TAX RETURNS FOR NON US
CITIZENS (FOREIGN STUDENTS
AND IMMIGRANTS)
Monica Ibarra and Mary Lepper
Center for Great Neighborhoods VITA
Topics Covered
1. Types of returns – regular 1040 or 1040NR
2. Steps to determine return type to file
3. Resident Alien Taxpayer
4. Nonresident Alien Taxpayer
5. Dual-Status Taxpayer
6. Individual Tax Identification Number (ITIN)
7. Tax Credit Eligibility
8. Start of 1040NR return in Taxslayer
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Types of Returns
1040 Return
• U.S. Citizen
• Undocumented Alien who does not have valid Visa
• Resident Alien
1040NR Return
• Nonresident Alien who is not a U.S Citizen
• Foreign Students and Teachers
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First Step: Resident or Nonresident Alien
If you see NO on the intake form
you must determine residency
status
A resident alien files a regular 1040 form (with
ITIN) and generally follows same tax laws as US
citizens
A nonresident alien files a 1040NR – out of
scope unless Foreign Student certification is
complete – only sites that have certified
volunteers
Dual-Status Alien - A taxpayer who changed
immigration status or received a green card
during the year (may be out of scope for VITA)
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Resident Alien
Must meet one of two tests:
Green Card Test
Taxpayer was lawful permanent resident at any time during
the year (had a “green card”) OR
Substantial Presence Test
Physically present in the US for at least 31 days during
2016 AND physically present in the US for at least 183
days during the past 3 years counting all days in 2017,
1/3 of the days present in 2016 and 1/6 of the days
present in 2015.
See Decision Tree in Pub 4012 for full details
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Substantial Presence Test Example
Victor first arrived in the US on July 1st, 2016. He
returned to Syria to care for his sick mother on
December 20, 2016. After his mother’s death in May,
2017, Victor returned to Pittsburgh on August 31,
2017. He has a SSN but is not a citizen.
Victor was present in the US for 123 days in 2017
and 173 days in 2016.
123 days in 2017 + 57 (1/3 of 173) days in 2016
= 180 days
He does not meet the substantial presence test of 183
days and is a Nonresident alien for tax purposes.
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Substantial Presence Test Example
Januka is a refugee and arrived in the US on March
1st, 2017. This is her first time in the US and she
hasn’t left the country since her arrival. She
received a Social Security number and card shortly
after she arrived.
Januka was in the US for 306 days in 2017.
Januka meets the substantial presence test and is a
resident alien for tax purposes. She files a regular
1040 return.
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Substantial Presence Test: Students and Teachers
Foreign Students
Do not count the days present during the first 5 calendar years
will be considered nonresident for first 5 years of presence, can be
resident if here longer than 5 years
Teachers or Trainee
Do not count the days present during the first 2 calendar years
Will be considered nonresident for first 2 years of presence, can be
resident if here longer than 2 years
Question – are any of your sites preparing 1040NR returns for
nonresident students and teachers?
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Screening Question to Help Determine Return
Type Status
Are you a citizen or resident of the US?
You are a resident of the US if you have a green
card (for all or part of the year) OR meet
the substantial presence test. If yes, continue with
preparing the regular1040 return.
If no, Check with local sites that are preparing
1040NR returns and direct taxpayer to site. Out of
scope at most local sites.
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Identification Needed for Return Preparation
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Social Security Card
• Issued to U.S Citizens and Immigrants with valid immigration
documentation
Individual Tax Identification Number (ITIN)
• United States tax processing number issued by the Internal Revenue
Service (IRS).
• The IRS issues ITINs to individuals who are required to have a U.S.
taxpayer identification number but who do not have, and are not
eligible to obtain, a Social Security number (SSN) from the Social
Security Administration (SSA).
Individual Tax Identification Number (ITIN)
Resident Aliens without a Social Security Number
can apply for an ITIN in order to file a tax return
A nine-digit number in the same format as the SSN
(9XX-8X-XXXX), begins with a “9” and the 4th and
5th digits range from “70”-“88” , “90”- 92” and
“94 - 99”.
ITIN only good for filing taxes, not for work
authorization.
ITIN good until notice of renewal date sent.
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Purpose of ITINs
IRS assigned numbers issued only for federal tax
administration purposes
Provide a means to efficiently process and account
for tax returns and payments for those not eligible
for Social Security Numbers.
