Suppose you find yourself residing within the borders of the United States or frequently staying in the country without being a citizen. In that case, you are still required to fulfill U.S. income tax obligations irrespective of your citizenship status. The IRS employs a combination of evaluations known as the green card test and the substantial presence test to determine your alien status. Meeting the criteria of one category will establish you as a resident alien for income tax purposes, while failing to do so will classify you as a non-resident alien. In order to comply with tax regulations in the United States, both legal residents and citizens are required to report their annual income on tax returns. This includes income earned in any country. Non-resident Aliens, on the other hand, are only taxed by the IRS on income that is linked to the U.S.

Determining Resident or Non-Resident Alien

When determining your alien status for tax purposes, the IRS employs two criteria: the green card test and the substantial presence test. Meeting the criteria of either test results in being classified as a resident or non-resident alien for tax purposes; failing to meet the criteria will lead to classification as a non-resident alien.

In the event that you are a visitor from another planet and possess a green card which signifies approval from the U.S. Citizenship and Immigration Service to live lawfully within the nation, you would be classified as a resident alien.

In the event that an individual doesn’t possess a green card and stays in the United States for a minimum of 31 days in the present tax year, along with a combined total of 183 days throughout the past three tax years (which include the current one), they typically fulfill the physical presence requirement and are considered a resident alien.

Counting 183 Days for Non-Resident Aliens

In determining the total days spent in the United States over a three-year span, it is important to exclude certain days from the count. Only a portion of the days within two out of the three years should be considered. For instance, if you need to ascertain your residency status for the tax year of 2025 based on having resided in the U.S. for 60 days, this calculation method will be useful.

In calculating your presence in the U.S. over a three-year period, consider 50 days for 2025, one-third of the days in 2024, and one-sixth of the days in 2023. For instance, if you spent 150 days in the U.S. in 2024 and 240 days in 2023, your count should be adjusted to include only 50 days for 2024 and 40 days for 2023. The total for the three years is 140 days, in which you pay income tax as a non-resident alien.

If you’re questioning whether you qualify as a resident or non-resident for tax purposes, our team of skilled tax experts at RapidTax is here to help. We will assess your residency status and promptly prepare your non-resident tax return.

Non-Resident Aliens Tax

When it comes to non-residents, they are required to pay income taxes to the IRS only on the earnings that can be linked to the United States. This typically covers the income generated while physically present in the U.S. Notably, the IRS lacks the jurisdiction to levy taxes on the income non-residents make in their native lands or any foreign nation.

Upon completion of your U.S. tax filing, Form 1040NR will be your go-to document. It is essential to note that only income originating from the U.S. will be included in your report, irrespective of the form utilized. Similar to how resident aliens and American citizens operate, there are opportunities for tax deductions and tax credits that can lower your taxable income.

Transitioning Dual-Status Taxpayer

During the phase when you are transitioning from being a non-resident to a resident for tax purposes, you are typically classified as a Dual-Status Taxpayer. As a Dual-Status Taxpayer, you will need to submit two separate tax returns for the year—one for the period in which you were categorized as a non-resident and another for the period in which you were classified as a resident. There are instances where a taxpayer has the option to choose to be considered a full-year resident during the transition year in order to prevent the need to submit two distinct tax returns.

Experience the convenience of RapidTax Live Full Service, where a skilled Tax Professional tailor-made to handle your specific tax needs will take care of your taxes from beginning to end. Alternatively, receive boundless support and guidance from tax specialists as you navigate your taxes alongside a dedicated Tax Professional through RapidTax.