INTERNATIONAL ISSUES FILING TAXES FOR RESIDENT ALIENS, NON RESIDENT ALIENS AND ILLEGAL ALIENS PRESENTER: Hortencia Torres, JD,EA, ABA GLOBAL TAX 920 W. Broad St. Falls Church, VA 22046 HTorres@myglobltax.com STATISTICS PERMANENT RESIDENT STATUS PROCESSED 1820-2007 ALMOST TWO HUNDRED YEARS OF CONTINUING INMIGRATION Persons 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1820 1828 1836 1844 1852 1860 1868 1876 1884 1892 1900 1908 1916 1924 1932 1940 1948 1956 1964 1972 1980 1988 1996 2004 (Source: dhs.gov) Year
STATISTICS: NATIVE AND FOREIGN POPULATION Population by Nativity 2000-2006 350.000.000 300.000.000 250.000.000 Population 200.000.000 150.000.000 87% 89% 100.000.000 50.000.000 0 13% 11% 2006 2000 Native born 261.929.098 250.288.425 Foreign born 37.469.387 31.133.481 SourceSource: Pew Hispanic Center
STATISTICS: LEGAL AND ILLEGAL ALIENS Foreign Born by Region Of Birth and Date of Arrival: 2006 2000 & lat er 1990 t o 1999 Bef ore 1990 Mexico Caribbean Central America South America South and East Asia Middle East All other 0 2.000.000 4.000.000 6.000.000 8.000.000 10.000.000 12.000.000 14.000.000 16.000.000 18.000.000 Source: Pew Hispanic Center Middle East consist s of Af ghanist an, Iran, Iraq, Israel/ Palest ine, Jordan, Kuwait, Lebanon, Saudi Arabia, Syria, Turkey, Yemen, Algeria, Egypt, Morocco and Sudan. STATISTICS: INCOME FOR NATIVE AND FOREIGN RESIDENTS Median Household Income by Region Of Birth: 2006 70.000 60.000 50.000 $us 40.000 30.000 20.000 10.000 0 Total native born Total foreign born Mexico Caribbean Central America South America South and East Asia Middle East All other Source: Pew Hispanic Cent er Note: Due to the way in which the IPUMS adjusts annual incomes, these data will differ from those that might be provided by the U.S. Census Bureau
ALIENS: SOURCE OF INCOME A resident alien s income is generally subject to tax in the same manner as a U.S. citizen. They must report on a U.S. tax return; all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income whether from sources within or outside the United States. A nonresident alien usually is subject to U.S. income tax only on U.S. source income. Under limited circumstances, certain foreign source income is subject to U.S. tax. Special rules apply to the taxation of foreign students and scholars which do not apply to other kinds of aliens. IMMIGRATION VS TAX RULES: NON RESIDENT ALIENS IMMIGRATION CLASSIFIES NON RESIDENT ALIENS UNDER VISA STATUS: A Visa: Foreign Government or Diplomatic.A-1: Ambassadors, Diplomatic or Consular officers & members of their immediately family, A-2: Other Foreign Government officials or employees,a-3: Attendants, servants or personal employees of A-1 or A-2 visa members B-1/B-2 Visa: Visitors for businesses and/or pleasure. C Visas: Alien In transit D Visas: Alien Crew Members E Visas: Treaty Traders and Investors F Student Visas G Visas: Employees of International Organizations H Visas Temporary workers and trainees.h-1b Temporary Professional Work visa,h-1c Nurses,H-2A Temporary or seasonal agricultural workers,h-2b Temporary or seasonal non agricultural workers, H-3 Trainers Visa.
IMMIGRATION VS TAX RULES: NON RESIDENT ALIENS I Visa: Foreign Correspondents J Visa: Exchange Visitor Visa (Au-Pair, Summer Camp Counselors & Staff, Post graduate students, Medical Students (Interns) K Visa: Fiancée of U.S. Citizen L Visa Intra company Transfers M Visa: Non-Academic or Vocational Studies into a program to study or train at a non-academic institution in the U.S. N Visa: Special Category Family Members O Visas: Extraordinary abilities in science, arts, education, business, athletics or extraordinary achievements in Movie-TV field. P Visas: Specially defined entertainers and athletes Q Visas: Cultural Exchange Visitors R Visa: Religious Workers S Visas: Aliens assisting certain government investigations RESIDENT ALIENS FOR TAX PURPOSES Green Card Test.- You are a resident for tax purposes if you are a lawful permanent resident of the US at any time during 2007 and/or if you have been given the privilege of residing permanently in the US as an immigrant. You generally have this status if the USCIS has issued a green card. You continue to have resident status under this test unless the status is taken away from you or is administratively or judicially determined to have been abandoned. Substantial Present Test.-You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for calendar year 2007. To meet this test, you must be physically present in the United States on at least: 31 days during 2007, and 183 days during the 3-year period that includes 2007, 2006, and 2005, counting: All the days you were present in 2007, and ⅓ of the days you were present in 2006, and ⅙ of the days you were present in 2005. Do not count any day you were present in the United States as an "exempt individual" or commute from Canada or Mexico to work in the United States on more than 75% of the workdays during your working period.
