What Is a Resident Alien for Tax Purposes?

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Resident aliens are living and working within the United States, and therefore pay similar taxes to U.S. citizens. However, the tax process can be complicated by various forms that are required to report status and types of income earned throughout the year. The expat tax lawyers at Evolution Tax and Legal is breaking down resident alien status: what it is, what that means for taxes, and how our team can help make tax season as seamless as possible.

What Is a Resident Alien?

A resident alien is an immigrant who has been legally and lawfully accepted as a resident of the United States. They are typically citizens of another country who live and work in the U.S. and have passed either the Green Card or substantial presence test. Resident aliens are also referred to as permanent or lawful permanent residents.

Types of Resident Alien

In the United States, there are three types of resident aliens:

  • Permanent Resident: This is an individual who has legally and lawfully been accepted as a permanent resident of the United States.
  • Conditional Resident: This is an individual who has been given a long-term temporary green card, typically two years. Conditional residents are typically applying for residency due to marriage or entrepreneurial endeavors. Conditional residents must reapply for residency 90 days before their temporary green card expires in order to keep their residency status.
  • Returning Resident: This is any individual who is a lawful and permanent resident of the United States but is returning to the country after having been abroad. This individual will be considered a “special immigrant” and is required to reapply for residency if they have been out of the country for more than 180 days.

Resident Aliens & the Substantial Presence Test

The substantial presence test is used to determine whether an individual has spent enough time in the United States to qualify for resident alien status. Individuals must have been present in the U.S. for more than 183 days over the three years prior to the test in order to pass. This includes a minimum of 31 days in the current year they are applying. The test counts all the days the individual was present in the current year, one third of the days the individual was present in the year before the current year, and one sixth of the days the individual was present the second year before the current year.

Resident Alien Taxes in the U.S.

Resident aliens are required to report all income and pay taxes the same as U.S. citizens. All income, whether it is earned within the U.S. or abroad, must be reported for tax purposes. This includes interest, royalties, income from rental properties, dividends, and any other wages or income received throughout the year. Resident aliens who leave the United States must hold a certificate of compliance to prove they’ve paid their taxes for the year.

Need Tax Help as a Resident Alien? Contact Evolution Tax and Legal

Resident aliens are required to file unique tax forms: Form 1040-C or Form 2063 and report their incomes from abroad as well as within the U.S. Filing the necessary forms and completing tax returns correctly can be a complicated task, but the team at Evolution Tax and Legal can help. Our team of experts can assist you with taxes and legal needs, for both your international taxes and the taxes due with your resident alien status. Contact the team today to learn more.