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Frequently Asked Tax Questions And Answers
Keyword: Substantial Presence Test
13.3 Aliens and U.S. Citizens Living Abroad: Foreign Income & Foreign Income Exclusion
Do I have to meet the 330-day presence test or have a valid working resident
visa to meet the requirement for foreign income exclusion?
To claim the foreign earned income exclusion, the foreign housing exclusion, or
the foreign housing deduction, you must have foreign earned income, your tax home
must be in a foreign country, and you must be one of the following:
A U.S. citizen who is a bona fide resident of a foreign country or countries for
an uninterrupted period that includes an entire tax year,
A U.S. resident alien who is a citizen or national of a country with which the
United States has an income tax treaty with a nondiscrimination article in effect
and who is a bona fide resident of a foreign country or countries for an uninterrupted
period that includes an entire tax year, or
A U.S. citizen or a U.S. resident alien who is physically present in a foreign
country or countries for at least 330 full days during any period of 12 consecutive
months.
U.S. tax law does not specifically require a foreign resident visa or work visa
for this purpose, but you (must/should) comply with the other country's laws.
References:
I am a nonresident alien. Can I take the foreign earned income exclusion
if I meet the bona fide resident test or physical presence test? If yes, what is the
tax form used for nonresident taxpayer?
No, nonresident aliens do not qualify for the foreign earned income exclusion.
Only if you are a U.S. citizen or a resident alien of the United States and live abroad,
may you qualify to exclude up to $80,000 of your foreign earned income for 2003. But,
if you are the nonresident alien spouse of a U.S. citizen or resident alien, you can
elect to be treated as a U.S. resident in order to file a joint return. In this case,
you can take the foreign earned income exclusion if otherwise qualified. Refer to Publication 519 , U.S. Tax Guide for Aliens , for detailed instructions
on how to make this election.
However, nonresident aliens would be able to exclude their foreign earned income
under the dual-status rules. Refer to Tax Topic 852 for dual-status information.
A nonresident alien is generally not subject to U.S. tax on compensation for services
performed outside the U.S.
References:
13.4 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - General
I am a foreign national and came to this country on June 30th of last year.
I have a H-1 visa. What is my tax status regarding residency nonresident alien, or
resident alien?
You were a dual status alien last year. As an H-1 visa holder in the U.S. for
183 days or more, you likely became a resident, for tax purposes, as of June 30th.
For the part of the year you are a resident alien, you are taxed on income from all
sources.
For the part of the year that you are not a resident alien, you are not taxed on
income from sources outside the United States, unless the income is effectively connected
with a trade or business in the United States.
Income from U.S. sources is taxable whether you receive it while a nonresident
alien or a resident alien unless specifically exempt under the Internal Revenue Code
or a tax treaty provision. Generally, tax treaty provisions apply only to the part
of the year you were a nonresident and only if you are a resident for treaty purposes
of a country that has a treaty with the United States.
For that part of the year that you are a nonresident, file Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return. For that part of
the year you are a resident, file Form 1040 (PDF) . Refer
to Tax Topic 852 for dual-status information.
References:
I have an H-1 visa and my husband has an F-1 visa. We both lived in the
United States all last year and had income. What kind of form should we file? Do we
file our taxes separately or jointly?
You will have met the substantial presence test and will be taxed as a resident
alien for last year, while your husband is likely to be a nonresident alien. Refer
to Tax Topic 851 for an explanation of the relevant tax forms. You may file a
joint tax return if your husband makes the choice to be treated as a resident for
the entire year. Generally, however, you cannot claim tax treaty benefits as a resident
alien. Please refer to Publication 519, U.S. Tax Guide for Aliens ,
for detailed instructions on making this choice.
References:
I was an international student (F-1 visa) until October 1, then my visa
status was changed to H-1. Should I file my income tax return as a dual status or
nonresident alien?
Assuming you were not in the U.S. on your F-1 student visa for over 5 years, you
may file as a nonresident for the entire year or, if you qualify under the first year
choice, you may file as a dual status alien. Please refer to Publication 519, U.S.
Tax Guide for Aliens, for additional information.
