Tax Information for Foreign Expatriates Living in the U.S.

Many foreigners choose to live in the U.S. for an extended period of time.  Although there aren't many tax benefits to being an expatriate, there may be some situations where the U.S. tax system could benefit an individual.  Resident Aliens living in the U.S. are taxed on worldwide income.  Non-resident aliens are under different jurisdiction; some can claim treaty benefits, making them exempt from paying certain taxes.  Non-resident aliens are usually only taxed on their income from the United States.  

There are two ways to be considered a resident alien.  If at any time during the calendar year you are a lawful permanent resident of the U.S., you are a resident alien.  Also, if you are in the U.S. for at least 31 days in the current year, and at least 183 days in a 3-year period consisting of this year and the two prior years, you are a resident alien.  Each country has different rules agreed upon with the U.S. for residency.  You may be taxed by both countries during the time you are switching residential status.  

The U.S. has tax treaties with other countries for nonresident aliens.  If you are a resident of one of these foreign countries, you are taxed at a reduced rate or have certain exemptions.  These tax treaties reduce U.S. taxes on nonresident aliens to less than the what U.S. residents and citizens pay in taxes.  

If you are paid by a foreign employer, you are exempt from U.S. tax.  There are three conditions that must be met to be exempt.

• You must perform personal services as an employee under contract with a nonresident alien individual, foreign partnership, or foreign corporation not engaged in a trade or business in the U.S.; or works for an office or place of business maintained in a foreign country or possession of the U.S. by a U.S. corporation, a U.S. partnership, or a U.S. citizen or resident.
• You must perform these services while a nonresident alien temporarily present in the U.S. for a period or periods of not more than a total of 90 days during the tax year.
• Your pay for these services is not more than $3,650.

Resident aliens have to pay for social security and medicare just like U.S. citizens.  However, some non-immigrants and nonresident aliens are exempt from paying these taxes.  If you have an A-Visa, D-Visa, F-Visa, G-Visa, or H-Visa, you are exempt from paying these taxes.  The U.S. has Totalization Agreements with certain foreign countries to avoid taxing people twice on Social Security taxes.

Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.