Filing Taxes as Immigrant: Resident vs Non-Resident Status and Common Mistakes
Tax obligations differ based on immigration and tax residency status. Here's how to file correctly and avoid costly mistakes.
Quick Answer
Tax residency differs from immigration status. You're tax resident if you have green card OR meet substantial presence test (183+ days in U.S. using weighted formula). Tax residents file Form 1040 reporting worldwide income. Non-residents file 1040-NR reporting only U.S.-source income. F-1 and J-1 holders have special exemptions. Common mistakes: filing wrong form, missing FBAR requirements, and not reporting foreign income.
Key Takeaways
Tax residency ≠ immigration status
Green card holders always tax residents
Substantial presence test determines residency for visa holders
Tax residents report worldwide income (Form 1040)
Non-residents report U.S. income only (Form 1040-NR)
F-1 and J-1 have special exemptions from substantial presence
Key Takeaways
Tax residency ≠ immigration status
Green card holders always tax residents
Substantial presence test determines residency for visa holders
Tax residents report worldwide income (Form 1040)
Non-residents report U.S. income only (Form 1040-NR)
F-1 and J-1 have special exemptions from substantial presence
Table of Content
Tax Residency vs Immigration Status
Immigration status (H-1B, F-1, green card) is different from tax residency status. You can be on temporary visa but be tax resident, or be on certain visas and remain non-resident for taxes.
Automatic tax residents:
Green card holders (from first day of residency)
Citizens
Determined by substantial presence test:
H-1B, L-1, O-1, and most work visa holders
Usually become tax residents after meeting presence requirements
Special exemptions:
F-1 students (exempt for 5 calendar years)
J-1 exchange visitors (exempt for 2 years)
Diplomats (A and G visas)
Substantial Presence Test
You're tax resident if you were in U.S. 31+ days current year AND 183+ days using weighted formula.
Formula:
Days in current year × 1
Days in prior year × 1/3
Days in year before that × 1/6
Total ≥ 183 = tax resident
Example:
2024: 120 days × 1 = 120
2023: 120 days × 1/3 = 40
2022: 120 days × 1/6 = 20
Total: 180 (not tax resident)
Most H-1B holders meet this test quickly and become tax residents.
Filing as Tax Resident
Tax residents file Form 1040 (same as U.S. citizens).
Reporting requirements:
All worldwide income (U.S. and foreign)
Foreign bank accounts (FBAR if aggregate >$10,000)
Foreign assets (FATCA Form 8938 if >$50,000)
Foreign tax paid (claim credit to avoid double taxation)
Standard deductions/credits available:
Standard deduction ($14,600 single, $29,200 married in 2024)
Child tax credit
Education credits
Retirement contribution deductions
Filing Status | Form | Income Reported | Deductions |
|---|---|---|---|
Tax Resident | 1040 | Worldwide | Standard or itemized |
Non-Resident | 1040-NR | U.S. source only | Limited |
Dual Status | Both forms | Varies by period | Complex |
Filing as Non-Resident
Non-residents file Form 1040-NR reporting only U.S.-source income.
U.S.-source income includes:
Wages from U.S. employer
U.S. business income
U.S. rental property income
U.S. dividends and interest (may be exempt by treaty)
Not reported:
Foreign employment income
Foreign investment income
Foreign rental income
Non-residents cannot use standard deduction (limited itemized deductions only) and cannot file jointly with spouse.
F-1 and J-1 Special Rules
F-1 students are exempt from substantial presence test for first 5 calendar years. File as non-resident on 1040-NR during this period even if in U.S. full year.
After 5 years:
Substantial presence test applies
Usually become tax resident
File Form 1040
J-1 exchange visitors exempt for 2 years (teachers, researchers) or 4 years (students).
Common Tax Mistakes
Filing wrong form:
Non-resident filing 1040 instead of 1040-NR
Claiming ineligible deductions/credits
Can trigger audit and penalties
Missing FBAR:
Required if foreign accounts exceed $10,000 aggregate anytime during year
Penalty up to $12,500 per account per year (non-willful)
Up to 50% of account balance (willful)
Not reporting worldwide income:
Tax residents must report foreign income
Foreign tax credit available to avoid double taxation
Failure to report is tax evasion
Wrong filing status:
Non-residents cannot file "Married Filing Jointly"
Must file "Married Filing Separately" or single
Tax Treaties
U.S. has tax treaties with many countries reducing taxation.
Common treaty benefits:
Reduced withholding on dividends/interest
Exemption for certain scholarship/fellowship income
Credits for foreign taxes paid
Research treaty between U.S. and your country. Tax professional can help claim treaty benefits.
