As a non-citizen of the United States or living abroad, filing a first-time tax can be challenging. You have no experience and what it takes to file tax for the first time correctly. This blog will discuss some of the tax filing requirements for a first-timer in international taxation.
Filing Requirements for International Taxpayers
International taxpayers living or working abroad must report annual tax returns in the US through Form 1040. The income made from all businesses has to be reported each year to meet the filing threshold set by the law. There are cases where an international taxpayer may be issued Form 8938 and FBAR.
International taxpayers not qualified as US citizens are divided into certain groups – resident alien, dual-status, or non-resident alien taxpayer. However, your immigration status is not altered by your annual tax filing status.
You need a green card to be considered a citizen of the United States; without one, you're a foreigner. The presence test formulated by the IRS is to help international taxpayers know their filing status.
You will know your filing status through:
How long have you been in the US in the current year?
How many days have you visited the US in the previous two years?
When did you first enter the States?
What type of visa was issued to you?
What type of visa is issued to your spouse and dependents?
Filing a tax is determined by your visa status; some are treated as non-citizens for some years. Having such a visa does not count, which exempts you from tax-related matters. For instance, a person with a J visa will not be permitted full amenities in the US till after two years. Due to this, you'll be considered a non-resident and issued a 1040NR Form during the two years. Another category is the dual-status aliens. This type of visa is issued to taxpayers when moving in or out of the United States.
Both citizens and non-citizens must file a US tax return after claiming their international properties each year. This must be done regardless of the taxpayer's location. However, a non-resident is liable to tax on income earned from work performed in the US as wages or on property sold in the US. The taxpayer will be issued Form 1040NR to file a tax return. To be issued this form also depends on a number of factors.
The first thing for an international taxpayer is an individual taxpayer identification number (ITIN). This number allows you to file a US tax return. However, an international citizen or green card holder usually has Social Security Numbers (SSNs) which can substitute for an ITIN. An international taxpayer can use an SSN to file a US return even when it's not valid for work in the US. You don't have to apply for ITIN when you have SSNs.
But if you're unable or unqualified to get an SSN, there is no option but to apply for an ITIN. ITIN is also necessary and available for spouses or children without spousal exemption or dependent claim. Note that ITIN does not qualify you for social security benefits and has no effect on your immigration status. The number also doesn't give you the right to work in the US. Plus, filing tax using ITIN does not qualify you for the earned income tax credit (EITC).
Paying tax as an international taxpayer can be stressful for both citizens and non-citizens. However, there are channels to follow as an international taxpayer to help with the procedure. If you plan to file a US tax return, FBARs or IRS is the first site to contact for help.
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