Overview

U.S. Taxation of Foreign Nationals

For most foreign nationals present in United States filing a tax return can be a difficult process. The tax rules and regulations that apply to nonresident aliens are very complex. The tax treaties between U.S. and other foreign countries have numerous provisions that foreign nationals can benefit from to reduce their taxes.

For most nonresident aliens present in United States for small periods of time, the cost of hiring a tax accountant might be completely unjustified. For this category, GTS tax software represents the best solution to file a nonresident tax return. For nonresident aliens with more complicated tax returns, we recommend the use of a tax professional to assist you with the filing of your tax return.

Tax Status

The first thing you must do before filing your tax return is to determine your tax status. Your residency status for tax purposes is different from your immigration status.

You might be considered a resident for tax purposes while remaining a nonimmigrant alien for immigration purposes. If you are present in the U.S. on a temporary visa, you might be considered resident alien, a non-resident alien, a non-resident alien eligible to elect to be taxed as a resident, or a dual-status alien for tax purposes. more

Forms to File

Form 1040NR-EZ - U.S. Nonresident Alien Income Tax Return

Form 1040NR-EZ is the easiest nonresident tax return form and is intended for nonresident aliens with simple tax returns. Nonresident aliens may claim the personal exemption and tax treaty benefits on this form.

Form 1040NR - U.S. Nonresident Alien Income Tax Return (long form)

Form 1040NR allows additional deductions and credits for certain categories of nonresident aliens. Not all tax deductions available for resident aliens are also available for nonresident aliens.

Form W-7 - Application for Individual Tax Identification Number (ITIN)

An ITIN is a nine digit number issued by the IRS to individuals who are required for U.S. tax purposes to have a U.S. tax payer identification number but who do not have and are not eligible to obtain a Social Security Number. Do not complete Form W-7 if you already have a Social Security Number or you have an application pending.

Form 8840 - Closer Connection Test

If you determine that you are considered a resident alien and wish to remain a resident alien, you may file Form 8840 to establish a closer connection to a foreign country and maintain your nonresident alien status.

* Interest income received from U.S. banks and credit unions is not taxable for nonresident aliens.

Tax Treaties

U.S. tax treaties or conventions with many foreign countries entitle U.S. residents to certain credits, deductions, exemptions, and reduced foreign tax rates. In this way, you may be able to pay less tax to those countries.

For example, most tax treaties allow U.S. residents to exempt part or all of their income for personal services from the treaty country's income tax if they are in the treaty country for a limited number of days.

Treaties also generally provide U.S. students, teachers, and trainees with special exemptions from the foreign treaty country's income tax. Publication 901 contains detailed information on tax treaties and tells you where you can get copies of them.

State Taxes

In addition to filing your federal tax return, as a nonresident alien, you might be required to file for the state taxes.

International Students and Scholars

Special tax rules apply to international students and scholars in United States . International students and scholars must file Form 8843 to maintain their nonresident status during their presence in United States. For more information, please visit International Student Taxes - http://www.istaxes.com designed specifically to assist international students and scholars in filing their nonresident tax return and all other supplemental forms.

E-file

Currently, the IRS does not allow the electronic filing of nonresident tax returns. All nonresident tax returns must be mailed at: Internal Revenue Service Center, Austin, TX 73301-0215, U.S.A.