Resident Alien

What Is a Resident Alien?

A resident alien is a foreign-born United States resident who is not an American citizen. A resident alien is also known as a permanent resident or a lawful permanent resident, which means they are considered an immigrant who has been legally and lawfully recorded as a resident of the country. A resident alien must have a green card or pass a substantial presence test. 

Key Takeaways

  • A resident alien is a foreign-born, non-U.S. citizen who lives in the U.S.
  • Resident aliens must have a green card or pass a substantial presence test.
  • In general, a resident alien is subject to the same taxes as a U.S. citizen.

Understanding Resident Alien

A resident alien is defined as someone who is a permanent resident of the country in which they reside but does not have citizenship. To fall under this classification in the United States, a person needs to either have a current green card or have had one in the previous calendar year.

People can also fall under the U.S. classification of resident aliens if they pass the substantial presence test. In order to do so, they must have been in the United States for more than 31 days during the current year, and for at least 183 days over a three-year period, including the current year.

According to the United States Citizenship and Immigration Services (USCIS), there are three types of resident alien:

  • Permanent resident: This is someone who has been given the lawful and legal right by the government to live in the United States.
  • Conditional resident: This person receives a two-year green card, which is usually given to people who have applied for residency based on marriage or because they are entrepreneurs. A person must apply to have the conditions removed 90 days before the green card expires, or else the permanent resident status will be removed. 
  • Returning resident: This is any lawful permanent resident who has been outside the U.S. and is returning to the country. This person, also known as a "special immigrant," must apply for re-admission if they have been outside the U.S. for more than 180 days. 

There are differences between the three types. For example, a resident alien can use foreign tax credits, whereas a non-resident cannot. A resident alien is subject to the same taxes as a U.S. citizen, while a non-resident alien only pays tax on domestic income that is generated within the United States, not including capital gains.

Resident aliens are required to report income from sources both within and outside the United States. Income is reported using Form 1040. Non-resident aliens, on the other hand, report domestic income using Form 1040NR or Form 1040NR-EZ.

Fast Fact

The U.S. Department of Homeland Security recorded admitting 1,031,765 million new permanent residents in 2019, the most recent figure available as of Feb. 1, 2021.

Resident Alien vs. Non-Resident Alien

There are some notable differences in how resident and non-resident aliens are seen in the eyes of the law. For example, a resident alien can use foreign tax credits, whereas a non-resident cannot. A resident alien is subject to the same taxes as a U.S. citizen, while a non-resident alien only pays tax on domestic income that is generated within the United States, not including capital gains.

Resident aliens are required to report income from sources both within and outside the United States. Income is reported using Form 1040. Non-resident aliens, on the other hand, report domestic income using Form 1040NR or Form 1040NR-EZ.

Special Considerations

It is possible to be considered exempt from resident alien status, in which case a person does not need to prove compliance with the green card test or the substantial presence test. Situations in which a person is present in the United States on government-related issues or when a student or teacher is temporarily present in the United States are both examples of exemptions.

These exempt aliens can, depending on the situation, file for an adjustment of status, a process that allows them to remain in the country and to apply to become a permanent resident with resident alien status. 

How Is a Resident Alien Defined in the United States?

An individual is classified as a resident alien of the U.S. for tax purposes if they meet either the green card test or the substantial presence test for the calendar year (January 1-December 31). The green card test states that a person needs to either have a current green card or have had one in the previous calendar year. The substantial presence test requires that a person has been in the U.S. for more than 31 days during the current year and 183 days during a three-year period that includes the current year and the two years prior.

What Are the Three Types of U.S. Resident Aliens?

According to the United States Citizenship and Immigration Services (USCIS), there are three categories of resident alien. A permanent resident, also known as a green card holder, is someone who has been given the lawful and legal right by the government to live in the United States. A conditional resident is a person who receives a two-year green card, which is usually given to people who have applied for residency based on marriage. Returning resident is any lawful permanent resident who has been outside the U.S. and is returning to the country. A subset of this is a "special immigrant" who must apply for readmission if they have been outside the U.S. for more than 180 days. 

How Does Taxation Differ for Non-Resident and Resident Aliens?

The main difference lies in how non-resident and resident aliens are taxed. For example, a resident alien can use foreign tax credits, whereas a non-resident cannot. However, in general, a resident alien is subject to the same taxes as a U.S. citizen, while a non-resident alien only pays tax on domestic income that is generated within the U.S., not including capital gains. Resident aliens are required to report worldwide income from sources both within and outside the United States. Income is reported using Form 1040. Non-resident aliens, on the other hand, report domestic income using Form 1040NR or Form 1040NR-EZ.

Article Sources

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  1. U.S. Department of Homeland Security. "U.S.Lawful Permanent Residents: 2019." Feb. 1, 2021.

  2. IRS. Taxation of Nonresident Aliens. Accessed August 21, 2021.