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.
Choosing the right recommenders is one of the most critical steps in building a successful O-1 visa petition. The standard for this visa is a high one, you must not only be an accomplished professional within your field but among the very top cadre of your peers. Reference letters serve as the connective tissue of an O-1 petition, transforming a dry list of accolades into a compelling narrative of extraordinary achievement. While awards and press clippings prove that you did something, reference letters provide the expert testimony necessary to explain why it mattered. In the eyes of USCIS, these letters function as evidence that contextualize your work within the broader industry, offering a level of nuance and credibility beyond the objective facts of your career journey. Without them, an adjudicating officer is left to interpret complex professional milestones in a vacuum; with them, you have a panel of qualified experts certifying that you are not just competent, but extraordinary and indispensable to your field. In short, they are the "voice" of your petition, validating your status as an individual of extraordinary ability. If you are beginning the process of identifying your recommenders, here are four essential qualities you should look for in a contact. 1. High Public Visibility In the eyes of USCIS, the status of the recommender often reflects the status of the applicant. USCIS officers will scrutinize every aspect of your petition, and this includes researching your references. If a recommender is someone who is easily recognizable due to an extensive public profile, especially due to their accomplishments, it makes it easier to verify that their opinion of you as a candidate should be given more weight and taken seriously. Look for individuals who have a "public profile." This could mean: They are frequently quoted in major media outlets. They have a significant social media following or industry-wide recognition. They have won major awards (Oscars, Grammys, Pulitzers, etc.) or hold prestigious titles. Their name is synonymous with success in your specific niche. When an officer sees a letterhead from a globally recognized entity or a signature from a famous figure, it immediately sets the tone that you are a candidate worth evaluating, and the words they have written on your behalf will weigh strongly on the officer’s decision. 2. Significant Accomplishment in the Field Your recommender should be an "expert" in their own right, whatever that means for your particular field. USCIS needs to know that the person praising you is actually qualified to evaluate your talent and knows the difference between someone who is merely accomplished in the field versus someone who has reached the pinnacle of their profession. Ideally, your contact should be more senior or more accomplished than you are. They should have a track record of success that is beyond reproach. However, they don't necessarily have to be in your exact job title. They can be in a related field, provided they are in a position to judge your work. For example, if you are a VFX Artist, a famous Film Director or a Senior Producer would be highly qualified to evaluate your contributions to a production. 3. A Deep Professional or Personal Connection One of the most common mistakes O-1 applicants make is chasing "big names" who don't actually know them. A generic letter from a celebrity who has never met you will likely be dismissed as "boilerplate." The strongest letters come from people who can speak to your work with specificity because they have worked directly with you in a professional context. You should look for contacts who know you through: An extensive personal history: Someone who has mentored you or followed your career trajectory for years, who can thus attest to your professional growth and elite trajectory over time. Direct collaboration: Someone who has worked alongside you in a professional context, and has witnessed your impact as a professional first hand because they were also directly invested in whatever project or goal you were working towards. This can also include peers you competed against, if you are an athlete. Your reference letters should describe specific instances where your skills and accomplishments shined through, or where you and your reference worked together towards meeting some goal. This level of detail comes naturally when your reference truly knows you as a professional because of a deep familiarity with your work or direct experience with you as a professional. 4. A Willingness to Advocate Zealously This is perhaps the most underrated quality in a recommender. You do not want a contact who is only willing to "confirm the facts." A letter that simply affirms facts and offers a standard affirmation of your skills and accomplishments will not convey to the officer that you are truly extraordinary. You should seek recommenders who are willing to be effusive. They should be prepared to use strong language—words like indispensable, unparalleled, world-class, and pioneer. This is a visa for exceptionally accomplished professionals, and for your references to be effective their words must convey to the officer that you are truly extraordinary. If a contact is hesitant to provide a glowing, high-energy recommendation, they may not be the right choice for this specific legal process. Final Thoughts The O-1 visa is a high bar, and your reference letters are the pillars that hold up your petition. By seeking the right qualities in your references, you can ensure that you will receive strong and impactful letters that will in turn help to maximize your chances of receiving an O-1 visa. At Santos Lloyd Law Firm, we pride ourselves on assisting our talented clients in every aspect of the O-1 visa process. If you are an exceptionally talented individual considering applying for an O-1 visa, please contact us today and we will be happy to guide you towards a successful outcome.
The U.S. Citizenship and Immigration Services (USCIS) has concluded the annual H-1B cap lottery for Fiscal Year 2027, with employers and legal representatives now able to check selection outcomes through their registration portals.
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