US Tax Resident Aliens and Non-Resident Aliens - Tax Filing Status Joint vs Single

Taxes in US as Foreigner – Classification of Aliens, Filing Status

In Living in USA by Ruchika4 Comments

In our previous article on taxes, we discussed on how not filing taxes and returns can be evil and many FAQs on Filing Taxes as International. In this article, we will discuss more around how foreigners are classified for tax purposes and what the filing status would be and some benefits around same, including forms that you would use.

How am I treated for U.S. tax purposes as International on Visas like H1B, H4, L1, etc. ?
For tax purposes those who are not a U.S. citizen or U.S. National are regarded as Aliens. Don’t think of the description of term Aliens in sci-fi movies ;), this is just the terminology in taxation.  Anyways, in context of foreigners, someone living on a Visa in America are considered Aliens for tax purposes. Also to clarify, US citizen is someone born in US or get citizenship by virtue of their parents citizenship. Unlike, US National are someone born certain islands like American Samoa are treated as US Nationals. Read US Citizen vs US National. There are in general two type of aliens: Resident and Non-resident Aliens.

As an International, How would I know which form I need to file for Taxes ?
If you are resident alien (basically most of the internationals living on work visa, dependents or student visa), you will file a Form 1040EZ, Form 1040A or Form 1040 depending on your tax situation. If you are a non-resident alien, you must file a Form 1040NR or Form 1040NR-EZ  (if you are engaged in a trade or business in the United States).

Refer: https://www.irs.gov/individuals/international-taxpayers/aliens-which-form-to-file

What would my filling status as Visa Holder for tax purposes – Married, Unmarried?
Your filing status is used to determine your filing requirements, standard deduction, and eligibility for certain credits, and your correct tax. This generally makes great difference in one’s tax bill.  In general, you can divide the filing statuses into 2 categories: married and unmarried.

The married filing statuses are Married Filing Jointly and Married Filing Separately while the unmarried filing statuses are Single, Head of Household, and Qualifying Widow or Widower.

(Head of Household:  The Head of Household status generally applies if you are not married and have paid more than half the cost of maintaining a home for yourself and a qualifying person)
Example: Standard deduction for tax year 2015 for residents

Filing Status Deduction Amount
Single/ Married filing separately  $                            6,300.00
Married Filing Jointly  $                          12,600.00
Head of Household  $                            9,250.00
Personal Exemption  $                            4,000.00

Clearly if you and your spouse file as Married Filing Jointly, your standard deduction may be higher, lower tax bracket and may qualify for other tax benefits that do not apply to the other filing statuses. This may lower your tax than other filing status.

Non-resident aliens and dual-status aliens are not allowed to claim the standard deduction and must itemize in order to claim tax deductions.

In the next article, we will cover details on filing taxes as family for H4 visa holders, Dependent Children.

Any other thoughts to add on tax classification and status ?

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Comments ( 4 )

  1. H1 Dream

    Hi Ruchika,

    First of all thanks for this amazing article. I have a query, can you help.

    I am on H1B, can i invest in BSE/NSE sitting in usa.
    If yes , regarding taxes, do I need to pay tax in india or usa or both??

    1. author
      Ruchika

      Hi,

      Yes, you can but there are few do’s and don’ts you should understand and follow. Regarding taxes, you have to pay taxes but there is no double taxation. If you file as US Resident alien, you will need to report your global income. If you have paid any taxes in India, they are also reported and your US tax liability will get reduced.

  2. simba

    I am not sure how much of those classifications are correct. I’ve been on F1 since 2012 and I have been filing as NRA and not RA (meaning using form 1040NR and not 1040) since and verified it from different sources like H&R Block, turbo tax, windstar etc.

    1. author
      Ruchika

      Hi Simba,

      These classifications are correct for those on work visa like H1 or L1. Those on F1 are “Exempt Individuals” and days of presence in USA are not counted for them. Refer Exempt individuals from Substantial Presence Test (referred above as well) : https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test.

      Exempt Individual:
      Do not count days for which you are an exempt individual. The term “exempt individual” does not refer to someone exempt from U.S. tax, but to anyone in the following categories:
      -An individual temporarily present in the U.S. as a foreign government-related individual under an “A” or “G” visa, other than individuals holding “A-3” or “G-5” class visas.
      -A teacher or trainee temporarily present in the U.S. under a “J” or “Q” visa, who substantially complies with the requirements of the visa.
      -A student temporarily present in the U.S. under an “F,” “J,” “M,” or “Q” visa, who substantially complies with the requirements of the visa.
      -A professional athlete temporarily in the U.S. to compete in a charitable sports event.
      Thus, you will have to file as NRA using 1040NR.

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