Are you in the US on a visa? If yes, you might have to join the bands of US tax filers, even though you’re not an American citizen. However, this only applies to visa holders who spend a considerable amount of time or live in the United States. Here are some tips that’ll make tax-filing easier for you:
- Identify whether you’re a resident or non-resident alien
For tax purposes, visa holders can be broadly classified as ‘resident’ and ‘non-resident’ aliens.
A resident alien is someone who isn’t originally a US citizen but is residing legally in the country, with a green card. To identify these aliens, the IRS uses two tests—the green card test and the substantial presence test. One passes the substantial presence if they test spend at least 31 days in the U.S. in the current tax year and a total of 183 days during the last three tax years (inclusive of the current tax year).
A non-resident alien is someone who doesn’t qualify the above tests but has income connected to the US.
Calculate your days-of-presence correctly
To satisfy the substantial presence test, here’s what’s added up to find out the number of days spent:
All of the days you were present in the current year
+ 1/3rd of the days you were present in the first year before the current year
+ 1/6th of the days you were present in the second year before the current year
Remember, certain days don’t have to be counted even if you were physically present in the US. According to the IRS, these are:
– Days you commute to work in the United States from a residence in Canada or Mexico if you regularly commute from Canada or Mexico.
– Days you’re in the United States for less than 24 hours when you’re in transit between two places outside the United States.
– Days you’re in the United States as a crew member of a foreign vessel engaged in transportation between the United States and a foreign country or a U.S. possession.
– Days you intended to leave, but couldn’t leave the United States because of a medical condition or medical problem that arose while you were in the United States.
– Days you’re an exempt individual.
- Know your tax-treatment
Since you’re a legal resident in the US, the IRS treats you as a citizen for tax purposes. Thus, you’re obligated to report all income you earn on annual tax returns, using the form 1040, or if eligible, the 1040A or 1040EZ.
As you’re not a full-time US resident, you only owe taxes on income that’s connected to the US. This usually refers to money you earn while you’re in the country. When you prepare your U.S. tax return, you must use Form 1040NR or the shorter 1040NR-EZ, if eligible.
Check if you should file as a ‘Dual-Status’ Taxpayer
If you’re transitioning between being a nonresident and a resident, you’ll be treated as a Dual-Status Taxpayer for that year. This means that you’ll have to file two tax returns for the year—one return for the portion of the year when considered a nonresident, and the other for the portion of the year considered a resident. Sometimes it is also advisable that you choose to be treated as a full-year resident, and file a single return.
It can often be tricky to understand taxes as a visa holder. MyTaxFiler is a low-cost tax filing service that’s familiar with all the ins & outs of US taxes. If you need guidance, we’ll be happy to help. Drop us an email at email@example.com today.