Who is a 'Nonresident Alien'

A nonresident alien is a noncitizen who has not passed or is exempt from the Green Card or substantial presence tests. Typical examples of nonresident aliens are teachers, people seeking medical treatment, and students.

BREAKING DOWN 'Nonresident Alien'

Once a person has been inside the United States for a specific period they may qualify as a resident alien under the substantial presence test. To pass, the individual must stay in the United States for more than 31 days in any given current year. They may also be classified as a resident alien if they resided in the U.S. for more than 183 days over a three-year period, which includes the current year.

Nonresident Alien Tax Implications

Like permanent citizens, resident aliens pay taxes on all earned income. However, a nonresident alien is subject to taxation only under specific circumstances. For a nonresident alien in the U.S., only income earned within the U.S. is taxable. Dividends from U.S.-based operations are taxed at 30%, whereas there is an exclusion on capital gains from taxation. Nonresident aliens may also enjoy other tax benefits such as international treaty exemptions.

Nonresident alien income sources may be taxable should the source come from the United States. For example, rent payments on properties they own within the U.S. would be taxable, as well as any royalties associated with the extraction of natural resources from the properties. Nonresident aliens are required to submit tax filings regarding their U.S. income-generating activities. 

Nonresident aliens must file a Form 1040NR, or Form 1040NR-EZ if they are filing with no dependents. Any taxes or refunds, owed or due, must meet the standard April 15th filing deadline. A nonresident alien with wages falling below the personal exemption amount and no other U.S. income is not required to file.

Departing Nonresident Aliens

To leave the United States, a nonresident alien must file a Form 1040-C. This form confirms they have paid all tax obligations. The nonresident alien must file this form to obtain a certificate of compliance, known as the sailing or departure permit. 

The certificate of compliance asserts that the nonresident alien complies with applicable tax laws as of their date of departure. However, a Form 1040-C does not remove the requirement to file an appropriate Form 1040NR for annual tax filing purposes.

RELATED TERMS
  1. IRS Publication 519 - U.S. Tax ...

    IRS Publication 519 - U.S. Tax Guide For Aliens is an IRS document ...
  2. Alien

    An alien is any person who is present in a country of which they ...
  3. Dual-Status Taxpayer

    A dual-status taxpayer meets the IRS criteria of being both a ...
  4. Resident Alien

    A resident alien is a foreign born, non-U.S. citizen who is currently ...
  5. Non-Resident

    A non-resident is an individual who mainly resides in one region ...
  6. Alien Corporation

    An alien corporation is a corporation that was created in another ...
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. Retirement

    Social Security Benefits for Non-U.S. Citizens

    Social Security benefits, which are confusing for U.S. citizens, can become even more confusing for resident aliens and non-resident aliens.
  3. Taxes

    How To Pay Taxes If You're Overseas

    Here is a step by step guide to paying taxes if you are a U.S. citizen living overseas.
  4. Small Business

    How to fill out an I-9 form (step-by-step)

    Step-by-step, here's how you and the employee you've hired fill out the required I-9 verification form from the U.S. Citizenship and Immigration Services.
  5. Taxes

    Late with Your Taxes? Grab IRS Form 4868

    Fill out this form to get a few more months to file your tax return. But remember, April 15 (17, in 2018) is still the payment due date if you owe taxes.
  6. Taxes

    5 Groups That Don't Pay Taxes

    Now that you've paid your share, find out who didn't have to pay taxes this year.
  7. Taxes

    Tax Implications of Surrendering U.S. Citizenship

    Before you consider giving up your U.S. citizenship or green card, make sure you plan for the expatriation tax.
  8. Taxes

    How to File a Tax Extension

    Learn the process you need to follow to get an extra six months to file your tax return.
  9. Retirement

    Top Tax Tips for Retirees

    Filing your taxes during retirement can be just as time consuming as when you were employed. We have some tips to help you out.
  10. Managing Wealth

    How & Where to File Form 1040 (And Which Version)

    All taxpayers need to know three things when filing a 1040: which form to use, how to file and where to file. After reading this, you'll know all three.
RELATED FAQS
  1. Why is Macau considered a tax haven?

    Discover Macau's tax benefits and learn why the city is known as a tax haven. Macau is a special administrative region in ... Read Answer >>
Trading Center