1) I do not have a green card yet, but I am engaged in business during the year, so do I have to file taxes in the U.S.?
The short answer is yes. An individual non-resident alien that is engaged in a business in the United States during the year is required to pay income taxes for income earned within the United States.
2) I will need to leave the U.S. in a few months, will I need to have a ‘sailing permit’ or obtain a certificate of compliance?
A: The sailing permit is required for nonresidents who have taxable income during the taxable year and resident aliens who will be leaving the United States with out any expected date to return. You will need to complete Form 1040-C, which is a Departing Alien Income Tax Return and then you will be granted a sailing permit. If you owe any taxes, you will need to pay them when you turn in your Form 1040-C otherwise you will not be able to leave. The purpose of the sailing permit is to make sure that you are accepting full responsibility for the taxes that you owe so they won’t go unpaid.
3) As an alien or non U.S. citizen, do I qualify for and get the benefit of any deductions and credits?
A non-resident alien can claim deductions but they cannot be related to income that is not from the United States. There are personal exemptions as well as certain itemized deductions that you can claim as long as you can provide proof that they are connected to your U.S. income.
4) On a visa, how many days do I have to be in the U.S. to pay taxes?
Your income is considered free from federal taxing if you were not in the United States for more than 90 days during the year. You are also exempt from federal taxes if your total income was less than $3,000 from your work done in the United States. If you run a business for someone, or perform work overseas, your income is not subject to taxation. If you receive compensation in addition to your wages in order to travel or if you pay into a pension or retirement fund from a U.S. source, then you will need to pay taxes. At the end of the year, you need to make sure that you have figured in those 90 days in order to see a small tax break.
5) What are the rules for paying inheritance tax for green card holders living in the U.S.?
A resident alien will be required to report any type of income; wages, interest, inheritance, dividends, property, royalties, and other types of income on your tax return. You are required to report this income whether you are from the United States or not. Remember, a green card holder is liable and responsible for taxes and interest the same as United States citizens. It is required to report this information so the correct tax amounts can be paid so the inheritance is free and clear, after you receive it. Paying the taxes and interest on the inheritance before you get the money will ease your mind and won’t leave you in debt later.
6) Are there tax obligations if I surrender my green card or U.S. permanent resident status?
If you surrender your green card, you will need to receive an official notice from the United States Citizenship and Immigration Services, or USCIS. Your tax status will terminate on the last day of the calendar year. You will be responsible for the taxes that have incurred while you were living in the United States. These taxes will need to be paid in full before you will be allowed to surrender the green card or give up your U.S. permanent resident status. You can fill out a 1040-C form when you are ready to leave the country. Make sure that you have documentation that you did pay your taxes before you leave, in case you need to prove it.
7) I am on a student visa (with no U.S. citizenship or green card), will my interest income be taxed?
Any interest income that is not connected with a United States trade or U.S. business will not be included in gross income. However, this is the rule as long as your income comes from a U.S. bank, U.S. savings and loan association, U.S credit union, U.S. insurance company, or a portfolio interest. You should turn in Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding to an institution. You will need to report any income you make while working as you are going to school. This is true with the exception of on-campus jobs as well as any job given to you by the USCIS.
8) As a foreign student, how do I know if I am exempted from U.S. Social Security and Medicare taxes?
If you are a foreign student, you may be exempt from U.S. social security and Medicare taxes if you work on-campus up to 20 hours a week or 40 hours a week during the summer months, if you work off-campus and are employed with a company that is approved by USCIS, or if you are enrolled in practical training student employment on or off the campus. Additionally, if you are employed by a physician, au pair, or summer camp worker, this rule doesn’t apply to spouses and children, employment not approved by USCIS, non-immigrants who changed immigration status, or immigrants that become resident aliens.
9) I am a foreigner and work for an international organization in the U.S. Can I get exemption under U.S. tax laws?
Wages that are paid to employees of international organizations in the United States may be exempt from income tax in the United States due to provisions in a tax treaty or a consular convention between the United States and the country you are from, or by you meeting the requirements of the United States tax law. An employee of international organizations will only qualify for an exemption from wages from the United States income tax if you meet the requirements of the U.S. tax law. You will only be exempt from income received for services that were performed by a foreign government or international organization.
10) I am a green card holder and have a source of income from a family business in my home country. Do I have to disclose that income to the IRS and pay taxes?
If you are not an employee but receive wages from a family business, you are subject to paying U.S. income tax while living in the U.S. File Form 1040NR-EZ as well as 1040NR in order to file your forms correctly. If you helped in the family business and did receive income from that business while you were employed but still resided in the United States while working, you will be subject to taxes as it will be considered income. You don’t need to pay your taxes twice so if you pay it in your country, you will need to add it to the forms when you file your taxes in the U.S.
11) I don’t have a green card yet but run my own business. However, I am completely confused about which form to fill and where to file my taxes. Can you help?
Whether you have your green card or not, the rules for filing income and gift taxes are the same. You have to file regardless of where your residence is. If you live in another country or you are a non-resident alien, you can file your tax returns to the Internal Revenue Service Center in Austin, TX 73301-0215. If you file, or if you are claimed as a dependent, you will need a social security number to present on your tax Form 1040-C. You can also inquire at the Internal Revenue Service located at P.0. Box 920 Bensalem, PA 19020.
12) I am from India on a work visa. Do I qualify for standard deductions?
If you were a non-resident alien or you are considered a dual status alien during any portion of the year, you are not entitled to the standard deductions. However, residents of India can qualify for some standard deductions if they meet certain specific criteria. If you reside in India, you will receive a certain amount of standard deductions that you can claim if you work in the United States while living there. Some standard deductions, like childcare, child credit, mortgage interest, business expenses and more are considered itemized deductions, which you can also benefit from. It’s important that you keep all your receipts throughout the year.
13) I am on a work visa, can I claim any tax benefits?
You will be able to itemize some deductions while working in the United States if you are required to report your income. The deductions include medical or dental expenses incurred throughout the year, state and local income taxes paid, real estate taxes, interest paid on a mortgage, charity information, theft loss, and other miscellaneous deductions.
14) What is the taxable income and rate of green card holders?
A green card holder is considered a permanent resident of the United States. This means that for any income you make, you will need to pay taxes on that income. This is on income that you make world wide. When there is an income tax treaty between the United States and the country you are from, you may be exempt from some of the taxes, otherwise, you will need to pay taxes to both of the countries. You should get a break from taxes on one of the two countries, depending on where you work and how you get your money. It is a requirement that 30% of the payment be given to the IRS if it is from a nonresident. If you are a green card holder, you should not have to pay the 30%.
15) With a green card status, if I am based away from the United States do I have to file taxes in the U.S. on the income I earn away from US?
Anytime you are a resident of the United States, full time or part time, you will need to file taxes in the United States for all the income earned in the United States or another country. Filing taxes requires the basic form 1040-C and other basic forms in order to file. When you have your green card, you are considered a resident. You will also need to report your income to the country that you are staying in part-time. You will need to show proof that you are paying taxes to one or both of the countries in order to get a break at tax time. You shouldn’t have to pay taxes twice as long as you can show proof.