For tax purposes, an alien is an individual who is not a U.S.
citizen. An alien is in one of three categories: resident,
nonresident, or dual-status. Determining the correct status is crucial
in determining what income to report and what forms to file.
Most members of the Armed Forces are U.S. citizens or resident
aliens. However, if you have questions about your alien status or the
alien status of your dependents or spouse, you should read the
information in the following paragraphs and get Publication 519.
Under peacetime enlistment rules, you generally cannot enlist in
the Armed Forces unless you are a citizen or have been legally
admitted to the United States for permanent residence. If you are an
alien enlistee in the Armed Forces, you are probably a resident alien.
If, under an income tax treaty, you are considered a resident of a
foreign country, see your base legal officer. Other aliens who are in
the United States only because of military assignments and who have a
home outside the United States are nonresident aliens. Guam and Puerto
Rico have special rules. Residents of those areas should contact their
taxing authority with their questions.
Resident Aliens
You are considered a U.S. resident alien for tax purposes if you
meet either the green card test or the substantial
presence test for the calendar year (January 1 - December
31). These tests are explained in Publication 519.
Generally, resident
aliens are taxed on their worldwide income and file the same tax forms
as U.S. citizens.
Treating nonresident alien spouse as resident alien.
A nonresident alien spouse can be treated as a resident alien if
all the following conditions are met.
- One spouse is a U.S. citizen or resident alien at the end of
the tax year.
- That spouse is married to the nonresident alien at the end
of the tax year.
- You both choose to treat the nonresident alien spouse as a
resident alien.
Making the choice.
Both you and your spouse must sign a statement and attach it to
your joint return for the first tax year for which the choice applies.
Include in the statement:
- A declaration that one spouse was a nonresident alien and
the other was a U.S. citizen or resident alien on the last day of the
year,
- A declaration that both spouses choose to be treated as U.S.
residents for the entire tax year, and
- The name, address, and taxpayer identification number
(social security number or individual taxpayer identification number)
of each spouse. If the nonresident alien spouse is not eligible to get
a social security number, he or she should file Form W-7,
Application for IRS Individual Taxpayer Identification Number
(ITIN). ITINs may be available through the nearest overseas base
legal office or U.S. consulate.
Once you make this choice, the nonresident alien spouse's worldwide
income is subject to U.S. tax. If the nonresident alien spouse has
substantial foreign income, there may be no advantage to making this
choice.
Ending the choice.
Once you make this choice, it applies to all later years unless one
of the following situations occurs.
- You or your spouse revokes the choice.
- You or your spouse dies.
- You and your spouse become legally separated under a decree
of divorce or separate maintenance.
- The Internal Revenue Service ends the choice because of
inadequate records.
For specific details on these situations, get Publication 519.
If the choice is ended for any of these reasons, neither spouse can
make the choice for any later year. This applies to a divorced
individual who previously made the choice and later remarries.
Choice not made.
If you and your nonresident alien spouse do not make this choice:
- You cannot file a joint return. You can file as married
filing separately or head of household if you qualify.
- You can claim an exemption for your nonresident alien spouse
if he or she has no gross income for U.S. tax purposes and is not
another taxpayer's dependent (see Exemptions,
later).
- The nonresident alien spouse generally does not have to file
a federal income tax return if he or she had no income from sources in
the United States. If a return has to be filed, see the next
discussion.
- The nonresident alien spouse is not eligible for the earned
income credit if he or she has to file a return.
Nonresident Aliens
An alien who does not meet the requirements for resident alien, as
discussed earlier, is a nonresident alien. If required to file a
federal tax return, nonresident aliens must file either Form 1040NR,
U.S. Nonresident Alien Income Tax Return, or Form
1040NR-EZ, U.S. Tax Return for Certain Nonresident Aliens
With No Dependents.
See the form instructions for
information on who must file and filing status.
Nonresident aliens generally must pay tax on income from sources in
the United States. A nonresident alien's income that is from
conducting a trade or business in the United States is taxed at
graduated U.S. tax rates. Other income from U.S. sources is taxed at a
flat 30% (or lower treaty) rate. For example, dividends from a U.S.
corporation paid to a nonresident alien generally are subject to a 30%
(or lower treaty) rate.
Dual-Status Aliens
An alien may be both a nonresident and resident alien during the
same tax year, usually the year of arrival or departure. Dual-status
aliens are taxed on income from all sources for the part of the year
they are resident aliens. Generally, they are taxed only on income
from sources in the United States for the part of the year they are
nonresident aliens.
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