State Taxes
Most states have income tax in addition to federal. Rules vary by state.
State residency:
Usually based on physical presence and domicile
Different from federal tax residency
Some states (Texas, Florida, Nevada) have no income tax
File state return where you lived/worked during year.
Tax Residency vs Immigration Status
Immigration status (H-1B, F-1, green card) is different from tax residency status. You can be on temporary visa but be tax resident, or be on certain visas and remain non-resident for taxes.
Automatic tax residents:
Green card holders (from first day of residency)
Citizens
Determined by substantial presence test:
H-1B, L-1, O-1, and most work visa holders
Usually become tax residents after meeting presence requirements
Special exemptions:
F-1 students (exempt for 5 calendar years)
J-1 exchange visitors (exempt for 2 years)
Diplomats (A and G visas)
Substantial Presence Test
You're tax resident if you were in U.S. 31+ days current year AND 183+ days using weighted formula.
Formula:
Days in current year × 1
Days in prior year × 1/3
Days in year before that × 1/6
Total ≥ 183 = tax resident
Example:
2024: 120 days × 1 = 120
2023: 120 days × 1/3 = 40
2022: 120 days × 1/6 = 20
Total: 180 (not tax resident)
Most H-1B holders meet this test quickly and become tax residents.
Filing as Tax Resident
Tax residents file Form 1040 (same as U.S. citizens).
Reporting requirements:
All worldwide income (U.S. and foreign)
Foreign bank accounts (FBAR if aggregate >$10,000)
Foreign assets (FATCA Form 8938 if >$50,000)
Foreign tax paid (claim credit to avoid double taxation)
Standard deductions/credits available:
Standard deduction ($14,600 single, $29,200 married in 2024)
Child tax credit
Education credits
Retirement contribution deductions
Filing Status | Form | Income Reported | Deductions |
|---|---|---|---|
Tax Resident | 1040 | Worldwide | Standard or itemized |
Non-Resident | 1040-NR | U.S. source only | Limited |
Dual Status | Both forms | Varies by period | Complex |
Filing as Non-Resident
Non-residents file Form 1040-NR reporting only U.S.-source income.
U.S.-source income includes:
Wages from U.S. employer
U.S. business income
U.S. rental property income
U.S. dividends and interest (may be exempt by treaty)
Not reported:
Foreign employment income
Foreign investment income
Foreign rental income
Non-residents cannot use standard deduction (limited itemized deductions only) and cannot file jointly with spouse.
F-1 and J-1 Special Rules
F-1 students are exempt from substantial presence test for first 5 calendar years. File as non-resident on 1040-NR during this period even if in U.S. full year.
After 5 years:
Substantial presence test applies
Usually become tax resident
File Form 1040
J-1 exchange visitors exempt for 2 years (teachers, researchers) or 4 years (students).
Common Tax Mistakes
Filing wrong form:
Non-resident filing 1040 instead of 1040-NR
Claiming ineligible deductions/credits
Can trigger audit and penalties
Missing FBAR:
Required if foreign accounts exceed $10,000 aggregate anytime during year
Penalty up to $12,500 per account per year (non-willful)
Up to 50% of account balance (willful)
Not reporting worldwide income:
Tax residents must report foreign income
Foreign tax credit available to avoid double taxation
Failure to report is tax evasion
Wrong filing status:
Non-residents cannot file "Married Filing Jointly"
Must file "Married Filing Separately" or single
Tax Treaties
U.S. has tax treaties with many countries reducing taxation.
Common treaty benefits:
Reduced withholding on dividends/interest
Exemption for certain scholarship/fellowship income
Credits for foreign taxes paid
Research treaty between U.S. and your country. Tax professional can help claim treaty benefits.
State Taxes
Most states have income tax in addition to federal. Rules vary by state.
State residency:
Usually based on physical presence and domicile
Different from federal tax residency
Some states (Texas, Florida, Nevada) have no income tax
File state return where you lived/worked during year.
Frequently Asked Questions
Which form do H-1B holders use?
Usually Form 1040 (resident) after meeting substantial presence test (typically after first year in U.S.).
Do I report income from before coming to U.S.?
If you were non-resident during that period, no. If you were tax resident, yes (worldwide income).
What is FBAR and do I need to file?
Report of Foreign Bank Accounts. Required if aggregate foreign accounts exceed $10,000 anytime during year. File separately from tax return.
Can I claim standard deduction on 1040-NR?
No. Non-residents can only claim limited itemized deductions. This is major disadvantage of non-resident status.
Should I use tax professional?
Recommended for immigrants, especially first year and any year with foreign income, foreign accounts, or dual-status situations.
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