Generally, green card holders (permanent residents) are considered “resident aliens” in the United States. This means that they are foreign immigrants lawfully recorded as a resident of the country. So, why is it essential to distinguish green card holders as resident aliens?
The primary reasons have to do with taxes and a person’s immigration status. A resident alien is taxed the same way as a U.S. citizen, including capital gains and foreign income sources, and lives here permanently. Non-resident aliens are here temporarily and are only taxed on domestic income.
Resident vs. Non-Resident Alien
Any individual in the United States who is not a citizen or a U.S. national is considered an alien. This category includes green card holders, visitors here on a visa, and DACA recipients or other undocumented immigrants.
Both the Internal Revenue Service (IRS) and the U.S. Citizenship and Immigration Services (USCIS) further subdivide this category into:
- Resident aliens: People who are residing in the U.S. long-term.
- Non-resident aliens: People here for a specific but temporary purpose such as working or studying, who the government will require to return to their home country when their business is complete.
Resident Alien for Tax Purposes (IRS)
When filing taxes, you are required to provide your immigration status. Generally, permanent residents are considered resident aliens. To determine which category you fall under, the IRS uses the Green Card Test and the Substantial Presence Test.
What Is the Green Card Test?
If you have been given U.S. permanent resident status at any time, you are considered a resident alien and taxed like a U.S. citizen. You continue to have U.S. resident status by IRS standards unless:
- You voluntarily renounce and abandon this status in writing to the USCIS.
- The USCIS administratively terminate
- s your immigrant status.
- A U.S. federal court judicially terminates your immigrant status.
What Is the Substantial Presence Test?
A non-resident alien could be taxed like a resident alien if they spend too much time in the United States. This is the substantial presence test. If you were physically present in the U.S. for 31 days in the current year and 183 days during this year and the previous two years, you qualify.
If you meet the green card test at any time throughout the tax year but do not qualify for the substantial presence test for that year, your residency starting date is the first day you are present in the U.S. as a permanent resident.
However, if you have been present in the U.S. at any time during the year as a permanent resident, you may choose to be treated as a resident alien for the entire calendar year.
Taxes with Student and Teacher/Researcher Visas
Immigrants who have F-1 student or J-1 exchange visitor visas are here for educational and research purposes and might worry that they qualify for resident alien status. This could create a significant financial burden.
Current guidance states that, in general, students will not meet the substantial presence test until they’ve been in the U.S. for five calendar years. Likewise, teachers and researchers will not meet the test until they’ve been in the U.S. for two calendar years.
That said, we encourage you to talk with an immigration lawyer just in case, especially if you stay for longer than you expected.
Resident Alien for Immigration Purposes (USCIS)
The term “resident alien” is used by the U.S. Citizenship and Immigration Services (USCIS) to refer to lawful permanent residents, conditional residents, and returning residents.
- A permanent resident is anyone with an unconditional green card with a 10-year expiration period.
- A conditional resident is someone with temporary two-year resident status, usually given to people in the country on a green card through marriage.
- A returning resident is a permanent resident who left the country for over 180 days and has returned.
Maintain Your Resident Alien Status With Help From FileRight
Green card holders are resident aliens in the eyes of both the IRS and the USCIS, taxed the same as citizens, and given the right to live in the U.S. permanently. To maintain permanent resident status, you must file Form I-90, Green Card Renewal Application, every 10 years.
With a filing package from FileRight.com, you can fill out and file any USCIS application quickly, accurately, and worry-free. Let us help you renew your green card or apply for citizenship once you’ve been in this country for at least five years.
Find out if you qualify for naturalization by taking our U.S. Citizenship Qualification Quiz today!