USEFUL TAX INFORMATION FOR FOREIGNERS
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.
ESTATE PLANNING FOR US CITIZEN + GREEN CARD SPOUSE
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.
WHO IS A TAX RESIDENT OF THE UNITED STATES?
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)],
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.
WHAT ARE THE CONSEQUENCES OF BEING A US TAX RESIDENT?
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.
Yes. If you do not you could lose your green card. The INS could determine that you abandoned your green card.
IS ALL OF MY INCOME SUBJECT TO US TAXES IF I WORKED ABROAD?
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
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