References:
13.5 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - Tax Withholding
I entered the U.S. in August and I have a J-2 visa with an Employment Authorization
(work permit). Can I be considered as a U.S. resident for tax purposes under the substantial
presence test? Since my visa does not allow me to stay in this country am I subjected
to social security tax and Medicare tax?
You will be considered a U.S. resident for tax purposes if you meet the substantial
presence test for the calendar year. As an exempt individual, a J-2 visa holder will
not initially meet this test.
For purposes of the substantial presence test, certain days of physical presence
do not count, such as the days during which you were an exempt individual . Please
refer to Publication 519, U.S. Tax Guide for Aliens , for a detailed
explanation of this issue.
In general, U.S. social security and Medicare taxes apply to payments of wages
for services performed as an employee in the United States, regardless of the citizenship
or residence of either the employee or the employer. In limited situations, these
taxes apply to wages for services performed outside the United States. This exception
does not apply to a derivative visa holder.
References:
Under my visa as a temporary nonresident alien, I'm not subject to social
security and Medicare withholding. My employer withheld the taxes from my pay. What
should I do to get a refund of my social security and Medicare?
If social security tax and Medicare were withheld in error from pay received which
was not subject to the taxes, you must first contact the employer who withheld the
taxes for reimbursement. If you are unable to get a refund from the employer, file
a claim for refund with the Internal Revenue Service on Form 843 (PDF), Claim for Refund and Request for Abatement.
You must attach the following to your claim:
a copy of your Form W-2 (PDF) , Wage and Tax Statement,
to prove the amount of tax withheld;
Form I-797, INS Approval Notice, is needed if you have changed your status
from F-1 or J-1 to another status prior to filing the claim;
if your visa status changed during the tax year you should attach copies of the
pay stubs that cover the period of exemption from social security taxes;
a copy of INS Form I-94, Arrival/Departure Record, if you are still in the United
States;
a copy of your valid entry visa;
Form 8316, Information Regarding Request for Refund of Social Security Tax ,
or a signed statement stating that you have requested a refund from the employer and
have not been able to obtain one; and
a copy of Form 1040NR (PDF) , US Nonresident Alien
Income Tax Return (or Form 1040NR-EZ (PDF)), for tax
the year in question. Processing of your claim may be delayed if you submit it less
than six weeks after you filed Form 1040NR or 1040NR-EZ.
In addition to the documentation listed above foreign student visa holders should
also attach the following:
a copy of Form I-20, Certificate of Eligibility, endorsed by your student advisor
and stamped by the Bureau of Citizenship and Immigration Services; and
a copy of the Employment Authorization Document of your Optional Practical Training
(e.g., Form I-766, I-538 or 688B).
if you are an exchange visitor, attach a copy of Form IAP-66 or DS-2019 to your
claim.
File the claim, with attachments, with the IRS where the employer's returns were
filed. If you do not know where the employer's returns were filed, send your claim
to the Internal Revenue Service Center, Philadelphia, PA 19255.
For more information, refer to Publication 519, U.S. Tax Guide for Aliens .
References:
I am a U.K. resident and I need to recover withholding tax on a U.S. capital
gain. Do I need an ITIN?
To claim a refund of U.S. tax withheld you need to file Form 1040NR (PDF) , U.S. Nonresident Alien Income Tax Return . Therefore, you
need to secure an Individual Taxpayer Identification Number, or ITIN. To secure an
ITIN, you must file Form W-7 (PDF), Application for
IRS Individual Taxpayer Identification Number . For detailed information on applying
for an ITIN, go to Tax Topic 857 , Individual Taxpayer Identification Number
- W-7
References:
- Publication 515, Withholding of Tax on Nonresident Aliens and
Foreign Corporations
- Publication 519, U.S. Tax Guide for Aliens
- Publication 1915 (PDF), Understanding Your IRS Individual
Taxpayer Identification Number
- Form W-7 (PDF), Application for IRS Individual
Taxpayer Identification Number
- Tax Topic 857, Individual Taxpayer Identification Number -
Form W-7
- Form 1040NR (PDF) , U.S, Nonresident
Alien Income Tax Return
- Tax Topic 857 , Individual Taxpayer Identification Number
- Form W-7
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