What are the tax rules for non-resident aliens working in the USA?
IRS Regulations for Non-Resident Aliens Employed in the U.S.
Tax Filing Requirements
- Non-resident aliens must file a tax return if they are engaged in a trade or business in the U.S. during the year.
- They must also file if they have U.S. income on which tax liability was not satisfied by withholding at the source.
- A return is necessary to claim a refund of overwithheld tax or to take advantage of deductions or credits.
- The required form for non-resident aliens is [Form 1040-NR], U.S. Nonresident Alien Income Tax Return.
Income Taxation
- Effectively Connected Income (ECI) is taxed at the same rates as for U.S. citizens and residents after allowable deductions.
- Fixed, Determinable, Annual, or Periodical (FDAP) income not connected with a U.S. trade or business is taxed at a flat 30% rate or a lower treaty rate, with no deductions allowed.
Withholding Rules for Non-Resident Aliens
- Employers must follow special withholding rules for non-resident aliens, which differ from those for resident aliens and U.S. citizens.
- Non-resident aliens can only claim "single" filing status on Form W-4, regardless of actual marital status, and are limited to one personal exemption unless a tax treaty specifies otherwise.
- They must follow the instructions in [Notice 1392] when completing Form W-4.
- Non-resident aliens may be eligible for exemptions from withholding due to tax treaties by filing Form 8233.
Social Security and Medicare Taxes
- Non-resident aliens employed in the U.S. are generally subject to Social Security and Medicare taxes, with exceptions for certain visa holders and situations as outlined in the [Aliens Employed in the U.S. – Social Security Taxes] section.
Tax Treaty Benefits
- Non-resident aliens may be able to reduce or eliminate U.S. tax on various types of income under income tax treaties between their country of residence and the United States.
- Treaty benefits must be reviewed individually for each type of income.
Filing Deadlines
- Employees receiving wages subject to U.S. income tax withholding must generally file by April 15.
- Those not subject to withholding must file by June 15 if using a calendar year.
Additional Information
- Non-resident aliens can be treated as resident aliens for tax purposes if married to a U.S. citizen or resident alien and choose to be treated as such.
- For more detailed information on the taxation of non-resident aliens, refer to [Taxation of Nonresident Aliens] and [Publication 519, U.S. Tax Guide for Aliens].
Important Forms and Publications
- [Form 1040-NR]: For filing non-resident alien income tax returns.
- [Publication 515]: For withholding of tax on non-residents and foreign entities.
- [Publication 519]: A comprehensive tax guide for aliens.
Please ensure to review the instructions for the relevant forms and consult the IRS publications for specific guidance on your tax situation.
Sources:
Nonresident aliens | Internal Revenue Service 2024-08-03
Taxation of Nonresident Aliens | Internal Revenue Service 2024-08-04
Aliens Employed in the U.S. | Internal Revenue Service 2024-08-02
Aliens Employed in the U.S. | Social Security Taxes 2024-08-01
NRA withholding | Internal Revenue Service 2024-08-02
Taxation of Nonresident Aliens | International Tax Gap Series 2024-08-04
Topic no. 851, Resident and nonresident aliens | Internal Revenue Service 2024-08-02
Foreign persons | Internal Revenue Service 2024-08-02
About Form 1040-NR, U.S. Nonresident Alien Income Tax Return 2024-08-03
Have more questions? Try ask TaxGPT today.
Disclaimer: the information provided does not, and is not intended to, constitute legal advice. Generative AI systems can make mistakes. Verify all important information.
TaxGPT answer library
Tax technology that delivers fast, verifiable answers to your tax questions using an extensive database of curated tax content and industry-leading generative AI technology.