Nonresident and Expatriate Individual Returns

A noncitizen can be a U.S. resident alien under the green-card test or the substantial-presence test. For substantial presence, generally require at least 31 countable days in the current year and at least 183 weighted days over three years. Count all current-year days, one-third of the preceding year’s days and one-sixth of the second preceding year’s days. Meeting only the 31-day requirement is insufficient.

Some days are excluded, including certain days for exempt individuals and other specified situations. “Exempt individual” in this context generally concerns counting days, not blanket exemption from U.S. tax. A closer-connection exception can require fewer than 183 actual current-year U.S. days, a foreign tax home, the required connection and timely documentation. Treaty residence provisions are another distinct analysis. Do not subtract days or invoke an exception without facts supporting it.

U.S. citizens and resident aliens generally report worldwide income. Nonresident aliens generally distinguish income effectively connected with a U.S. trade or business from U.S.-source fixed or determinable annual or periodical income. Effectively connected income generally uses graduated rates and permitted deductions. Other U.S.-source FDAP income is often subject to a 30% gross-basis rate unless a treaty or statutory rule changes the result.

Source is determined by the applicable income rule, not simply by the payer’s mailing address. Compensation generally follows where services are performed. Other categories, such as interest, dividends, rents and property gains, have their own rules. A treaty can reduce a rate without turning the taxpayer into a citizen or making all income exempt. Dual-status years require allocating the reporting treatment to the resident and nonresident periods.

For the foreign earned income exclusion, a qualifying taxpayer needs a foreign tax home and must satisfy the applicable bona fide residence or physical presence test. The physical presence test generally requires 330 full days in foreign countries during a consecutive 12-month period. A foreign assignment lasting “about a year” is not proof that the exact full-day requirement is met. Travel days and the selected period matter.

The exclusion applies to qualifying earned income, not automatically to pensions, dividends or capital gains, and it does not by itself remove self-employment tax. Foreign taxes attributable to excluded income cannot also support a foreign tax credit. Living abroad is also different from formally expatriating by relinquishing citizenship or ending certain long-term residency; those facts can trigger separate Form 8854 and expatriation-tax rules. Identify that boundary instead of treating every overseas worker as subject to an exit tax.