residency purposes. For example, a teacher or intern on a "J" visa will not count days in the United States during the first two years of holding that visa. This means that they will be considered non-resident aliens and will present a 1040NR within the first two years.

There is a final category: dual-status aliens. Typically, you register as a dual taxpayer during the years you move or leave the United States.


Implications of your filing status for reporting purposes

Resident aliens and U.S. citizens must report their income worldwide and file a U.S. tax return each year that reaches the applicable deposit threshold. This is true no matter where in the world you live.

However, a non-resident alien only pays income taxes in the United States, including wages earned for working in the United States or income from the sale of property located in the United States, depending on a number of factors. However, if you are earning a salary as an employee, you will usually have to file a return.


How to file a U.S. tax return for the first time

You will need a tax identification number (TIN) to file a United States income tax return. If you already have an SSN, use it as a TIN even if it doesn't allow you to work in the United States. If you have applied for an SSN, you do not need to apply for a tax code (TIN).

However, if you do not have a Social Security Number and are not entitled to obtain it, you will need to apply for an Individual Tax Identification Number (ITIN). If you can apply for a spousal and/or child support exemption, your spouse and children will also need an ITIN. The Individual Tax Identification Number will not entitle you to Social Security benefits and will not change your status or your right to work in the United States. Additionally, taxpayers using an ITIN are not eligible for the Earned Income Tax Credit (EITC).


Requesting an ITIN

There are two ways to request an ITIN. First, you can apply for an ITIN by filling out Form W-7 and attaching it to the tax return required for the ITIN. The other method is to have the required original documents certified by a Certified Acceptance Agent (CAA) and attach the certified identification documents to the W-7 application.

Taking the consistent, substantial presence test and the ITIN application process can be overwhelming. Internationals and expats ready to start their tax and FBAR filing can get help from a qualified tax professional. 


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