Nonresident Alien

AAA

DEFINITION of 'Nonresident Alien'

A non-U.S. citizen who doesn't pass the green card test or the substantial presence test. If a non-citizen currently has a green card or has had a green card in the past calender year, he or she would pass the green card test and would be classified as a resident alien. If the individual has resided in the U.S. for more than 31 days in the current year and has resided in the U.S. for more than 183 days over a three-year period, including the current year, he or she would pass the substantial presence test and also be classified as a resident alien.

INVESTOPEDIA EXPLAINS 'Nonresident Alien'

Resident aliens are taxed on all earned income as if they were U.S. citizens, but a nonresident alien is not taxed in the same way. For a nonresident alien, only income that is generated from U.S. sources, excluding certain investments such as stocks, is subject to taxation. For example, if you live in England and own a company that operates in the U.S., but you have not been to the U.S. for five years and don't have a green card (a non-resident alien), the income generated by the business will be subject to U.S. tax. Dividends are taxed at 30% for every non-resident alien, while capital gains are not subject to U.S. tax.

RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. IRS Publication 513

    A document published by the Internal Revenue Service that details ...
  3. Dual-Status Taxpayer

    A taxpayer that has met the criteria to be both a resident and ...
  4. Bona Fide Foreign Resident

    Any resident of a foreign country that meets the IRS criteria ...
  5. Alien

    Any person who is not a citizen of the country in which he or ...
  6. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
RELATED FAQS
  1. I am a non-U.S. citizen living outside the U.S. and trading stocks through a U.S. ...

    The tax implications for a foreign investor will depend on whether that person is classified as a resident alien or a non-resident ... Read Full Answer >>
  2. How do I file taxes for income from foreign sources?

    If you are a U.S. citizen or resident alien, your income (except for amounts exempt under federal law), including that which ... Read Full Answer >>
  3. When am I not required to submit a social security number on my tax return?

    When filing your tax return, you are generally required to include the social security numbers of yourself and the individuals ... Read Full Answer >>
  4. As a temporary resident of the US, can I withdraw funds from my Traditional IRA without ...

    Should you decide to invest in a Traditional IRA and receive a tax deduction for your contribution, the amounts that you ... Read Full Answer >>
  5. How can I tell if I'm eligible for an EITC?

    According to the IRS, over 22 million taxpayers received $41.4 billion dollars in earned income tax credit (EITC) for tax ... Read Full Answer >>
  6. Where on my 1040 form do I report AGI (adjusted gross income)?

    On a standard IRS Form 1040, you add up and report adjusted gross income, or AGI, on line 37. Line 37 appears on the first ... Read Full Answer >>
Related Articles
  1. Taxes

    Tax Rules For Resident And Nonresident Aliens

    This article examines the definition and tax treatment of these types of non-U.S. citizens.
  2. Taxes

    6 Reasons to Use a Household Help Agency

    It's not just because they find you well-qualified workers. Agencies spare you the paperwork and taxes required when you hire on your own.
  3. Taxes

    8 Things To Know Before Hiring Household Help

    Here's how to avoid the legal, tax and trust issues that can trap you when you become an employer.
  4. Retirement

    I Maxed Out My 401(k)! Now What?

    Fear not: There are smart ways to ensure that your retirement nest egg keeps growing.
  5. Economics

    What is a Resident Alien?

    A resident alien is a foreigner who is a permanent resident of the country in which he or she resides but does not have citizenship.
  6. Taxes

    Have Household Help? Don't Get In Tax Trouble

    Hiring household workers can be a complicated process. Know what the government requires so you can prevent penalties and problems down the road.
  7. Taxes

    Estate Planning for a Surviving Spouse

    Estate planning for surviving spouses can be difficult for a number of reasons, so it's important to have good support and financial advice.
  8. Professionals

    Gay Marriage Ruling: Its Impact on Estate Planning

    Same-sex couples now face the same legal and financial issues as heterosexual couples; some may need to adopt simpler, more mainstream financial plans.
  9. Entrepreneurship

    Employment Negotiations: What To Ask For & How

    Improving their first offer: What you should know
  10. Taxes

    What is an Ad Valorem Tax?

    An ad valorem tax is a levy placed on real or personal property based on the assessed value of that property.

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!