James Maertin, C.P.A.

  U.S. Tax Preparation Worldwide

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Foreign Nationals  


To get started with your individual tax return preparation, please fill out a tax questionnaire.   After completing the main page, please also fill in the Foreigner worksheet, if required. 

 

Tax compliance for foreign nationals is one of my areas of expertise and I have prepared thousands of tax returns that had foreign issues. The rules are quite complex but I will always look for the optimal way for you to file.

 

If you meet the substantial presence test, you are a resident alien for tax purposes and are required to file a U.S. resident income tax return (Form 1040). In this case your reporting requirements are the same as for U.S. citizens and green card holders: You are taxable on worldwide income, but foreign source income may be eligible for a foreign tax credit, and/or you may be able to claim foreign deductions (e.g., deducting foreign mortgage interest and/or property tax). You may also be subject to reporting foreign financial accounts and assets.

 

In some cases, a resident alien can be treated as a nonresident alien for tax purposes by claiming a closer connection to a foreign country.  Since U.S. residents are taxed on worldwide income, this is sometimes beneficial for those with a lot of foreign source income, provided you meet the requirements.

 

If you don't meet the substantial presence test, you are a nonresident alien for tax purposes and will file a nonresident income tax return (Form 1040NR).  If you can file as a federal nonresident, generally you can also file as a state nonresident. This can sometimes be quite beneficial, because in this case you are normally not taxed in the state on interest, dividends and capital gains, or on earned income sourced outside the state. Also, in New York, there is no New York City tax if you are a New York State nonresident, even if you reside or work in the city.  Unlike tax residents, nonresidents only need to report U.S. source income and do not have to report foreign bank accounts. 

 

In some cases, a nonresident alien may be able to elect to be treated as a U.S. resident alien under the First Year Choice rule.  Taxpayers who benefit most from this election are generally married with a non-working spouse and also those with children.  That's because the tax rates are better for married filing jointly versus married filing separately (married filing separately is required when filing as a nonresident).  Also, as a resident alien, if you have children, you may be entitled to child tax credits which are not available to nonresident aliens.  If you make this choice and you are married, you'll also have to make an election to treat your nonresident spouse as a tax resident

 

In the year of your arrival or departure in the U.S., you may be required to file a dual status tax return.  You are a dual status alien when you have been both a U.S. resident alien and a nonresident alien in the same tax year.  For tax purposes, a resident alien is an individual that is not a citizen or national of the United States and who meets either the green card test or the substantial presence test.  A nonresident alien is an individual who is not a U.S. citizen or a resident alien. 

 

Certain foreign nationals may also qualify for tax treaty benefits.  For example, if you were a student or trainee with earned income, there may be a tax treaty with your country that allows you to exempt a certain amount of earned income.

 

My Tax Guide lists many differences in the taxation of U.S. residents versus U.S. nonresidents.  You'll also find information on federal and state residency, living expense deductions, education, and many more topics.  When preparing your tax return, I always try to find the most benefits legally possible.

 

A foreign national may also need to apply for an ITIN (Indlvidual Taxpayer Identification Number) for a spouse and/or child who is not eligible for a social security number.  Every person listed on the tax return is required to have a SSN or ITIN.