The United States attracts people worldwide seeking opportunities and a better life for themselves and their families. However, navigating non-US citizen tax law can be challenging, especially for those unfamiliar with the system. This article examines a case study involving a Brazilian non-US citizen who moved to the United States, established a successful computer repair business, and tackled the complexities of non-US citizen tax law. We will explore the steps she took to comply with non-US citizen tax law, obtain a Social Security Number, file back tax returns, and secure her ability to stay in the country after marriage. The Tax Defenders are here to help you overcome similar challenges. Call us at (312) 345-5440 for a free attorney consultation.
Background and Challenges in Non-US Citizen Tax Law
Our case study follows a computer repair specialist who relocated from Brazil to the United States three years ago. She formed a corporation in Illinois but encountered several non-US citizen tax law challenges, including:
- Obtaining a Social Security Number (SSN)
- Filing back tax returns
- Addressing potential legal issues with the IRS
- Securing their ability to stay in the country after marriage
Obtaining a Social Security Number
To tackle non-US citizen tax law, our computer repair specialist needed an SSN. As a non-US citizen, she had to demonstrate authorization to work in the United States. Obtaining an SSN involved:
- Applying for work authorization from the United States Citizenship and Immigration Services (USCIS)
- If granted work authorization, applying for an SSN with the Social Security Administration (SSA)
By obtaining an SSN, the individual could address other challenges, such as filing back federal tax returns according to non-US citizen tax law.
File Back Tax Returns and Pay Taxes
With an SSN, our computer repair specialist could file back tax returns as required by federal law. As a non-US citizen, she was considered a resident alien for tax purposes if she met the substantial presence test. To comply with US tax law, she needed to:
- File Form 1040 for each year they were in the United States
- File Form 1120 for each year their corporation was in existence and pay any federal taxes due
In both cases, accurately reporting income and expenses was crucial to avoid potential issues with the IRS. The Tax Defenders helped her navigate these tax filing complexities.
Addressing Potential Legal Issues with the IRS
No one wants to face legal issues with the IRS, especially non-US citizens who may feel vulnerable due to their immigration status. Once our computer repair specialist engaged us to accurately file her back tax returns, she needed to pay any taxes due and negotiate a payment plan.
Compliance with non-US citizen tax law reduced the likelihood of adverse actions by the IRS. The Tax Defenders have extensive experience resolving IRS issues and can provide invaluable assistance if you find yourself in a similar situation.
Securing the Ability to Stay in the Country After Marriage
Our computer repair specialist wanted to secure her ability to stay in the United States after marrying a US citizen. The process of obtaining a green card through marriage involved:
- Consulting with a licensed and experienced immigration attorney
- Adjusting her status by submitting Form I-485, Application to Register Permanent Residence or Adjust Status, to USCIS
- Filing necessary forms with USCIS, such as Form I-130, Petition for Alien Relative, and Form I-864, Affidavit of Support
- Attending an interview with a USCIS officer
- Receiving her green card, allowing her to live and work in the United States permanently
Navigating the complexities of non-US citizen tax law can be a daunting task for non-US citizens. In the case of our computer repair specialist from Brazil, obtaining a Social Security Number, filing back tax returns, addressing potential legal issues with the IRS, and securing their ability to stay in the country after marriage were all critical steps in her journey toward building a successful life in the United States.
If you or someone you know is facing similar challenges related to non-US citizen tax law, remember that help is available. The Tax Defenders are a team of experienced tax professionals and attorneys who can provide guidance and assistance in addressing your tax concerns. Call us today at (312) 345-5440 for a free attorney consultation. We are here to help you navigate the complex world of non-US citizen tax law and ensure that you can focus on building a bright future for yourself and your family.
Can you claim a non-citizen as a dependent on your taxes?
Whether you can claim a non-citizen as a dependent on your taxes depends on their immigration and tax status. Generally, only U.S. citizens, resident aliens, and certain nonresident aliens qualify. You should consult a tax professional to determine eligibility, as claiming an ineligible dependent can result in penalties.
