Unique Filing Situations Flashcards
How do I apply tax law to nonresident aliens?
What are 4 examples of nonresident aliens?
Who must report worldwide income on their Form 1040?
Nonresident aliens can be students, teachers, trainees, or undocumented immigrants.
Your role is to determine if the nonresident alien can be treated as a resident alien for tax purposes; most tax rules that apply to a U.S. citizen will also apply to the resident alien, including filing status and dependent issues.
Resident aliens and U.S. citizens must report worldwide income on their Form 1040.
Is a person considered married even if they live in another part of the world?
Does filing a tax return as a resident alien affect the person’s immigration status in any way?
Yes, a person is considered married no matter where in the world they were married. It does not matter if one spouse is living in another country.
The person who is the resident alien or citizen still must follow the tax rules for married persons.
No, filing a tax return as a resident alien does not affect the person’s immigration status in any way.
Who is a resident alien or nonresident alien and what two test must they meet?
If the taxpayer has checked “No” for U.S. citizen on the intake and interview sheet, you must determine if the person can be treated as a resident alien for tax purposes before continuing. An individual must meet one of the following tests to be considered a resident alien for tax purposes:
• Green card test
• Substantial presence test
What is the Green Card Test?
Individuals who were lawful permanent residents of the US at any time during the tax year are resident aliens (they were given privilege or residing permanently in the US)
What does a green card look like?
Green cards are approximately the size of drivers licenses.
They are no longer green in color but still hold the name.
Most green cards have valid social security numbers and must follow the same tax laws as US citizens, including reporting worldwide income.
What is the Substantial Presence Test?
This test is based on a formula of days and years a person is physically present in the United States.
Taxpayers can still be considered resident aliens if they meet the requirements of the substantial presence test.
What counts as days of presence for the substantial presence test?
Count any day a person is physically present in the United States at any at any time during the day as a day of presence.
( DO NOT COUNT DAYS A PERSON REGULARLY COMMUTES TO WORK IN THE UNITED STATES FROM THEIR HOME IN CANADA OR MEXICO OR DAYS THE PERSON IS AN EXEMPT INDIVIDUAL)
Who is an exempt individual?
Foreign government- related individual
Teacher or trainee who is temporarily present under a J or Q Visa
Student who is temporarily present under an F J M or Q Visa
Professional athlete who is temporarily in the United States to compete in a charitable sports events.
Do you count the days present in the US for purposes of the substantial presence test for an exempt individual?
No, do not count the days present in the US for purposes of the substantial presence test for an exempt individual.
What Form does exempt individuals must file?
Who are they?
Form 8843
What if a nonresident alien meets the substantial presence test?
Is paperwork needed to indicate that a person is a nonresident alien filing as a resident alien under the substantial presence test?
What must they have?
Nonresident aliens who meet the substantial presence test are treated as a resident for aliens for tax purposes.
No paperwork or documentation is needed to indicate that a person is a nonresident alien filing as a resident alien under the substantial presence test.
All persons listed on the return must have either a valid SSN or an ITIN.
What is the form to fill out for non residents?
Form 1040 NR
When can nonresident aliens file a joint return?
A married couple may elect to treat a nonresident alien spouse as a resident alien for tax purposes and file a joint return.
How does a married couple elect to treat the nonresident alien spouse as a resident alien?
What must a spouse be on the last day of the tax year?
If the nonresident alien spouse agrees to file a joint return, worldwide income of both spouses must be reported.
To make this election, a joint return should be paper filed with an attached declaration signed by both spouses stating
- one spouse was a nonresident alien and the other spouse was a US citizen or resident alien on the last day of the tax year.
- They choose to be treated as a US resident for the year
- the name, address and SSN or ITIN of each spouse.
When can a citizen or resident alien who lives with a non resident alien spouse, file as head of household?
All of the requirements must be met:
- the taxpayer is a US citizen or resident alien for the entire year.
- the nonresident alien spouse chooses not to file a joint return.
- the taxpayer meets the other requirements for this filing status.
- the spouse is not a qualifying person for HOH purposes. The taxpayer must have a qualifying person in order to be eligible for this status.
