What is a nonresident alien?

You might have heard the term nonresident alien but aren’t quite sure what it means. So, what is a nonresident alien? Where taxes are concerned a nonresident alien is any foreign individual who is not a U.S. citizen or a resident alien of the U.S.

While that definition sounds simple, it’s important to differentiate a nonresident alien from a resident alien. A person is considered a nonresident alien if they have not passed either the green card test or the substantial presence test.

Others who are considered nonresident aliens

Some visa holders who reside in the U.S. are also considered nonresidents for tax purposes. People who fall into this category can include students, trainees, teachers, and researchers on F, J, M, and Q visas. Additionally, employees of foreign governments and international organizations on A and G visas are generally nonresident aliens.

Note: Holders of most exempt visas can only be considered nonresident aliens for a certain number of years. In other words, they can’t maintain nonresident alien status indefinitely.

What nonresident aliens need to know about U.S. taxes

Even though they are not U.S. citizens or permanent aliens, nonresident aliens in the U.S. may be required to file a tax return. Generally, a nonresident alien must pay income tax on income that’s earned or derived from a U.S. source.

The tax rates nonresident aliens pay can vary depending on the type of income. For example, wages are taxed at the same graduated rates for U.S. citizens. Investment income, on the other hand, is taxed at a flat 30% rate, unless a tax treaty allows for a lower rate.

What tax forms do nonresident aliens use?

Nonresident aliens will use Form 1040-NR to file their returns instead of Form 1040, which U.S. citizens and resident aliens use. A nonresident who later becomes a resident alien in the same year (known as a dual status alien) will need to file a 1040 with a 1040-NR attachment.

Tax help for nonresident aliens

Navigating U.S. tax matters as a nonresident alien can be complex, especially for individuals unfamiliar with IRS rules and requirements. Luckily, H&R Block has international tax experts who can help you file your 1040-NR or other tax forms.

Need help? Get started with virtual Expat Tax Preparation from H&R Block today.