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What are the Tax Consequences of Immigration Status?

In the United States, an individual's immigration status will have a substantial influence on their tax obligations. With the legal guidance of an experienced immigration lawyer in Williamson County, you can develop a better understanding of your tax standing based on immigration status. Contact us for quality assistance today!

Individuals are classified into different tax categories by the Internal Revenue Service (IRS). If you are not a U.S. citizen, you will be placed into a category of a resident alien or a nonresident alien. You will be considered a nonresident alien if you can pass the green card test or the substantial presence test within the calendar year.

Alien Residency Tests

If you meet the qualifications of the substantial presence test for the calendar year, you will be classified as a U.S. resident for taxation purposes.

You will have to meet all of the following requirements to pass the substantial presence test:

  • Presence in the U.S. for 31 days during the current year
  • Presence in the U.S. for 183 days during the 3-year period, which includes the current year and 2 years immediately prior

If you are a lawful permanent resident of the U.S. during the calendar year, you will be considered a resident for tax purposes. This is called the green card test.

You will have U.S. resident status under this test as long as none of the following situations occur:

  • You voluntarily renounce your residency status in writing to the USCIS
  • Your immigrant status is administratively terminated by the USCIS
  • Your immigrant status is judicially terminated by a U.S. federal court

Resident Aliens vs. Nonresident Aliens

Individuals who are resident aliens of the United States are generally taxed in the same way as U.S. citizens. As a resident alien, you will need to report the following on your U.S. tax return:

  • Interest
  • Dividends
  • Wages
  • Compensation for services
  • Income from rental property
  • Income from royalties
  • All other types of income

Nonresident aliens are, generally, only subject to U.S. income tax if they have a U.S. source income. In some cases, however, foreign source income will also be subject to U.S. tax.

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