Are You a Nonresident Alien?
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What is a Nonresident Alien?
If you are an individual who is not a U.S. citizen, you are defined in the Internal Revenue Code as an "alien" (IRC Sec. 7701(b)). Because this term might have negative connotations, practitioners tend to use the softer term "foreign national" or the less precise term "immigrant" to describe you. However, we generally use the legal term "alien" to describe the tax differences between a resident alien and a nonresident alien.
There are two kinds of aliens (for tax purposes, that is): resident aliens and nonresident aliens. If you are not a resident alien, you are a nonresident alien. There are three tests in the Internal Revenue Code to determine residency status (IRC Sec. 7701(b)(1)):
- The "Green Card" Test
- The Substantial Presence Test
- The First-Year Choice (or election) Test
If you satisfy any one of these tests, you are a resident of the U.S. for tax purposes, at least for part of the calendar year. The tax rules discussed here are applicable to a nonresident alien who owns an LLC.
For a full explanation of how the rules work to determine your tax residency status, visit our US Tax Guide for Aliens. For an interactive questionnaire that will guide you to your correct tax residency status, take our Learn Your US Residency Status test.