An increasing number of foreign taxpayers or nonresident aliens are engaging in U.S. business activities or earning taxable U.S. income. Consequently, it’s unsurprising that a significant portion of these individuals will find themselves subject to U.S. tax responsibilities.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you’ll have access to the full recording and the entire list of Q&As.
Q: What return would you file for an individual who is in the U.S. on an expired visa, living under the radar, has secured an ITIN, and needs to file a return?
A: They would be considered a resident alien in that case, so you would be filing Form 1040.
Q: What exactly are exempt individuals exempt from?
A: They are exempt from the substantial presence test. There are specific visas to which this applies. If they are exempt in this context, you don’t have to worry about the substantial presence test.
Q: What date does the year count start for those in the U.S. on a student visa?
A: You would want to review the tax treaty to determine when the year count starts. For example, if you look at the China tax treaty, the three-year exemption starts on the first day the individual enters the host State (the U.S. in this case).
Q: When counting days for the substantial presence test, what time frame do you use?
A: It is based on the tax year, which is typically the calendar year.
To learn more about preparing taxes for nonresident aliens, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at natptax.com/explore.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.