Resident and nonresident aliens are taxed in different ways. Resident aliens are generally taxed in the same way as U.S. citizens. Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U.S. trade or business.

Resident Aliens

Resident aliens are generally taxed in the same way as U.S. citizens. This means that their worldwide income is subject to U.S. tax and must be reported on their U.S.

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Foreign citizen is treated as a non-resident alien unless he or she qualifies as a resident alien. A “US” resident is defined as a foreign citizen or national who meets either of green card tests or the substantial presence test. This definition is only for purpose of determining foreign individual’s US income tax liability. It does not for example apply for estate and gift tax purpose.

The residency rules for tax purposes are found in I.R.C.

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