For tax purposes, an alien is an individual who is not a U.S. citizen. An alien is in one of three categories: resident, nonresident, or dual-status. Placement in the correct category is crucial in determining what income to report and what forms to file.
Under peacetime enlistment rules, you generally cannot enlist in the Armed Forces unless you are a citizen or have been legally admitted to the United States for permanent residence. If you are an alien enlistee in the Armed Forces, you are probably a resident alien. If, under an income tax treaty, you are considered a resident of a foreign country, see your base legal officer. Other aliens who are in the United States only because of military assignments and who have a home outside the United States are nonresident aliens. Guam and Puerto Rico have special rules. Residents of those areas should contact their taxing authority with their questions.
Most members of the Armed Forces are U.S. citizens or resident aliens. However, if you have questions about your alien status or the alien status of your dependents or spouse, you should read the information in the following paragraphs and see Publication 519. taxmap/pubs/p3-003.htm#en_us_publink1000176220
You are considered a resident alien of the United States for tax purposes if you meet either the "green card test" or the "substantial presence test" for the calendar year (January 1 – December 31).
If you meet the substantial presence test for 2010, you did not meet either the green card test or the substantial presence test for 2008 or 2009, and you did not choose to be treated as a resident for part of 2008, you may be able to choose to be treated as a U.S. resident for part of 2009. See First-Year Choice in Publication 519.
These tests are explained in Publication 519. Generally, resident aliens are taxed on their worldwide income and file the same tax forms as U.S. citizens. taxmap/pubs/p3-003.htm#en_us_publink1000176221
A nonresident alien spouse can be treated as a resident alien if all the following conditions are met.
- One spouse is a U.S. citizen or resident alien at the end of the tax year.
- That spouse is married to the nonresident alien at the end of the tax year.
- You both choose to treat the nonresident alien spouse as a resident alien.
Both you and your spouse must sign a statement and attach it to your joint return for the first tax year for which the choice applies. Include in the statement:
- A declaration that one spouse was a nonresident alien and the other was a U.S. citizen or resident alien on the last day of the year,
- A declaration that both spouses choose to be treated as U.S. residents for the entire tax year, and
- The name, address, and taxpayer identification number (social security number or individual taxpayer identification number) of each spouse. If the nonresident alien spouse is not eligible to get a social security number, he or she should file Form W-7, Application for IRS Individual Taxpayer Identification Number (ITIN).
Once you make this choice, the nonresident alien spouse's worldwide income is subject to U.S. tax. If the nonresident alien spouse has substantial foreign income, there may be no advantage to making this choice.
Once you make this choice, it applies to all later years unless one of the following situations occurs.
- You or your spouse revokes the choice.
- You or your spouse dies.
- You and your spouse become legally separated under a decree of divorce or separate maintenance.
- The Internal Revenue Service ends the choice because you or your spouse kept inadequate records.
For specific details on these situations, see Publication 519.
If the choice is ended for any of these reasons, neither spouse can make the choice for any later year. taxmap/pubs/p3-003.htm#en_us_publink1000176225
If you and your nonresident alien spouse do not make this choice:
- You cannot file a joint return. You can file as married filing separately, or head of household if you qualify.
- You can claim an exemption for your nonresident alien spouse if he or she has no gross income for U.S. tax purposes and is not another taxpayer's dependent.
- The nonresident alien spouse generally does not have to file a federal income tax return if he or she had no income from sources in the United States. If a return has to be filed, see the next discussion.
- The nonresident alien spouse is not eligible for the earned income credit if he or she has to file a return.
If you are an alien who does not meet the requirements discussed earlier to be a resident alien, you are a nonresident alien. If you are required to file a federal tax return, you must file either Form 1040NR, U.S. Nonresident Alien Income Tax Return, or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents. See the form instructions for information on who must file and filing status.
If you are a nonresident alien, you generally must pay tax on income from sources in the United States. Your income that is from conducting a trade or business in the United States is taxed at graduated U.S. tax rates. Other income from U.S. sources is taxed at a flat 30% (or lower treaty) rate. For example, dividends from a U.S. corporation paid to a nonresident alien generally are subject to a 30% (or lower treaty) rate. taxmap/pubs/p3-003.htm#en_us_publink1000176228
You can be both a nonresident and resident alien during the same tax year. This usually occurs in the year you arrive in or depart from the United States. If you are a dual-status alien, you are taxed on income from all sources for the part of the year you are a resident alien. Generally, for the part of the year you are a nonresident alien, you are taxed only on income from sources in the United States.