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- Students
- Estate Planning for US Citizen with Green Card
Spouse who is a Tax Resident of the United States
- Who is a Tax Resident of the United States?
- What are the Consequences of being a US Tax Resident?
- If I have a Green Card but I am living outside
of the United States during the entire year, Do I have to file a US
Tax Return?
- Is all of my Income subject to US Taxes if I worked
abroad?
- IRS Tax Information for US Citizens Living Abroad
and Aliens
- Related Lighthouse Articles
Foreign students in the F and J categories who are authorized to engage in employment by the INS or through their exchange program sponsors are not considered to be subject to withholding or taxation for social security or unemployment taxes. I.R.C. Section 3121(b)(19); See 26 C.F.R. Section 31.3121(b)(19)-1. Such aliens are still required to pay income taxes.
Therefore, F-1 students on practical training should inform their employer or potential employer of this tax benefit since it saves the employer and the employee a substantial amount of money. If you had this money withheld or you are an employer and you already deposited this money, the IRS will refund this money or give you a tax credit.
Only U.S. citizen spouses benefit from the application of the unlimited marital deduction which postpones estate tax until the death of the second spouse and allows unlimited gifts between citizen spouses. Not even legal permanent residents (green card holders) who may have been living in the United States most of their lives obtain the benefit of this useful estate planning tool.
Therefore, noncitizens or U.S. legal permanent residents who are married to a US citizen should consider setting up a Qualified Domestic Trust (QDOT) in order to postpone estate taxes until the second spouse's death.
An alien is considered to be a U.S. tax resident if
1. The individual was a lawful permanent resident at any time during the calendar year, that is , the individual held an immigrant visa (a "green card"), [I.R.C. Section 7701(b)(A)(i)], or
2. The individual was (or will be) physically present in the United States for:
(a) 183 days or more during a calendar year [I.R.C. Section 7701(b)(3)(a)(ii)],
or
(b) if the total days in the current year, plus 1/3 of the days present
during the preceding calendar year, plus 1/6 of the days present during
the second preceding calendar year, equals or exceeds 183 days. However,
in order for this test to apply at all, the alien must be present for
at least 31 days during the current year. [I.R.C. Section 7701(b)(3)(a)(i)],
Days of arrival and departure are included in the counting of days.
Certain individuals are exempt from these rules. For example, a student present in the United States with an F visa is exempt for the first 5 years of study. This exemption can be extended if the student is able to prove to the IRS that he or she does not intend to reside permanently in the U.S.
You would be taxed on your worldwide income, whether or not remitted to the United States. This also would include capital gains from the sale of property located outside the United States.
IF I HAVE A GREEN CARD BUT I AM LIVING OUTSIDE OF THE UNITED STATES DURING THE ENTIRE YEAR, DO I HAVE TO FILE A US FEDERAL TAX RETURN?
Yes. If you do not you could lose your green card. The INS could determine that you abandoned your green card.
No. IRC Section 911 allows citizens or residents of the United States who are living abroad the opportunity to exclude up to $70,000 of their gross income and certain costs related to foreign housing.
IRS TAX INFORMATION FOR US CITIZENS LIVING ABROAD
AND ALIENS
"The Internal Revenue Service provides questions and answers
for a number of frequently asked questions regarding taxes for U.S. citizens
living abroad and aliens on its web page. Such topics include the following:
- What is the difference between a resident alien and nonresident aliens for tax purposes?
- What is a dual-status alien?
- I am a U.S. citizen working abroad. Are my foreign earnings taxable?
- What is the foreign tax credit?
- Under my visa as a temporary non-resident alien, I'm not subject to social security and Medicare witholdings. My employer withheld the taxes from my pay. What should I do to get a refund of my social security and Medicare?
- What is the new law on gifts from foreign entities?
- I live in a foreign country and need a social security number for my child. How may I obtain the Form SS-5-FS?
- My spouse is a non-resident alien. How can I get a tax identification number for my spouse?
- I live in a foreign country. Where may I find IRS assistance in filing?
- How much money can I bring into the U.S. without tax consequences?
To find the answers to these questions click here.
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