International Tax Filing: Non-Resident vs. Resident

Various flags isolated on a white background.Resident (RA) vs Non-Resident (NRA) Tax Filing

For tax purposes U.S. tax law treats U.S. persons and foreign persons differently. So, it is relevant to distinguish between these two types of taxpayers.

Resident or United States Persons:   In tax law, the term “United States person” refers to a citizen or resident of the United States, a domestic partnership, a domestic corporation, a domestic estate, any trust if a court within the United States is able to exercise primary supervision over the administration, and one or more United States persons have the authority to control all substantial decisions of the trust, and any other person that is not a foreign person.

Non-Resident or Foreign Persons: it refers to non-resident alien individual, foreign corporation, foreign partnership, a foreign trust, a foreign estate, and any other person that is not a U.S. person. If you are a nonresident alien doing business or working in the United States, you are required to file a tax return if your U.S. source income is greater than your personal exemption $4,050 for 2016.

Dual Status Alien: You can be both a nonresident alien and a resident alien in one tax year in which case you will be considered a ‘dual-status alien’ for tax purposes. This usually occurs in the year you arrive or depart from the Unites States or when you change your immigration status. If so, you have to pay special attention on how to file your tax return

View our article on Foreign Bank Accounts Report (FBAR) Deadline Is Now in April, to see if you are considered a Tax Resident.

See the chart below to see how the tax authorities look at Tax Residents vs Non Tax Residents:

Resident Aliens Non-Resident Aliens
Standard Deduction $6,300 (for 2016) No standard deduction
Live permanent in the U.S. Lives less than 30 days during a year period in the U.S.
Estate tax deduction $5.4 million Estate tax deduction $60,000
Required to file FBAR*
Required to report Foreign Earned Income*
Required to report Foreign Tax Credit*
Required to report Foreign Asset/Corporate ownership declaration*
Required to report Foreign tax return declaration*


* These foreign forms are subject to extensive penalties for noncompliance starting at a minimum of $10,000 per infraction and up to imprisonment.

The tax brackets for the non-resident and resident aliens are the same.

Tax season is right at the corner, we encourage you to prepare in advance to file and pay your tax return on time.  Please also be aware that the Foreign Bank Accounts Report (FBAR) is due with your tax return on April 18th, 2017 this year. If you have questions regarding your foreign income tax return please give us we, at Rosillo & Associates we will be glad to assist you. We are international tax specialists.

Posted in Foreign, Multi-National, Tax Planning