A nonresident alien (NRA) is any individual who is not a U.S. citizen or U.S. national and who has not passed the Green Card test or the Substantial Presence Test.
A NRA must file a U.S. tax return if any of the following conditions apply:
- A NRA is engaged or considered to be engaged in a trade or business in the United States during the year.
- The NRA is not engaged in a trade or business in the United States and has U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.
- A representative or agent responsible for filing the return of an individual described in (1) or (2),
- A fiduciary for a nonresident alien estate or trust, or
- A resident or domestic fiduciary, or other person, charged with the care of the person or property of a nonresident individual may be required to file an income tax return for that individual and pay the tax.
NOTE: If you were a nonresident alien student, teacher, or trainee who was temporarily present in the United States on an “F,””J,””M,” or “Q” visa, you are considered engaged in a trade or business in the United States. You must file a tax return only if you have income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc.
A NRA’s U.S. income must be divided into two categories:
- Income that is effectively connected with a trade or business in the United States
Effectively Connected Income (ECI), after allowable deductions, is taxed at graduated rates. These are the same tax rates that apply to U.S. citizens and residents.
- S. source income that is Fixed, Determinable, Annual, or Periodical (FDAP)
FDAP income generally consists of passive investment income and is taxed at a flat 30 percent (or lower treaty rate, if one qualifies) and no deductions are allowed against such income.
When and Where To File
If you are an employee or self-employed person and you receive wages or non-employee compensation subject to U.S. income tax withholding, or you have an office or place of business in the United States, you must generally file by the 15th day of the 4th month after your tax year ends. For a person filing using a calendar year, this is generally April 15th.
If you are not an employee or self-employed person who receives wages or non-employee compensation subject to U.S. income tax withholding, or if you do not have an office or place of business in the United States, you must file by the 15th day of the 6th month after your tax year ends. For a person filing using a calendar year, this is generally June 15th.
XPAT 1040 specializes in international tax compliance for U.S. nonresident aliens who are required to file a tax return.
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