Tax Residency for Non-Citizens
Being a tax resident of the U.S. is not limited to U.S. citizens. Green card holders are always tax residents, and non-immigrant visa holders may also be considered tax residents depending on their length of stay in the U.S.
- Tax residents must report all global income on IRS Form 1040, including earnings from outside the U.S.
- An exception applies if the individual is considered a tax resident of another country under an income tax treaty.
Even if you lose or give up your green card, you may still be considered a tax resident until you formally notify the IRS and the Department of Homeland Security. Ending tax obligations may require filing Form 8854, and in some cases, tax return obligations may continue for up to 10 years.
Who is Considered a Tax Resident?
A non-citizen is taxed the same as a U.S. citizen if they meet either of the following conditions:
- They held a green card at any point during the tax year.
- They meet the substantial presence test for the tax year.
Substantial Presence Test for Non-Immigrant Visa Holders
A non-immigrant visa holder is considered a tax resident if they meet the substantial presence test, which involves:
- Spending at least 31 days in the U.S. in the current year; and
- Spending 183 “tax days” over the current year and the previous two years, calculated as follows:
- Full weight for days spent in the U.S. in the current year
- One-third weight for days spent in the U.S. in the previous year
- One-sixth weight for days spent in the U.S. two years before
Exceptions to the Substantial Presence Test
Certain days do not count toward the substantial presence test, including:
- Days spent transiting through the U.S. en route to another country.
- Days commuting to work from Canada or Mexico.
- Days spent in the U.S. due to a serious medical condition preventing departure.
- Days under exempt visas, such as:
- F, J, M, or Q visas for students.
- A visas for foreign government employees.
- P visas for professional athletes competing in the U.S.
To claim an exemption, individuals must submit Form 8843 to the IRS.
Closer Connection Exception for Non-Immigrant Visa Holders
Non-immigrant visa holders who would otherwise be considered U.S. tax residents may claim an exception if they have a closer connection to another country. To qualify, they must:
- Have not applied for a green card.
- Maintain a tax residency in another country.
- Have spent fewer than 183 days in the U.S. in the current year.
A tax treaty between the U.S. and the individual’s home country may also provide an exemption from U.S. tax residency rules.
Filing Taxes as a Foreign National
- Foreign nationals can claim the same deductions and credits as U.S. citizens.
- If income tax was paid to another country, a foreign tax credit can prevent double taxation.
- Tax filing deadlines:
- April 15 – General filing deadline.
- June 15 – Extended deadline for those living outside the U.S. and Puerto Rico.
- October 15 – Possible extension by filing Form 4868 (taxes must still be paid by April 15 or June 15).
Consequences of Tax Violations
Failing to comply with U.S. tax laws can result in:
- Criminal prosecution for tax fraud.
- Loss of a green card or visa due to non-compliance.
- Ineligibility for U.S. citizenship if tax obligations are not properly met.
Given the strict tax regulations, seeking professional tax guidance is highly recommended for visa and green card holders.
