Posted by James Financial Services Inc

What Is a Non-Resident Alien?

What Is a Non-Resident Alien?

A non-resident alien is not a U.S. citizen and does not pass the green card or background tests used to determine tax status. Non-resident aliens must pay taxes on their income in the United States.

Deeper Definition

The United States requires all U.S. taxpayers to pay income tax, including foreign nationals. As such, the IRS classifies foreigners as residents or non-residents.

To classify taxpayers as non-resident aliens, the IRS calculates the time they spend in the United States. Over Those who do not qualify or have a green card, or who have been in the U.S fewer than 31 days in the calendar year and one hundred and eighty-three days during the last three years, file their tax returns as non-resident aliens.

An exception to this rule is an alien married to a U.S. citizen or permanent resident who can file as a "married filing jointly" with their spouse.

Unlike resident aliens, who use the same tax rules as U.S. citizens, non-resident aliens pay tax only on income they earn in the United States, as long as it exceeds the annual amount of the personal tax exemption. For tax years beginning after 2017, the personal exemption was $4,050, so non-resident aliens who earned less than this amount do not have to file an income tax return unless they wish to apply for an available tax refund. 

Non-resident aliens use Form 1040NR or 1040NR-EZ to report their taxes. They can do so with an individual tax identification number instead of a social security number if they are not entitled to a tax number—social Security.

How do I know if I have the tax status of a non-resident alien?

If you are not a U.S. citizen but have lived or worked in the United States, you might be wondering if you have resident alien or non-resident alien tax status.

To determine which state applies to you, you need to verify that you meet the requirements to be considered a resident alien. If none of these apply to you, you are considered a non-resident alien (NRA) for your taxes purposes:

  • Hold a green card from the Immigration and Naturalization Service (INS) in the current year.

  • You did not elect to be a resident alien.

  • You have spent at least 31 days in the United States this year. The total of those days is at least 183 days: You have been present in the United States every day during the current year, or ⅓ the days you were in the United States last year, or ⅙ the days you were present in the United States during the year preceding the previous year.

  • You spent at least 183 days in the United States this year.

Please note that tax treaties between the United States and foreign governments may affect your residence status. Certain types of visas can also affect your residency status. 

Understanding the taxation of non-resident aliens

The taxation of non-resident aliens is different from that of another status. Like the NRA, your capital income is taxed at a flat rate of 30% unless a tax treaty specifies a lower rate. Your salary is taxed at graduated U.S. rates. Non-resident aliens must report and pay all taxes owed using Form 1040NR: Tax Return for Non-Resident Aliens in the United States or Form 1040NR-EZ: Tax Return for Certain Nonresident Aliens without dependents.

Example of a non-resident alien

An example of a non-resident alien is a visiting professor from another country who teaches at a university for one semester. If the professor arrives in the United States before the semester begins in August and leaves at the end of the semester in December, the professor does not meet the substantial presence test.

However, if the professor decides to resume teaching each year, the tax status changes. After three years, the professor accumulates more than 183 days in the United States and meets foreign resident tax status criteria.

Are you a non-resident alien and want to calculate taxes for the next year? Talk to a tax expert to see how much you owe the IRS.



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