1. Non-Resident Test
An alien is any individuals who is not a US citizen or US national. A non-resident alien is an alien who has not passed the green card test or the substantial presence test.
Green Card Test:You are a Lawful Permanent Resident of the United States at any time during the calender year.
Substanital Presence Test:You are physically present in the United States on at least:
- 31 days during the current years, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that
Current year All days Current year - 1 year 1/3 days Current year - 2 year 1/6 days 183 < Total days
2. Who must file?
- A nonresident alien individual engaged or considered to be engaged in a trade or business in the United state during the year
- A nonresident alien individual who is not engaged in a trade or business in the United States and has US income on which the tax liability was not satisfied by the withholding of tax at the sources
- a representative or agent responsible for filing the return of an individual described I or 2
- a fiduciary for nonresident alien estate or trust, or
- a resident or domestic fidicary or other person, charged with the care of the person or property of a nonresident individual may be required to file an income tax return for that individual and pay the tax
3. When to file?
|Due Date||Date to File Extension||Extension Due Date|
|Employee or SE-Employed Person||April 15||April 15||October 15|
|Not Employee or SE-Employed Person||June 15||June 15||December 15|
4. Which Income to Report?
- Income that is Effectively Connected with a trade or business in the United State
- US source income that is fixed, determinable, annual, or periodical (FDAP)
- Tax at a 30% (or lwer treaty) rate applieds to FDAP income or gain from US sources, but only if they are not effectively connected with your US Trade or business.
- Example of FDAP Income
- Compensation for personal services
- Pensions and Annuities
- Scholarships and fellowship grand
- Real property tincome
- Orginal issue Discounts
- Other grants, prizes and awards
- A sales commission paid or credited monthly
- A commission paid for a single transaction
- Reference: https://www.irs.gov/individuals/international-taxpayers/fixed-determinable-annual-periodical-fdap-income
5. Reporting Tax
- Effectively Connected Income, after allowable deductions, is taxed at graduated rates. These are the same rates that apply to U.S. Citizens and residents. Reported on page 1 of Form 1040NR
- Fixed, Determinable, Annual, or Periodical (FDAP) income is taxed at a flat 30% rate (or lower treaty rate, if qualify) and no deductions are allowed against such income. Reported on page 4 of 1040 NR
6. Apply ITIN
What is an ITIN?An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the IRS.
Who needs an ITIN?
- A nonresident alien required to file a U.S. tax return
- A U.S. resident alien (based on days present in the United States) filing a U.S. tax return
- A dependent or spouse of a U.S. citizen/resident alien
- A dependent or spouse of a nonresident alien visa holder
How do I know if I need an ITIN?if you do not have a SSN and are not eligible to obtian a SSN, but you have a requirements to furnish a federal tax identification number or file a federal income tax returns, you must apply for an ITIN.
How do I apply for an ITIN?
- Mail out package
- Application Form
- Attached Deferal Income Tax Return
- Original Proof of Identity or Copies Certified by Issuing Agency
Mail above to:
Internal Revenue Service
Austin Service Center
P.O. Box 149342
Austin, TX 78714-9342
- Apply through IRS authorized acceptance agent
- Taxpayer assistance centers (TACS) also provide in-person help with ITIN aplications on a walk-in or appointment basis
- Mail out package