The IRS considers anyone who is not a US citizen, Green Card holder, or met the substantial presence test but has US tax filing obligation to be a nonresident alien. For example, you have income from the US but you do not meet the substantial presence test. Or you are engaged in a trade or business in the US and you are a nonresident alien. It doesn’t matter if the business activities generated any income, or if it’s exempt under tax treaty from US tax.
There is no minimum income threshold to file 1040NR Form as a non-resident alien. You should only report your US sourced income on this form. However, foreigners investing in the US should first determine if their US visits make them US residents for tax purposes. In such cases, you must report your worldwide income.
Non-US citizens with US rental properties or US companies
The United States real estate markets have seen a strong demand from foreign investors looking for offshore investment opportunities. It is important to consider the various ownership structures with different tax implications.
Non-US citizen investors need to consider income tax on rental income, capital gains tax on sale of property, and inheritance tax on owning a US asset. The different investment structures will affect each of these taxes.
Generally, the deadline to file Form 1040NR or Form 1040NR-EZ is June 15th of the following year. In cases when you are an employee and receive wages, which you need to pay taxes on, you will need to file Form 1040NR by April 15th of the following year. To get a 6-month extension a foreign person needs to file Form 4868.
How We Can Help
Our team of tax professionals review each investor’s specific considerations and advice on the best structure for their investment. We also file the annual income tax return (Federal and State as necessary) to pay the least amount of tax possible both in the US as well as in the investor’s resident country.