Foreign Nationals

Foreign Nationals-Nonresident and/ or Resident Aliens

(Non US citizens or non US green card holders living and working here in the US)

Whether you have been assigned, seconded or locally hired in or to the US from a foreign country, determination of your optimal tax filing status in your year of arrival to the US is usually never straightforward and can be quite complex.

There are a multitude of unique and highly complex US domestic tax laws and regulations affecting the US tax residency of Foreign Nationals-Nonresident and/ or Resident Aliens, in addition to income tax and social security tax treaties or Totalization Agreements. These US domestic tax laws and regulations are very specialized and their tax ramifications for Foreign Nationals-Nonresident and/ or Resident Aliens are very different than that for US citizens or US green card holders. Additionally, in many cases Foreign Nationals-Nonresident and/ or Resident Aliens may not be subject to certain US and State taxes that they may have been paying for many years. We specialize in helping our clients recover such improperly paid income taxes.

As a Foreign National-Nonresident Alien here in the US, if you breach the Substantial Presence Test (SPT) - in any calendar tax year through US presence that is in excess of 183 days, with a two year look back test that adds days to the days of the current year on a fractional basis, then you become a US resident alien taxable in the US on your worldwide income as is any US citizen or green card holder. There are exceptions to this test if on certain visa's or meeting certain conditions. The tax rates are the applicable US graduated tax rates.

You will also be subject to nonrecoverable US social security taxes depending on your visa type.

In cases where a Foreign National-Nonresident and/ or Resident Alien is here in the US has two statuses in a single tax year, example when they go from a Nonresident Alien to Resident Alien status or vice-versa in the same US tax calendar year, they are called dual-status filers in recognition of these two statuses. Dual Status filers if married must file separately and NOT jointly. They may not use the Head of Household filing status or the Standard deduction.

Additionally there are opportunities for individual taxpayers entering the US at some point in the tax year and whom do not meet the SPT test in that US tax year, to elect to be treated as US resident aliens from the date of entry forward. This election to be treated as a US Resident Alien from the date of entry forward may benefit taxpayers with mortgage interest or other itemized deductions not allowed to US nonresident aliens, or if they have foreign losses, e.g.: foreign rental losses. Also in some cases it may facilitate breaking residence in the former country.

Likewise their exists an election for married persons to make them both full year US resident aliens that may benefit taxpayers by using the married filing joint graduated tax brackets, as opposed to the married filing separate brackets which are halved. This is particularly useful where the spouse is not working, earning no income.

Ways out of US tax residency include domestically the Closer Connection Exception available on Form 8840- Closer Connection Exception Statement- and US federally negotiated income tax treaties and social security treaties or Totalization Agreements that override US domestic tax legislation.

We are dedicated to educating our professional and intelligent clients, who desire to be kept aware as to US tax laws affecting the amount of US income tax they will pay as well as developing and constantly changing new US tax law.

We invest the time and resources to meet with our clients as often as required to ensure optimum tax savings mechanisms are in place.

These are highly complex filings that involve complex terminology and Internal Revenue Code sections not understood by the majority of CPA practionners, therefore only competent international tax CPA’s should attempt these filings. We have excellent articles on this website that will help explain the above in more detail your foreign national filing positions. Please see article- Prefer An American Work Experience?

We can advise you as to the applicable tax laws and regulations directly affecting you and we will consult with you on the preparation of your Form 1040NR, Dual-Status or Form 1040 and any required State tax filings.

Please contact us for a free consultation and for further details.