Tax treatment and planning strategies for nonresident individuals

  • October 22, 2015
  • Maria Montie, CPA, MST, CVA, MAFF

imag00041-main_full4President Barack Obama’s executive action on immigration announced on Nov. 20, 2014, would allow some unauthorized  aliens to temporarily work and remain in the United States. Although opposed in Congress and, at this writing, still blocked from implementation in a lawsuit brought by more than two dozen states or their officials, the executive action creates some uncertainty in federal and state laws, including those concerning taxation of nonresidents.

While the executive action would grant some unauthorized aliens the right to legally work in the United States, it does not appear to make these workers resident aliens under the green-card test and thus subject to tax laws for citizens, U.S. nationals, and resident aliens. Yet, the workers covered by the executive action would likely meet the resident alien substantial-presence test, thereby possibly making them subject to the tax laws for resident aliens. Many workers covered by the executive action may not meet the substantial-presence test, and such workers generally are nonresident aliens under the Code.

Read full article at The Tax Adviser.