What Is A Nonresident Alien? Know Your Status

Are you a nonresident alien? What is your status in the United States? Are your a U.S. citizen? What can you do as a nonresident alien? Can you pay taxes on money earned in the U.S.? If you see yourself confused with this term and want to know your status, this article will try to answer those questions for you.

In simple terms, a nonresident alien is not a U.S. citizen. He or she has not passed the Green Card test yet, according to IRS. However, a nonresident alien has to pay taxes on any income earned in the U.S. this is one of the most important things you need to know as far as what you have to do in the U.S.

What Is A Nonresident Alien?

A nonresident alien, according to the IRS, “is not a U.S. citizen or U.S. national. A nonresident alien is an alien who has not passed the green card test or the substantial presence test.” In other words, if you are not a US citizen, you are a nonresident of the United States for tax purposes. You are a resident of the United States for tax purposes if you meet the green card test or the substantial presence test.

The green card test for nonresident aliens

If you are a lawful permanent resident of the United States at any time during the calendar year, then you are a resident, for U.S. federal tax purposes. This is what is called the “green card” test.

Generally, you achieve this status if the U.S. Citizenship and Immigration Services (USCIS) issued you a Permanent Resident Card, Form I-551, also known as a “green card.”

You continue to have U.S. resident status, under this test, unless:

• You voluntarily renounce and abandon this status in writing to the USCIS,
• Your immigrant status is administratively terminated by the USCIS, or 
• Your immigrant status is judicially terminated by a U.S. federal court.

The substantial presence test for nonresident aliens

You are a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:

1. 31 days during the current year, and
2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
   • All the days you were present in the current year, and
   • 1/3 of the days you were present in the first year before the current year, and
   • 1/6 of the days you were present in the second year before the current year.

Example:

You were physically present in the U.S. on 120 days in each of the years 2019, 2020 and 2021. To determine if you meet the substantial presence test for 2021, count the full 120 days of presence in 2021, 40 days in 2020 (1/3 of 120), and 20 days in 2019 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test: for 2021.

Days of Presence in the United States

You are treated as present in the U.S. on any day you are physically present in the country, at any time during the day. However, there are exceptions to this rule. Do not count the following as days of presence in the U.S. for the substantial presence test:

• Days you commute to work in the U.S. from a residence in Canada or Mexico if you regularly commute from Canada or Mexico.
• Days you are in the U.S. for less than 24 hours, when you are in transit between two places outside the United States.
• Days you are in the U.S. as a crew member of a foreign vessel.
• Days you are unable to leave the U.S. because of a medical condition that develops while you are in the United States.
• Days you are an exempt individual

Tax Considerations for Nonresident Aliens

According to the IRS, if you are working in the US and have earned an income, you must file an income tax return as a nonresident alien. The IRS specifies three situations in which you have to file a return:

1) You must file a return if you are a nonresident alien engaged or considered to be engaged in a trade or business in the United States during the year.

2) Even if you are not engaged in a trade or business in the United States, you must file a return if you have U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.

3) You also must file an income tax return if you want to claim a refund of excess withholding or want to claim the benefit of any deductions or credits (for example, if you have income from rental property that you choose to treat as income connected to a trade or business).

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