EXEMPT INDIVIDUAL: NON RESIDENT ALIENS FOR TAX PURPOSES The term exempt individual does not refer to someone exempt from U.S. tax, but to anyone in the following categories. An individual temporarily present in the United States as a foreign government-related individual. A teacher or trainee temporarily present in the United States under a J or Q visa, who substantially complies with the requirements of the visa. A student temporarily present in the United States under an F, J, M, or Q visa, who substantially complies with the requirements of the visa. A professional athlete temporarily in the United States to compete in a charitable sports event. OTHER RESIDENT ALIENS FOR TAX PURPOSES Non resident Spouse treated as a resident.-you can claim an exemption for your spouse on a Married Filing Separate return if your spouse had no gross income for U.S. tax purposes and was not the dependent of another taxpayer You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. Non resident Dependents treated as residents.- You can claim an exemption for each person who qualifies as a dependent according to the rules for U.S. citizens. The dependent must be a citizen or national of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins
NON RESIDENT ALIENS FOR TAX PURPOSES Even if you meet the substantial presence test, you can be treated as a nonresident alien if you are present in the United States for fewer than 183 days during the current calendar year, you maintain a tax home in a foreign country during the year, and you have a closer connection to that country than to the United States. This does not apply if you have applied for status as a lawful permanent resident of the United States, or you have an application pending for adjustment of status. Sometimes, a tax treaty between the United States and another country will provide special rules for determining residency for purposes of the treaty. An alien whose status changes during the year from resident to nonresident, or vice versa, generally has a dual status for that year, and is taxed on the income for the two periods under the provisions of the law that apply to each period. SSN VS ITIN Taxpayer Identification Number.- Is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (Ex: SSN) or by the IRS (Ex: ITIN). Social Security Number (SSN).- A Social Security number (SSN) is issued by the Social Security Administration. You must submit evidence of your identity, age, and U.S. citizenship or lawful alien status. Individual Taxpayer Identification Number (ITIN).- Are issued by the IRS, is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN). It is a 9-digit number, beginning with the number "9", formatted like an SSN (NNN-NN-NNNN).
Documentation Required for ITINs Supporting Documentation Can be used to Establish: Foreign status Passport (the only stand-alone document) X X U.S. Citizenship and Immigration Services (USCIS) photo identification X X Visa issued by U.S. Department of State X X U.S. driver s license U.S. military identification card Foreign driver s license Foreign military identification card X X National identification card (must be current, and contain name, photograph, address, date of birth, and expiration date) U.S. state identification card Foreign voter s registration card X X Civil birth certificate X* X Medical Records (valid only for dependents under age 14 (under age 18 if a student)) X* X School Records (valid only for dependents under age 14 (under age 18 if a student)) * Can be used to establish foreign status only if they are foreign documents. X Identi t y X X X X X X* X DOCUMENTATION TO BE SUBMITTED Documents listed and required by the IRS for the taxpayer and spouse and dependents Originals (sending originals is not a good idea) Certified copies by the issuing agency or official custodian of the records or Copies Notarized by a U.S. notary public, and Tax return (1040 or 1040NR) and Form W-7
W-7 FORM US RESIDENT ALIEN APPLICATION
SPOUSE S RESIDENT ALIEN DEPENDENT S RESIDENT ALIEN
MISCELLANEOUS Remember the USCIS have poverty guidelines that are important to share with taxpayers who earns wages in cash if they are planning to change their immigrant legal status in the future. The taxpayer s spouse of an resident or non resident alien could be included as an exemption regardless if she or he is living out of the country. If a resident aliens are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, may qualify for the foreign earned income exclusion. The exclusion is $85,700 in 2007. In addition, may be able to exclude or deduct certain foreign housing amounts. MISCELLANEOUS Employees of foreign persons, organizations, or offices. Income for personal services performed in the United States as a nonresident alien is not considered to be from U.S. sources and is tax exempt if you meet all three of the following conditions. You perform personal services as an employee of or under a contract with a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in a trade or business in the United States; or you work for an office or place of business maintained in a foreign country or possession of the United States by a U.S. corporation, a U.S. partnership, or a U.S. citizen or resident. You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year. Your pay for these services is not more than $3,000.
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