Nonresident Alien

Demystifying Nonresident Aliens: A Comprehensive Overview

Understanding Nonresident Aliens

According to the IRS, a nonresident alien is an individual who is not a U.S. citizen or national and has not passed either the green card test or the substantial presence test. Commonly, individuals arriving on J-1 or F-1 visas fall into the category of nonresident aliens until they pass the substantial presence test. This classification holds significant implications for tax filing purposes.

Resident Aliens vs. Nonresident Aliens: Key Distinctions

The differentiation between resident aliens and nonresident aliens is contingent upon the outcomes of the Green Card and substantial presence tests. The attainment of resident alien status for a calendar year is based on the successful completion of either of these tests.

Authorization for Employment: Can Nonresident Aliens Work in the U.S.?

Nonresident aliens can work in the United States once authorized. Authorization is granted through the completion of Form I-9, Employment Eligibility Verification, confirming the alien’s identity and eligibility for employment.

Documentation Requirements for Employing Nonresident Aliens

Employers engaging nonresident aliens must collect relevant identification documents. For nonresident aliens, acceptable documents may include a Certificate of Naturalization or an Unexpired Temporary Resident Card. Alternatively, a combination of identification and employment eligibility documents, such as a driver’s license or a U.S. Social Security card, may be submitted.

Taxation of Nonresident Aliens: Filing Obligations

Nonresident aliens must file a tax return under several circumstances, including working for a U.S. trade or business, having U.S.-sourced income, or acting as a representative or fiduciary for a nonresident alien. Filing obligations are fulfilled using Form 1040-NR or Form 1040-NR-EZ if no dependents are claimed. Taxes are levied on income linked to U.S. trade or business and fixed, determinable, annual, or periodical income.

Departure Protocol: Filing Form 1040-C

Upon leaving the United States, nonresident aliens are required to file Form 1040-C, the U.S. Departing Alien Income Tax Return. This document captures all income received throughout the tax year and settles the associated tax liability.

Social Security Numbers for Nonresident Aliens

Nonresident aliens can obtain a Social Security number (SSN) to facilitate employment in the United States. Two application methods are available:

1. Submit an SSN request while applying for work authorization through Form I-765, the Application for Employment Authorization.
2. Visit a Social Security office in person while lawfully present in the United States and holding a visa status allowing work.

Understanding the intricacies surrounding nonresident aliens, from employment authorization to tax obligations, ensures compliance and clarity for both individuals and employers.