Learn how to determine your tax residency as a non-US citizen - such as international students and H1b working professionals using the IRS residency test. You would also understand the important difference between the tax residency statuses at the federal and state level.

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1️⃣ Determine Your Tax Residency Status when you create a free account on Sprintax [ Ссылка ]

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3️⃣ Check out our blog with more details on US Tax Residency
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-- Links to Related Videos and Resources--

4️⃣ How to Get an ITIN Number (Individual Tax Id Number) as an International Student
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5️⃣ How to Get a Social Security Number (SSN) as an International Student
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6️⃣ IRS Website on Tax Residency
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#USTaxResidency
For the purposes of federal taxation, the Internal Revenue Service IRS, defines non-US citizen taxpayers into two categories; (1) Resident aliens for tax purposes and (2) Non-resident aliens for tax purposes.

This classification is not the same as the definition of a resident and a nonresident alien that is used in US immigration law.

A resident alien's income is generally taxed in the same way as a US citizen.

In simple terms, If you are not a U.S. citizen, you are considered a nonresident alien for tax purposes, unless you meet one of two tests during the calendar year (January 1 – December 31), in which case you would be considered a resident alien for tax purposes.

The first test is called the Green Card Test. And is applicable when you are admitted to the United States as a lawful permanent resident, or you change your status to a Lawful Permanent Resident.

The second test is the Substantial Presence Test (which is a numerical formula that measures your days of presence in the United States). It works like this

You must be present in the US for 31 days during the current year for which your are filing a tax return

AND

You must be present in the US for a period of 183 days calculated by adding ALL the days of presence in the current year + ⅓ of the total days in the last year + ⅙ of the total days you were present in the last 2 years.

When determining your tax residency using the Substantial Presence Test, it is important to have a record of your travel into and out of the United States as a US nonimmigrant visa holder.

Generally international students who have been in the US for less than 5 calendar years on an F, J, M, and Q visas, are considered as exempt individuals and are considered as nonresident aliens for tax purposes.

Differences between an taxation of a resident alien for tax purposes and one who is a non-resident alien for tax purposes.

#1: Tax Forms
Nonresident alien tax payers file federal taxes with the Tax Form 1040NR, while resident alien tax payers file taxes with the Tax Form 1040NR.

#2: Taxes on foreign Income
As a non-resident alien for tax purposes, you generally pay income taxes from US sources, unlike resident aliens who must pay taxes on worldwide income

#3. Social security and Medicare Taxes - FICA TAX (7.65% of Income saved)
International students who are nonresident alien tax payers don't pay FICA tax. While international students who are resident alien tax payers, pay the FICA tax.

#4. Tax Deduction and Credits
Taxpayers who are non-resident alien for tax purposes, typically do not get as much tax deductions and tax credits that US resident aliens and US citizens enjoy come tax time.

State Tax Residency Rules

In some states, the tax residency rules treat temporary residents such as international students as nonresidents for tax purposes regardless of how long they have resided in the state, while some other states have tax residency rules where international students could be considered residents for tax purposes after residing in the state for a certain period of time.

As a resident of a state, you are expected to pay taxes on all your sources of income, while as a non-resident, you only pay taxes on the sources of income coming from the state.

Disclaimer: The content in this video should not be considered as tax or financial advice, given the complexities of the US tax codes, I highly recommend you seek a licensed tax specialist for personalized tax advice.

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