If you are a tax resident of the U.S., you will need to pay taxes even if you are not a citizen. Any green card holder is a tax resident, and you may even be a tax resident if you have a non-immigrant visa, although this will depend on the situation. As a tax resident, you are likely required to report all of your income to the IRS on Form 1040, including income that you received from sources outside the U.S. (There is an exception for people who arrange to be considered a resident of a foreign country under an income tax treaty.) You will need to report your income regardless of whether you actually spent all or part of the tax year outside the U.S. Not all of your income may be taxed, though. You can review the IRS rules for more details.
If you lose or give up your green card, you still may be considered a tax resident of the U.S. Removing the duty to file tax returns might require filing Form 8854 with the IRS, as well as directly informing the Department of Homeland Security that you no longer have a green card. In some cases, you still might need to continue filing tax returns for another 10 years.
An individual who is not a U.S. citizen will be taxed in the same way as U.S. citizens if:
1They were a U.S. lawful permanent resident at any time during the year; or
2They meet the substantial presence test for the year
Rules for Non-Immigrant Visa Holders
If you meet the substantial presence test as a non-immigrant visa holder, you will be considered a tax resident of the U.S. and will need to file Form 1040NR or Form 1040NR-EZ. In most situations, this means that you spent 31 days in the U.S. during the current year, as well as 183 “tax days” during the current year and the previous two years combined. If you spend 183 days in the U.S. in any given year, you will automatically be considered a tax resident. If you spend less than 31 days in the U.S. in any given year, you will automatically not be considered a tax resident. Otherwise, you will need to use a formula to determine whether you spent 183 tax days in the U.S. over the last three years.
Each day spent in the current year counts for full value, while each day spent in the previous year counts for one-third of a day. Each day spent in the first year of the three-year period counts for one-sixth of a day.
Being present in the U.S. means that you were physically present at any time in the day. It does not require you to spend the entire day in the U.S. However, the substantial presence test excludes days on which you entered the U.S. en route to a different country, days on which you commuted to work in the U.S. from Mexico or Canada, and days that you were forced to spend in the U.S. because a serious medical condition prevented you from leaving the country. You also may have been exempt on days on which you held a certain type of temporary status, such as a visa for a student, a teacher, a professional athlete, or an employee of a foreign government. You must notify the IRS of any exemptions by submitting Form 8843.
Days that an individual was exempt, such as days that they were a student under an F, J, M, or Q visa, will not count toward the substantial presence test so long as Form 8843 is provided.
Exception for Non-Immigrant Visa Holders with “Closer Connections”
If you would be considered a tax resident under the rules for non-immigrant visa holders above, you might want to consider whether you would fit within an exception for foreign nationals who have a closer connection with another country than the U.S. You would qualify for this exception if you have not applied for a green card, you have a tax residence in the country to which you have a closer connection, and you did not spend 183 days or more in the U.S. during the current year. Having a closer connection with the foreign country means that you have more significant contact with it, as determined by evidence that you provide to the IRS or its own analysis.
Another exception may apply if your home country has established a tax treaty with the U.S. You can consult a tax lawyer for more guidance.
The Process of Filing Taxes
A foreign national will be able to claim the same deductions and benefits that a U.S. citizen could claim, and they will be subject to the same requirements. If you paid income tax in a foreign country on income earned in that country, you can get a tax credit to prevent double taxation on that income. You must file your tax return and pay any taxes by April 15 of the year after the year for which the return applies. However, you do not need to file your return and pay taxes until June 15 if you are living outside the U.S. and Puerto Rico on April 15, and your main place of business also is located outside the U.S. and Puerto Rico. If you need more time to file your return, you can get an extension to October 15 by filing Form 4868, but you still will need to pay taxes by the April 15 or June 15 date.
Violations of the federal tax code can lead to criminal prosecution and the loss of your green card or other legal status. Even if you are not prosecuted, you may not be able to get citizenship (or a green card, if you have a non-immigrant visa) because USCIS views tax violations harshly.