Do non U.S. citizens pay taxes in the US? (Person vs Citizen)
Persons who are non-U.S. citizens earning income in the United States are required to pay taxes, regardless of their immigration status. A person’s specific tax requirements depend on their tax residency status, determined by the IRS through the green card test or the substantial presence test. Tax laws for persons who are non-U.S. citizens can be complex, so consulting a tax professional is a necessary step.
What is a non U.S. citizen for tax purposes? (Green Card vs Substantial Presence test)
A non-U.S. citizen for tax purposes is an individual who is not a citizen or national of the United States. However, this does not automatically determine their tax status, which is based on the green card test or the substantial presence test.
Under the green card test, an individual is considered a resident alien if they are a lawful permanent resident of the United States at any time during the calendar year.
Under the substantial presence test, an individual is considered a resident alien if they meet both of the following conditions:
- They were physically present in the United States for at least 31 days during the current calendar year, and
- The sum of the number of days they were present in the United States during the current year, plus one-third of the number of days they were present in the United States during the immediately preceding year, plus one-sixth of the number of days they were present in the United States during the second preceding year, is at least 183 days.
Resident aliens are subject to U.S. tax laws and must report their worldwide income, including income earned both inside and outside the United States, to the IRS on their tax returns. They may also be eligible for certain tax deductions and credits.
What is a resident alien?
A resident alien is a non-U.S. citizen who meets either the green card test or the substantial presence test for tax purposes. They are subject to U.S. tax laws and must report their worldwide income.
What is a nonresident alien? What is a nonresident tax return?
A nonresident alien is a non-U.S. citizen who does not meet the criteria for resident alien status. They are generally only subject to U.S. taxes on income earned within the United States and may be eligible for certain tax exemptions and deductions. Nonresident aliens must file a U.S. nonresident tax return if they received U.S. source income subject to tax withholding.
What is Publication 519?
IRS Publication 519, “U.S. Tax Guide for Aliens,” is a document published by the IRS that provides information for U.S. taxpayers who are nonresident aliens or resident aliens for tax purposes. The publication covers a wide range of topics, including:
- How to determine your tax residency status
- How to calculate taxable income and deductions for nonresident aliens and resident aliens
- How to file a U.S. tax return as a nonresident alien or resident alien
- How to claim treaty benefits if your home country has a tax treaty with the United States
- How to report foreign income and assets on your U.S. tax return
- How to claim tax credits and deductions for taxes paid to foreign countries
- How to comply with U.S. tax withholding requirements
Publication 519 is an important resource for non-U.S. citizens who have income from U.S. sources or who are considered resident aliens for tax purposes. It is designed to help taxpayers understand their tax obligations and to provide guidance on how to comply with U.S. tax laws. The publication is available for free on the IRS website and can be downloaded in PDF format.
What is Foreign withholding?
Foreign withholding refers to taxes that are withheld by a foreign government on income earned by non-residents in that country. The withholding tax is typically a percentage of the income earned, and the purpose of the tax is to ensure that non-resident taxpayers fulfill their tax obligations to the foreign government.
Foreign withholding can occur in a variety of situations, such as when a U.S. citizen earns income from foreign sources or when a foreign national earns income from U.S. sources. For example, if a U.S. citizen earns dividends from a foreign company, the foreign government may withhold a certain percentage of the dividends as foreign withholding tax. The U.S. citizen would then be able to claim a foreign tax credit on their U.S. tax return to offset the taxes paid to the foreign government.
The rules surrounding foreign withholding can be complex and depend on a variety of factors, including the type of income earned, the country where the income was earned, and any applicable tax treaties between countries. If you earn foreign income, you need to understand the rules surrounding foreign withholding and consult a tax professional to ensure that they are properly reporting and paying taxes on their foreign income.