Assist the IRS with collection of taxes from foreign
nationals, nonresident aliens and others who have
filing or payment obligations under U.S. tax law
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An ITIN does not:
Entitle the recipient to Social Security benefits or
replace an SSN
Qualify an applicant for Earned Income Tax Credit
Change the individual's immigration status
Give the individual the right to work in the U.S.
Serve as identification outside the federal tax
system
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Who needs an ITIN?
A resident alien (taxpayer) filing a U.S. federal tax return who
does not have social security number.
A dependent or spouse of a U.S. citizen or taxpayer who does
not have valid social security number.
A nonresident alien required to file a return to obtain a refund
of tax withheld under the provisions of an income tax treaty.
Foreign nationals and others who have a federal income tax
reporting or filing requirement.
A nonresident alien student, professor, or researcher filing a
U.S. federal tax return or claiming an exception.
A dependent or spouse of a nonresident alien holding a U.S.
visa
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Who is not eligible for ITIN?
U.S. citizens
Aliens with work visas that qualify them for a SSN
Permanent legal resident of the U.S. (Green card
holder, also known as Permanent Resident Card)
Any individual with a valid SSN
Applicant not meeting the criteria for residency
and/or ID documentation (who failed to prove
identity and foreign status)
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Why should a resident alien file a tax return at
all?
If you make over a certain amount of money or owe
taxes, you have a legal obligation to file a tax return.
Filing taxes is evidence of good moral character and
continuous presence in the United States.
You could get a cash refund if your employer
withheld excess taxes during the year or if you have
a dependent or dependents that qualify for the Child
Tax Credit.
Some immigration applications require you to present
your tax returns.
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Will the IRS share my information with
immigration if I file return with ITIN?
No. The IRS does not share information with other
departments of the US Federal government. The IRS
cannot report you to immigration for having applied
or received an ITIN.
However, the courts can request information about
you from the IRS if you have an open deportation
order or if you are suspected of terrorist activities.
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Tax Credit Eligibility
Eligible if
dependent has
ITIN (not SSN)
Citizenship
EITC NO Child and TP must be US citizen or a legal resident
of the US with SSN valid for work – TIP: Check to
see if SSN is marked “not valid for work” if so not
valid for EIC
Dependent YES Dependent must be US citizen or a resident of the
US, Canada or Mexico (no other country)
Child Tax Credit YES Child must be US citizen or a resident of the US
(lived in US) for more than six months of the year
Head of Household YES Dependent must be US citizen or a resident of the
US, Canada or Mexico
Child Care Credit YES Child must be US citizen or a resident of the US,
Canada or Mexico
American Opportunity and
Lifetime Learning CreditsYES Child must be US citizen or a resident of the US,
Canada or Mexico
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Special Circumstances:
US Citizen or Resident Alien married to Nonresident Alien
3 filing status options
Married filing separately
May still be able to claim exemption for spouse
Married filing joint
Wordwide income of both must be included
Must include declaration signed by both agreeing to choose resident
alien status
Head of Household
Possible even if they live together. If resident alien is unmarried or considered
unmarried on the last day of the year and they pay more than half the cost of keeping up
a home for you and a qualifying person, claim HOH. Must be a resident alien for the entire
tax year. You are considered unmarried for this purpose. Spouse can be nonresident at
any time during the year.
See details in Publication 4491
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Special Circumstances:
Exemptions
Dependency Exemption for adopted foreign-born
child
Child must be resident of taxpayer’s household for entire
year
Dependency Exemption for a child born overseas
If at least one parent is a citizen, child is a US citizen for tax
purposes. Must have SSN.
See details in Pub 4491
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Nonresident VISA Types
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Student VISA – F-1
• Temporarily in US
• Does not count days in US toward Substantial Presence Test for five
years
• File return as nonresident if worked in US
Nonresident working in US – H-1
• Temporarily in US
• Days in US count toward Substantial Presence Test
• If more than 183, file regular 1040, if not 1040NR
Teacher or Researcher – J-1
• For people who wish to take part in work-and-study-based exchange
and visitor programs in the U.S. These programs are sponsored by
Universities or Corporations
Dual-Status Taxpayer
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Dual-Status Taxpayer
• Both a resident alien and a nonresident alien in the same year
• Does not refer to Citizenship only to resident status in US
• Most common dual-status tax years are the years of arrival and
departure.
• For part of year a nonresident, taxes on income from US sources and
on certain income effectively connected with a U.S. trade or business.
