Definition
A Nonresident Alien (NRA) is any individual who is not considered a lawful permanent resident (does not possess a “green card”) of the United States during the calendar year and who does not meet the criteria outlined in the Substantial Presence Test. Additionally, a nonresident alien (NRA) does not elect to be treated as a resident alien for tax purposes.
Examples
- International Students: An international student on an F-1 visa who is in the United States for educational purposes but does not meet the substantial presence test requirements would be considered a nonresident alien.
- Temporary Workers: A foreign national working in the U.S. on an H-2B visa for a temporary or seasonal position would typically be considered a nonresident alien if they do not meet the substantial presence test or elect to be treated as a resident alien.
- Tourists: A tourist visiting the U.S. on a B-2 visa, regardless of the duration of stay, is usually considered a nonresident alien unless specific conditions are met that would alter this status.
Frequently Asked Questions
What is the Substantial Presence Test?
The Substantial Presence Test is a criterion used by the Internal Revenue Service (IRS) to determine whether someone without a green card qualifies as a resident for tax purposes. It involves physical presence in the U.S. for a specific duration variously across different tax years.
Can a nonresident alien file a joint tax return with a U.S. citizen?
No, a nonresident alien generally cannot file a joint tax return with a U.S. citizen or resident spouse. However, they may elect to file as a resident for tax purposes, enabling them to file jointly.
How are nonresident aliens taxed in the U.S.?
Nonresident aliens are typically taxed only on their income from U.S. sources and certain income connected with U.S. business or trade. They do not benefit from standard deductions or some other tax credits available to U.S. citizens and resident aliens.
Does a nonresident alien need to file a U.S. tax return?
Yes, if a nonresident alien has U.S. source income, they may need to file Form 1040-NR or Form 1040NR-EZ with the Internal Revenue Service (IRS). Specific thresholds and tax treaties may affect these requirements.
Can a nonresident alien claim dependents on their tax return?
Generally, nonresident aliens cannot claim dependents. However, exceptions exist for individuals from countries with applicable tax treaties permitting such claims.
Resident Alien
A Resident Alien is an individual who is a lawful permanent resident of the United States or one who meets the Substantial Presence Test.
Green Card
A Green Card, officially known as a Permanent Resident Card, signifies an individual’s status as a lawful permanent resident of the United States.
Substantial Presence Test
The Substantial Presence Test is used to determine whether an individual without a green card is considered a resident for tax purposes based on days physically present in the U.S. over a three-year period.
Online References
Suggested Books for Further Studies
- “International Taxation in a Nutshell” by Richard L. Doernberg
- “U.S. Tax Guide for Aliens: Internal Revenue Service Publication 519”
- “Understanding Taxation of Non-Resident Aliens in USA” by Christian Chooled
Fundamentals of Nonresident Alien: International Tax Law Basics Quiz
### What defines a nonresident alien?
- [ ] A person living permanently in the United States without a green card.
- [ ] A U.S. citizen temporarily living abroad.
- [x] An individual who does not have a green card and does not meet the substantial presence test.
- [ ] Any immigrant regardless of documented status.
> **Explanation:** A nonresident alien does not have a green card and does not pass the Substantial Presence Test, nor chooses to be treated as a resident alien for tax purposes.
### What is the Substantial Presence Test?
- [x] A tax criterion used to determine U.S. residency based on physical presence.
- [ ] A test administered by USCIS for legal residency.
- [ ] A visa application process.
- [ ] A work authorization measure.
> **Explanation:** The Substantial Presence Test is employed by the IRS to conclude whether a non-green card holder qualifies as a resident for tax purposes based on days spent in the U.S. within a specific timeframe.
### How are nonresident aliens taxed in the U.S.?
- [ ] On worldwide income.
- [x] On U.S. source income and certain U.S.-connected business or trade.
- [ ] Based solely on residency status.
- [ ] According to the same rules as U.S. citizens.
> **Explanation:** Nonresident aliens are generally taxed on their U.S. source income and specific income connected with U.S. business or trade.
### Can nonresident aliens file a joint tax return with their U.S. citizen spouse?
- [x] They generally cannot, except if they choose to be treated as residents for tax purposes.
- [ ] Yes, they can always do so.
- [ ] No, they never can.
- [ ] Only if they have children.
> **Explanation:** Generally, nonresident aliens can't file a joint tax return except when opting to be considered residents for tax purposes.
### Which form does a nonresident alien use to file their U.S. tax return?
- [ ] Form 1040
- [ ] Form W-2
- [x] Form 1040-NR or Form 1040NR-EZ
- [ ] Form 1065
> **Explanation:** Nonresident aliens report their income using Form 1040-NR or Form 1040NR-EZ.
### What benefit do nonresident aliens generally not receive on their tax return?
- [ ] Deductions for U.S. source income
- [ ] Tax refunds
- [x] Standard deductions
- [ ] Tax credits
> **Explanation:** Nonresident aliens normally do not qualify for standard deductions on their U.S. tax return.
### Are nonresident aliens regarded for social security benefits?
- [ ] Yes, always.
- [ ] Never.
- [x] They may be eligible based on specific agreements.
- [ ] Only if they become U.S. citizens.
> **Explanation:** Eligibility for social security benefits depends on specific treaties and the fulfillment of certain requirements.
### Which of the following might classify someone as a nonresident alien?
- [ ] Someone with a green card.
- [x] An international student on an F-1 visa.
- [ ] A U.S. citizen.
- [ ] A refugee.
> **Explanation:** An international student on an F-1 visa, not meeting the Substantial Presence Test, is classified as a nonresident alien.
### Can nonresident aliens claim dependents on their tax returns?
- [x] Typically, no, except in cases covered by certain tax treaties.
- [ ] Yes, just like U.S. citizens.
- [ ] Only dependents living in the U.S.
- [ ] Only if they have a social security number.
> **Explanation:** Nonresident aliens do not usually claim dependents except when specified by tax treaties.
### What document signifies someone as a lawful permanent resident in the U.S.?
- [ ] Passport
- [ ] Work Visa
- [ ] Employment Authorization Document (EAD)
- [x] Green Card
> **Explanation:** A Green Card indicates lawful permanent residency within the U.S.
Thank you for exploring the comprehensive subject of nonresident aliens through our structured content and interactive quiz. Stay informed and engaged in your journey through international tax law!
