Taxation of Nonresident Aliens in the United States Source: http://freedomtaxinternational.com/taxation-of-nonresident-aliens-in-the-united-states/ If the individual files his returns as per the instructions applicable on form 1040 only (this form applies to U.S. resident returns), then it is imperative for him to report all his incomes since the same are subject to taxation in the United States (irrespective of the fact that the source of the income may originate in any other country all over the world) However, this requirement does not apply to non-resident individuals, who are required to file their returns on form 1040NR (non residents) Such individuals only need to report that part of their income that has been sourced in the United States only. However, this condition also applies to all foreign nationals who have invested in the US, in other words, if a non resident alien visits the U.S and said visit makes him or her a US tax resident for tax purposes, then all income accrued form any legal sources all over the world would automatically be subjected to income tax. For Form 1040, both US citizens and the holders of valid Green cards (a permit issued by the United States government that allows individuals to live and work in the United States on a permanent basis) haveminimum filing requirements. There is no set minimum income for filing a return; this is because the taxable amount varies according to both age as well as filing status. Quite unlike U.S. residents, the cravat for a minimum incomethreshold for filing tax returns for non resident aliens does not apply, as long as they receive income from U.S. sources. However, for all such non resident aliens who are involved in business or trade in United States Territory, it is obligatory for them to file returns irrespective of the fact that they may have accrued no income from any business or trade conducted in the U.S. This applies even if there were to be any actual income and said income is exempt from U.S. tax under a tax treaty or any section of the Internal Revenue Code.
Tax implications for non resident aliens All tax assessments for any foreign individual (irrespective of country of origin) will depend on that individuals classification as either a non-resident or a resident alien. In the case of all non-residentaliens, the individual s would be subjected to certain criteria, some of which also include: The non resident alien person cannot be in possession of a valid green card at any time during the relevant period under assessment (typically annualized around a 12 month calendar year) A non resident alien must not have resided in the U.S. for more than 183 days (maximum) in the past 3 year period. (This would also include the current reporting and assessment period as well). Nevertheless all non-U.S. citizens who are in possession of valid green cards (another term for a United States Permanent Resident Card) and have been on United States territory for a period exceeding at least 183 days would be considered to be resident aliens, at least with regard to the evaluation of their tax returns, and as such would have to follow all the rules and regulations in place that govern the tax returns of all resident aliens in United States under the existing laws (As and when applicable) Here if any foreigner in the United States on a valid visa for a limited period of time were to be classified as a non-resident alien and his only business activity would consist of the involvement in the trading and holding of non tangible trading assets (such as mutual funds, stocks, commodities
and other associated non tangibles ) within the ambit of a United States dollar denominated brokerage firm or any other agent operating as per the same guidelines, then such an individuals income would be considered to fall under the domain of the following tax principles.