US Taxes for US Non-Residents

It is, almost illogically, easier to define who is a non – US person backwards. The US has a unique taxation structure that taxes its citizens, Green Card holders and residents regardless of what country they live in. US taxes will apply to the first US Citizens to reside on the moon and they will need to file. A closer to home example is a US Citizen living in France. In addition to having French tax to file and pay, the US citizen would also have US taxes to file. 

Types of Residency

Non-US citizens, non- residents and people without green cards are non -US persons.  As stated before, if a person is a US citizen, they are always considered a US Person. Their residency has no bearing. Persons who are legal residents of the US have different status depending on what type of  residency they hold. If a person is a holder of a US Green Card – they are, for US Tax purposes, treated as if they are a US citizen. So, just like US citizens, they are subject to US tax regardless of residency. 

US residents here on work or other temporary visas are, with some exceptions, treated as US persons subject to US tax. Once you leave the US the rules are complex requiring an averaging of days in the US over a 3-year period. For the purposes of this program I will not deal withleaving the US and assume that visa holders are US residents. 

A good reference in this area is IRS Publication 519. Students and educators in the US on an F-1 visa are considered as continuing to reside in their home country and are non – resident, despite their presence in the US. 

Employees of world organizations, such as the UN or World Bank and employees of other governments, such as embassy workers are not considered resident in the US and are treated as non-US persons. 

W-8BEN

Dealing only with individuals for the purpose of this program: Non-US persons must complete a form W-8BEN. This document identifies your tax status for the US. 

You must provide your:

• home country identification number, 
• date of birth, permanent address, 
• and, if you have one, US taxpayer identification number. 

Part II of the form establishes eligibility for treaty rates if you are a tax resident of a country that has a tax treaty with the US. We will discuss tax treaties in detail in another lesson. 

W-8BENs must be redone and resubmitted to any US entity holding your account or generating income to you if you have any change in circumstances – for example if you move – even if you move within the same country. 

W-8BENs are good for 3 years from the date of signing.

W-8BENs expire on 12/31 of the third year and must be updated before that date to avoid withholding at higher rates and on additional items of income. 

If you have a US taxpayer ID W-8BENs do not expire, however, they must be updated for any change in circumstances.