U.S. Tax Requirements for U.S. Tax Residents.
Olga Guzhva • January 11, 2024
When considering immigration to the United States, people often search for the ins and outs of the varied visa options, cost of leaving, education opportunities for kids, but they seldom inquire about the implications of the U.S. taxation. If you do a Google search about U.S. immigration, you’d come across a lot of information about varied visas and their eligibility requirements, the process of obtaining a green card or naturalization, and so on. The information about U.S. tax rules would not appear in your Google search unless you specifically search for it.
- As part of your immigration planning, it is very important to be aware of and understand the U.S. tax obligations, specifically if you have assets in your home country.
- Additionally, if you decide to open your new U.S. business and apply for an immigrant visa, such as EB-1 or EB-2 NIW, or a non-immigrant visa, such as E-2 or L-1, you’d also want to know what taxes you and your business entity would be required to pay.
- Even if you don’t immigrate to the United States but choose to work there based on a temporary nonimmigrant visa, you may be subject to U.S. taxation.
In general, (1) U.S. tax residents are taxed in the same manner as U.S. citizens - on their worldwide income, while (2) nonresidents are generally taxed on U.S. source income and income effectively connected with U.S. trade or business.
Income of residents is subject to the graduated tax rates that apply to U.S. citizens. Residents use the Tax Table and Tax Rate Schedules which apply to U.S. citizens found in the Instructions for Form 1040 and Form 1040-SR2.
Residency Under U.S. Tax Law
Taxation of an individual who is not a U.S. citizen or U.S. national is dependent on the residency status of such individual.
If you are a U.S. resident, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U.S. tax return. You must report
these amounts whether they are earned within or outside
the United States.
Note:
U.S. resident for immigration purposes is not always the same as US resident for tax purposes.
Who is the U.S. Tax Resident?
- U.S. citizen is a US resident for U.S. income tax purposes.
- An immigrant who obtains a green card is treated as a lawful permanent resident for immigration purposes and is considered a U.S. tax resident for U.S. income tax purposes.
- Foreign national could be a U.S. resident for U.S. income tax purposes under the substantial presence test.
- Foreign nationals may choose to be treated as dual status residents for this taxable year if certain tests are met. To learn more, refer to Publication 519, U.S. Tax Guide for Aliens.
- You are a dual-status individual when you have been both a U.S. resident and a nonresident in the same tax year.
- Dual status does not refer to your citizenship, only to your resident status for tax purposes in the United States.
- In determining your U.S. income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. The most common dual-status tax years are the years of arrival and departure.
When planning your immigration to the United States, smart strategic planning of your immigration process, as well as evaluating your future U.S. tax obligations, are essential to your piece of mind in avoiding any pit falls and issues in dealing with the IRS. Navigating the complexities of the U.S. immigration and tax laws often requires professional legal guidance. Seeking assistance from an experienced immigration attorney well versed in U.S. taxation can significantly enhance the chances of your successful immigration planning, ensuring compliance with these intricate regulations and requirements.
If you have any questions about what this means for you, please schedule a consultation with one of our experienced attorneys.
We look forward to working with you!
This blog is not intended to be legal advice and nothing here should be construed as establishing an attorney client relationship. Please schedule a consultation with an immigration attorney before acting on any information read here.
The United States has long been a destination for the world’s most talented athletes—not only to compete at the highest level, but to access world-class training, coaching opportunities, and long-term career prospects. Whether on the field, in the ring, or across the chessboard, athletes from across the globe are finding immigration pathways that allow them to pursue their athletic and professional goals in the U.S. U.S. immigration law offers several visa and green card options designed specifically for individuals with extraordinary athletic talent. These include the P-1A visa for internationally recognized athletes, the O-1A visa for individuals of extraordinary ability, and the EB-1A immigrant petition, which can lead to permanent residency and ultimately, U.S. citizenship. The P-1A visa is commonly used by professional athletes coming to the U.S. to compete in a specific event or season. This applies not only to individual athletes but also to members of teams or clubs recognized internationally. It is widely used by soccer players, basketball players, MMA fighters, Brazilian Jiu-Jitsu competitors, and even elite chess players. Athletes must demonstrate a high level of international recognition and a record of performance in their sport. The O-1A visa is a strong option for coaches who demonstrate extraordinary ability, typically evidenced by championship titles, sustained winning records, or recognition as integral to their team’s success. To qualify, a coach must establish that their expertise places them among the small percentage of top professionals in their field. For athletes seeking permanent status in the U.S., the EB-1A immigrant petition —often referred to as the “extraordinary ability green card”—provides a direct path to lawful permanent residency. It requires clear documentation that the individual is among the very best in their sport and has achieved sustained national or international success. Unlike other green card categories, the EB-1A does not require employer sponsorship and can be self-petitioned. This has become a common path for MMA world champions, BJJ black belt medalists, Olympic athletes, and chess grandmasters—many of whom now represent the U.S. at the highest levels of international competition. It’s important to note that U.S. immigration law defines “athlete” broadly. Whether you are a professional football player in Europe, a sprinter from the Caribbean, a judoka, a gymnast, or a grandmaster in chess, your achievements may qualify under these categories if they are properly documented and presented. The key is a consistent record of excellence and recognition in your sport on a national or international scale. Our office specializes in these types of immigration matters. Whether you are an individual athlete looking to relocate or an organization seeking to bring international talent to your roster, we offer tailored legal strategies to support your goals. If you are exploring options to compete, train, or build your future in the U.S., we’re here to help you take the next step.
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