• Out of Scope for VITA sites
Additional Resources
ITIN tab in Pub 4012
Chapter 8 in Pub 4491
Publication 1915: Understanding your IRS ITIN
Publication 519: US Tax Guide for Aliens
Publication 4757: ITIN Power Point Presentation
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Individual Taxpayer Identification Number
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What is an ITIN?
It was created for tax purposes. The ITIN program was created by
the IRS in July 1996 so that foreign nationals and other individuals
who are not eligible for a Social Security number (SSN) can pay the
taxes they are legally required to pay.
ITINs are not SSNs. The ITIN is a nine-digit number that always
begins with the number 9 and has a 7 or 8 in the fourth digit, for
example 9XX-7X-XXXX.
Individual Taxpayer Identification Number
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Many immigrants have ITINs.
People who do not have a lawful status in the United States may obtain
an ITIN.
In addition, the following people are lawfully in the country and must pay
taxes but may not be eligible for a SSN and may obtain an ITIN:
A non-resident foreign national who owns or invests in a U.S.
business and receives taxable income from that U.S. business, but
lives in another country.
A foreign national student who qualifies as a resident of the United
States (based on days present in the United States).
A dependent or spouse of a U.S. citizen or lawful permanent resident.
A dependent or spouse of a foreign national on a temporary visa.
Individual Taxpayer Identification Number
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ITINs do NOT provide legal status or work authorization.
An ITIN does not provide legal immigration status and cannot be used to prove
legal presence in the United States.
An ITIN does not provide work authorization and cannot be used to prove work
authorization on an I-9 form.
ITIN holders pay taxes.
ITINs let more people pay into the system, which builds the tax base.
ITIN holders are not eligible for all of the tax benefits and public benefits that
U.S. citizens and other taxpayers can receive. For example, an ITIN holder is
not eligible for Social Security benefits or the Earned Income Tax Credit (EITC).
However, if that person becomes eligible for Social Security in the future
(for example, by becoming a lawful permanent resident), the earnings reported
with an ITIN may be counted toward the amount he or she is eligible to receive.
ITIN holders are eligible for the Child Tax Credit (CTC).
What other purposes can an ITIN serve?
Opening an interest-bearing bank account. Individuals who do not have a SNN
but do have an ITIN can open interest-bearing accounts.
Providing proof of residency..
Applying for an ITIN
Each person who applies for an ITIN must file a
separate Form W-7 and provide their own supporting
identification documentation.
One 1040 might include 2 or more W-7s for taxpayer,
spouse and dependent(s)
Form W-7 must be completed and attached to a U.S.
federal income tax return.
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ITIN application procedures
Appointments will be scheduled via 859.547.5542 at the Centro de
Amistad or Center for Great Neighborhoods sites
Taxpayers can complete Spanish intake form if helpful
Preparer should ensure taxpayer has required documentation before
starting return
Bilingual preparer can complete return(s) and Form W-7 if necessary
Bilingual preparer will translate for review when necessary
Reviewer should review return and Form W-7
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Documentation Required
Unexpired Passport (If you have a passport, this is the ONLY
document required.) OR
If you do not have a passport, you must present 2 of the
following documents:
If adult, one document must include photo
If dependent, one document must be birth certificate
All documents must be original and unexpired
National Identification Card (for
example, Mexico’s Matricula Consular)
Foreign Voter ID Card
Medical records (Only for dependents
under 6 years old)
School Report Card (Only for students
under 18)
Foreign Military ID Card
Visa issued by the United States
Photo ID from the U.S. Citizenship and
Immigration Services (USCIS)
U.S. Driver’s License
Foreign Driver’s License
U.S. State Photo ID
U.S. Military ID Card
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Form W-7
Select reason C,
D or E (resident
alien or their
spouse or
dependent)
If D or E is selected and the taxpayer is mailing in a
W-7 also, write their name and “applying for an ITIN”
on the dotted line
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Form W-7
The applicantʼs name must be listed on the Form W-7 as it appears on the
tax return.
Form W-2 must have the same name that appears on the federal tax
return submitted with Form W-7.
If you no longer have a foreign address, list only your country of last
residence on line 3
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Return with ITIN in TaxSlayer
Complete regular 1040 form for resident aliens
Electronic filing of return with valid ITIN and
different SSN shown on W-2.
See instructions in Pub 4012 for
Starting a return for someone applying for an ITIN
Creating a temporary TIN for spouse or dependent
applying for ITIN
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