An immigrant, having yet, no citizenship of the United States, but hold a PR (permanent resident) i.e. having a current green card or have had during the previous taxation year. There are distinct tax filing pros and cons for Resident Alien and Non Resident Aliens.
In the calendar year 2021 (January 1 to December 31); according to the taxation law of united states of America, you are subjected to US income tax if you meet the requirement for the green card test or the substantial test as a resident alien of the United states. In some special circumstances, you may also be considered as a U.S. resident alien even though you are just living in the U.S. soil as a non-resident alien for the part of that taxation year.
Green Card Test:
You are a U.S. lawful permanent resident at any time if you have been granted the privilege of permanently residing in the U.S. soil as an immigrant under the immigration laws. Usually you have this status when you received an alien registration card known as the “green card”, from the USCIS (U.S. Citizenship and Immigration Service). If you, lawful hold a green card during the calendar year, unless and until you or the USCIS renounce or judicially terminated your statue you will be subject for taxation, this taxation law known as the green card test”. However
Substantial Presence Test:
People may also be subject to the U.S. resident alien classification for tax purposes if they lived under the U.S soil for more than 31 days during the current calendar year or have had lived for total 183 days during the past three years including the current calendar year. This taxation law known as the Substantial Presence Test”.
This law only applies if your physical presence in the united states in three whole calendar years is 183 days or more, if not, for example, if you were physically present in the United States in 2021 for 60 days, 30 days in 2020, and 20 days in 2019, the total presence for the 3-year period is 110 days, so you will not be taxed as a resident alien under the substantial presence test.
Tax Treaties effects:
Under the tax laws of each country, a resident of both the United States and another country is known as a dual-resident taxpayer. You can still claim the advantages under the income tax treaties, if you are a dual-resident taxpayer. The guidelines provided here is to determine whether you are a resident of the United States do not override residency definitions of tax treaties. Income tax treaties between the two nations must include a tie-breaker rule for resolving conflicting residence allegations.
If you are treated under a tax treaty as a resident of a foreign country, your U.S. income tax will be regarded as a non-resident alien. You will be considered as a resident of the United States for purposes other than figuring your tax. If you are a non-resident alien who will become a resident alien in the year following this taxable year under the Substantial Presence test, you may be chosen to be considered as a dual-status alien for the current calendar year and the next calendar year if you satisfy certain requirements. Refer to the Dual-Status Aliens region of First Year Choice
If you do not fulfill either the green card test or the substantial 2020 or 2021 presence test and you have not chosen to be considered as a resident for part of 2020, but you do satisfy the substantial presence test i.e. 1. Have at least 31 days in a row in the United States in 2020 and 2. Be in the U.S. for at least 75% of the amount of days starting with the first day of the 31-day period and finishing with the last day of 2021. You can treat up to 5 days of absence from the United States as days of involvement in the United States for the purposes of this 75% requirement.
Do not count the days you were in the United States under any of the exceptions mentioned previously under Days of Presence in the United States when counting the days of residence in (1) and (2) above. If you choose your first year, your residency starting date for 2021 is the first day of the earliest 31-day period (described in (1) above) you use to qualify for the selection. You are regarded for the remainder of the year as a resident of the U.S. If you are present for more than one 31-day period and you fulfill the above condition (2) for each of those phases, the first day of the first 31-day period is your residency beginning date. If you are present for more than one 31-day period but only meet the above condition (2) for a subsequent 31-day period, the first day of the subsequent 31-day period is your residency beginning date. Note: To make this choice, you don’t have to be married.
Statement needed to create the 2020 selection for the first-year choice:
To make your first-year choice for 2020, you must attach a statement to Form 1040.
You must include your name and email in the declaration and indicate the following.
- You’re making your first-year choice for 2020.
- You weren’t a 2019 resident.
- You will be a resident under the Substantial 2019 presence test.
- The number of days in 2021 in the United States.
- The dates of your 31-day presence in the United States and the period of your continuous presence in 2020.
- The dates of your 2020 absence from the United States that you treat as days of presence.
Until you meet the substantial presence test for 2021, you cannot file Form 1040 or the statement. If you did not meet the 2021 test as of April 15, 2021, you may request an extension of time to submit your 2020 Form 1040 until a reasonable period after you have passed the exam. Use Form 4868 to request an extension to file until 15 October 2021. You can file the paper form or use one of the possibilities for electronic filing described in the guidelines in Form 4868. You should pay the quantity of tax that you expect to owe for 2020 as if you were a non-resident alien throughout the year with this extension. To calculate the tax, you may use Form 1040 NR or Form 1040 NR-EZ. Enter the Form 4868 tax. Not paying your due tax, will be charged with interest on any tax not paid by your return’s periodic due date, and you may be subjected to a late payment penalty.
You may not revoke it once you make the first-year choice without IRS permission. If you don’t follow the procedures discussed here to make your first-year choice, you will be treated for all of 2020 as a non-resident alien. This does not apply, however, if you can demonstrate by clear and convincing evidence that you have taken sensible measures to become conscious of the filing processes and substantial steps to follow the processes.
Resident Alien Status and Choosing It:
If all of the checklists below apply, then you can choose to be treated as a US resident for the duration of the whole year:
- The start of the year documented your status as a non-resident alien.
- The end of the year marks your status as a resident alien or U.S. citizen.
- At the end of the calendar year, you are married either to a U.S. citizen or a resident alien.
- You are joined by your spouse while making the choice. Situations such as you and your spouse being non-resident aliens at the start of the tax year and converting to resident aliens at the end of the tax year are included in such a scenario.
You cannot make this choice if you are single at the end of the calendar year.
The following rules apply if you make this choice:
- For the purpose of income tax, you and your spouse are treated as U.S. residents from the start to the end of the year.
- Worldwide income is taxed from you and your spouse’s earnings.
- A joint return must be filed by both you and your spouse for the choice year.