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Glossary and Resources

Glossary

  1. Non-resident Versus Resident alien for US tax purposes*
  2. Substantial Presence Test
  3. Income Tax Withholding for Payments
  4. Country of Citizenship versus Country of Tax residence

1. Nonresident versus Resident alien for US tax purposes*

A Nonresident alien (NRA) for US tax purposes

A Resident alien (RA) for US tax purposes

  • Is a Permanent Resident of the US (Green Card Holder) or
  • Qualifies as a resident for tax purposes by passing the substantial presence test

*for US tax purposes refers to how you are taxed while in the US. It does not relate to your immigration visa status.

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2. Substantial Presence Test

An international person will be considered a US resident alien for tax purposes if they meet the substantial presence test for the calendar year. The test must be applied each year that the individual is in the U.S.

To meet the test, an international person must:

  • Be physically present in the U.S. for at least 31 days during the current year, and
  • Be physically present 183 days during the three-year period that included the current year and the two years immediately before that, counting:
    • All the days the individual was present in the current year, and
    • 1/3 of the days the individual was present in the 1st year before the current year, and
    • 1/6 of the days the individual was present in the 2nd year before the current year

F and J student visa holders are to exclude five calendar years of presence for purposes of the substantial presence test. J non-student visa holders are to exclude two years.

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3. Income Tax Withholding for payments

Services:

  • Federal income tax is withheld at 30% unless the visitor is exempt under a tax treaty
  • California State income tax will be withheld at the rate of 7% from any payment over $1,500

International Employees:

  • Federal tax withholding is restricted to Single with 0 or 1 allowance unless the employee is exempt under a tax treaty or is a resident for tax purposes.
  • State tax withholding has no restrictions.

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4. Country of Citizenship versus Country of Tax Residence

Your Country of Citizenship is your country where you are a citizen, either by birth or by naturalization. 

Your Country of Tax Residence implies that you are generally subject to the country's tax laws on your global income, which includes income earned both within and outside that country. Your place of residency prior to coming to the US, is likely your country of tax residence.

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