Filing taxes in the United States can be complex, and even more so for foreigners who aren’t familiar with the U.S. tax system. Whether you’re working, studying, or investing in the U.S., it’s important to understand your obligations to the Internal Revenue Service (IRS). This article breaks down the key steps and considerations for foreigners filing taxes in the U.S.
1. Determine Your Tax Status
The first step is figuring out whether you’re a nonresident alien or a resident alien for tax purposes. The IRS uses two tests:
Green Card Test: If you hold a Green Card, you’re considered a resident alien.
Substantial Presence Test: If you’ve been physically present in the U.S. for at least 31 days during the current year and 183 days over the past three years (with some adjustments), you’re likely a resident alien.
Your tax obligations depend on this classification:
Resident aliens are taxed on worldwide income, similar to U.S. citizens.
Nonresident aliens are taxed only on U.S.-sourced income.
2. Get a Taxpayer Identification Number (TIN)
You’ll need a Social Security Number (SSN) if you’re authorized to work in the U.S. If not, you must apply for an Individual Taxpayer Identification Number (ITIN) using Form W-7.
3. Understand What Income is Taxable
Foreigners may earn U.S. income from:
Employment
Investment or rental income
U.S. business activities
Scholarships or grants
If you’re a nonresident, only U.S.-sourced income is generally taxable. However, tax treaties between your home country and the U.S. may exempt some types of income from taxation or reduce the tax rate.
4. Choose the Correct Tax Form
Form 1040-NR: For nonresident aliens.
Form 1040: For resident aliens (same as U.S. citizens).
Some common schedules or attachments include:
Form 8843: Required for certain visa holders (e.g., F, J, M, Q) even if they earned no income.
Schedule OI: For disclosing foreign income and treaty benefits on Form 1040-NR.
5. File On Time
The typical IRS tax deadline is April 15. However:
Nonresident aliens filing Form 1040-NR have until June 15 if they have no wages subject to U.S. withholding.
You can request an automatic 6-month extension using Form 4868, but this does not extend the time to pay taxes owed.
6. Consider State Taxes
In addition to federal taxes, you may need to file state income tax returns, depending on where you lived or earned income. Rules vary by state, and some (like Texas and Florida) have no state income tax.
7. Claim Tax Treaty Benefits (If Applicable)
Many countries have tax treaties with the U.S. that may reduce or eliminate your tax liability on certain types of income. Use Form 8833 to disclose treaty-based positions when necessary.
8. Avoid Penalties
Foreigners can face fines for:
Failing to file or pay taxes on time.
Not reporting foreign bank accounts (FBAR requirement via FinCEN Form 114).
Not disclosing foreign assets (using Form 8938, if applicable).
9. Seek Professional Help
U.S. tax law is notoriously complex, especially for foreigners. Consider working with:
Tax professionals who specialize in international taxation
Certified Public Accountants (CPAs)
IRS Volunteer Income Tax Assistance (VITA) program, especially for students and low-income filers
Final Thoughts
Filing U.S. taxes as a foreigner doesn’t have to be overwhelming. Start early, gather your documentation, and don’t hesitate to seek expert advice. Staying compliant not only helps you avoid penalties but can also smooth future visa or immigration processes.
If you’re unsure about any part of the process, the IRS website is a great resource—and you can always ask for help before the deadline hits.
