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Who is Affected by U.S. International Tax Laws?

One of the least desirable situations a person can find themselves in is unexpectedly on the wrong side of international tax law. Unfortunately, many US Citizens living, working and/or earning money abroad, along with Greencard holders, resident aliens and non-resident aliens often find themselves in this very predicament. Here we will explore a high level overview of the circumstances wherein a person fitting one of these descriptions may find themselves owing taxes.

U.S. Citizens are Impacted by U.S. International Tax Laws

If you are a U.S. citizen you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U.S. law. You are generally also subject to the same income tax filing requirements that apply to U.S. citizens. This is true even if you reside outside the United States, and even if you do not receive a W-2 form or Form 1099 from the foreign employer/client. This rule applies to both earned income and unearned income, so you must pay taxes on wages earned as well as interest, dividends, capital gains, pensions, rents, and royalties.

Greencard Holders are Subject to U.S. International Tax Laws

If you are a resident alien, you may be subject to U.S. tax law through the green card test. The green card test applies to resident aliens who hold immigrant visas, or green cards. Under this test, you are considered a U.S. resident for tax purposes if you were a lawful permanent resident of the United States at any time during the calendar year.

You May be Subject to U.S. International Tax Laws Under the Substantial Presence Test

Under the Substantial Presence Test, you are considered a U.S. resident for tax purposes if several conditions are meant. This test looks at whether you have been physically present in the U.S. for a certain amount of time during the calendar year. Specifically, you must be physically present in the U.S. on at least: “1) 31 days during the calendar year, and 2) a total of 183 days during the current year and the preceding 2 years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year.” For the most recent information on Publication 54, a Tax Guide for US Citizens and Resident Aliens Abroad visit:

Some Non-Resident Aliens are Subject to U.S. International Tax Laws

A non-resident alien is defined as someone who has not passed the greencard test or the substantial presence test. These individuals are not U.S. citizens or U.S. nationals. A non-resident alien may be subjected to U.S. income tax in limited circumstances. As a general rule, non-resident aliens engaged or considered to be engaged in a trade or business in the United States during the year must file a return. In addition, a nonresident alien individual who is not engaged in a trade or business in the United States, but still U.S. income on which the tax liability was not satisfied by the withholding of tax at the source must file a return and pay U.S. taxes. Thus, non-resident aliens must pay U.S. income tax only on income that comes from a U.S. source.

An Experienced Tax Attorney Can Help You to Follow U.S. International Tax Laws

The Tax Lawyer - William D. Hartsock has been successfully helping clients comply with U.S. International Tax Laws and deal with issues related to worldwide taxation since the early 1980s. Mr. Hartsock offers free consultations with the full benefit and protections of attorney client privilege to help people clearly understand their situation and options based on the circumstances of their case. To schedule your free consultation simply fill out the contact form found on this page, or call (858) 481-4844.

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The Tax Lawyer - William D. Hartsock, Esq. – San Diego Tax Attorney

Author: William D. Hartsock, Esq

A "Certified Tax Law Specialist" for over 37 years, Mr. Hartsock is one of the most trusted and respected tax attorneys in Southern California. Call today to discuss the facts of your case and learn about your options. Mr. Hartsock offers free consultations and all conversations are protected under attorney-client privilege; meaning that no information shared with a tax attorney will be shared with the IRS or California Franchise Tax Board.