The tax filing rules for residents and non-residents can be poles apart in the US. With an elaborate set of laws for American citizens, resident aliens, as well as non-resident aliens, it is imperative to understand the technicalities involved for these categories of taxpayers.
If the government finds you satisfy any of the rules from the two tests criteria – the substantial presence test coupled with the green card test, you will be termed a resident alien on US soil. Moreover, resident aliens will enjoy certain forms of tax exemptions in contrast to ordinary American residents. They are entitled to file only the domestic income generated from US sources compared to the regular US residents.
Team Smart Accountants come at your disposal with some crucial elements about the taxation of Americans. Here is a comprehensive guide on the US tax for US Citizens and resident aliens abroad.
Who are resident aliens and non-resident aliens?
As we mentioned above, a US alien status depends on the two tests conducted by the IRS. A resident alien who legitimately holds a green card can reside in the country legally under the US Citizenship and Immigration Service laws. On the other hand, if you do not own a Green Card and have spent about 31 days in the US and a total of 183 days in the last three tax years, your physical presence makes you a resident alien. While counting 183 days, only a fraction of days in two to three years are calculated. Generally, a resident alien falls under the following category,
- F and J student visa holders after 5 years in the US.
- J researchers and professionals after two years in the US.
- H-1, TN, and O-1 visa holders after they meet the “substantial presence” test.
On the contrary, non-resident aliens are people without US citizenship and do not qualify for the green card and substantial presence test. Generally, a non-resident alien comes under the following category;
- F and J student visa holders during the first five years in the US.
- J professors and researchers during their first two years in the US.
- H-1, TN, and 0-1 visa holders until they meet the “substantial presence” test.
When to File your tax return?
No matter what your residential status is, as a US citizen or resident alien staying abroad, on the due date of your return, you will get an automatic 2-month extension to file and pay your taxes without requesting further extensions. Usually, for a year-end return, the payable date extension is till June 15. If you receive the advantage of a 2 months extension, then the late tax penalties will be calculated if you exceed the 2-month extension period. However, do not wait until the extension if you wish to avoid interest for not paying taxes on the regular date, i.e., April 15 for calendar year taxpayers.
What if you cannot meet the requirement even after the 2-month extension? Don’t hesitate! You can fill Form 4868 application for automatic extension and get an additional extension belt till October 15. However, make sure you apply for the form before June 15. Failure to do so can result in heavy penalties since the penalty will be calculated from the original due date, i.e., April 15. You will be subjected to a low interest despite these extension dates, as you miss the first tax file due date.
Where to File?
Physically submission of the federal tax return
If you are a US citizen residing in any of the US states, refer to the addresses provided by the IRS.
As a resident alien residing overseas, you can mail the US tax return to the following address:
– Department of the Treasury, Internal Revenue Service Center Austin, TX 73301-0215 USA
Further, your estimated tax payments should be mailed along with form 1040-ES to:
– Internal Revenue Service, PO Box 1300, Charlotte, NC 28201-1300 USA
Electronic filing (e-file)
People who enjoy a certain threshold in Adjusted Gross Income can electronically file their returns using a free file. AGI is the total of all your earnings subtracting certain adjustments. Usually, it is modified by the State, using state-specific deductions. If your threshold exceeds the minimum limits, you can file using fillable forms or electronically file it through commercial software systems after the payment of required charges.
Taxpayer Identification Number
A taxpayer identification number or TIN is the number used by the IRS for tax filing purposes. It is necessary for filing a tax return and claiming treaty benefits. Anyone who files for a US tax return needs to either hold an individual tax identification number (ITIN) or a social security number (SSN).
Don’t have an SSN? Worry not! You can apply for a social security card through Form SS-5. You only need to submit your identity, age, US citizenship, or lawful alien status for filing SSN. You can also obtain it by contacting a Social Security Officer or paying a quick visit to Social Security International Operations. If you are not eligible for SSN, get an ITIN by filing form W-7.
The amount of US tax returns can be expressed only in US dollars. But, if your income and payable amounts are in foreign currency, you need to translate them into the official currency of the US.
If you have foreign earned revenues or incur expenditures in foreign currency, then you generally have to use the exchange rate existing on the date you earn or pay the amount. For further clarity regarding the applicable exchange rates, refer the IRS guidelines.
How to Get Tax Help?
If you need tax filing assistance, then the IRS Office in Philadelphia can lend a hand. Contact them during office hours – Monday to Friday from 6 a.m to 11 p.m. EST.
Phone: 267-941-1000 (not toll-free)
Mail: Internal Revenue Service Philadelphia, PA 19255-0725
Assistance with Unresolved Tax Problems
Are your tax issues draining your income? Sometimes, tax problems cannot be resolved through the usual channels. In such cases, you can contact the taxpayer advocate to get further assistance.
There are many requirements and forms to file depending upon your citizenship status. What more to say? Filing tax returns can be daunting for any common taxpayer. Additionally, missing to file tax on the due date can bring an extra burden to shoulders. Hence, make sure you file your returns on time to avoid interests and penalties. The above guide shall allow you to tread your way through the US tax filing maze to a large extent. If you need professional assistance, then contact dependable firms like Smart Accountants.
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