Taxes can be confusing…now add in the complexity of filing a U.S. tax return. At RLB, our specialized team of accountants in our U.S. tax department often get asked this question. Here are some questions you should ask yourself to determine whether you may be required to file a U.S. tax return.
Our 5 top considerations:
1) Are you a U.S. citizen or green card holder?
2) Are you a non-U.S. citizen that may meet the physical presence test?
What is the physical presence test?
The Internal Revenue Service (“IRS”) applies a test known as the “substantial presence test” to determine whether an individual will be considered a U.S. resident for income tax purposes. An individual will be considered a resident for U.S. tax purposes under the substantial presence test if:
- The weighted total number of days the individual spends in the U.S. over the prior three years equals or exceeds 183 days, and
- The individual has been in the U.S. for more than 30 days in the current year
The weighted total number of days formula that is calculated by the IRS in determining whether you are a U.S. resident for tax purposes is as follows:
|Total number of days in the U.S. in the current year|
|1/3 of the total number of days in the U.S. in the prior year|
|1/6 of the total number of days in the U.S. in the second prior year|
An individual that spends 183 days (6 months) in the U.S. in any given year will clearly meet the substantial presence test. In addition, an individual will also meet the substantial presence test if they regularly spend over 4 months (122 days) a year in the U.S.
3) Are you a non-U.S. citizen receiving a Form W-2?
Why do you receive a Form W-2?
- The IRS requires all employers to file Form W-2 to report an employee’s annual U.S. wages and the amount of taxes withheld for services performed in the U.S. for the specified calendar year.
4) Are you a non-U.S. citizen that owns U.S. real property and rented it out during the current year?
5) Are you a non-U.S. citizen that has sold U.S. real property during the current year?
Did you answer yes to any of the above questions? OR … do you require clarification and have more questions? Our team of specialized accountants in our U.S. tax department can help!
There are other considerations that may require a taxpayer to file U.S. tax returns and mechanisms to alleviate certain taxpayers from filing U.S. tax returns based on the information outlined above. Please contact our team at firstname.lastname@example.org for any questions and information regarding filing U.S. tax returns.