WHAT IS A NONRESIDENT ALIEN?
A nonresident alien is an individual who does not meet the criteria for being classified as a resident alien for tax purposes in the United States. According to the Internal Revenue Code, nonresident aliens are generally only subject to U.S. income tax on their U.S.-sourced income. For example, if a nonresident alien works in the U.S. for six months and earns income from a U.S. employer, that income would be subject to U.S. income tax.

Nonresident aliens are required to file a tax return if they have U.S.-sourced income and want to claim a refund of any taxes withheld. They may also need to report any income from sources outside the U.S. if it is effectively connected with a U.S. trade or business. Nonresident aliens are not eligible for certain tax deductions and credits that are available to resident aliens and U.S. citizens.

WHAT IS A RESIDENT ALIEN?
A Resident Alien is an individual who meets the substantial presence test, which is based on their physical presence in the United States over a three-year period or meets the Green Card test. This means that they have been present in the U.S. for at least 31 days in the current year and 183 days in total over the past three years.

Resident aliens are treated similarly to U.S. citizens for tax purposes and are required to report their worldwide income on their tax returns. They are eligible for the same tax deductions and credits as U.S. citizens and are fully subject to U.S. income taxes. They may also have certain reporting requirements, such as reporting their foreign bank accounts if the total value exceeds a certain threshold.

Related: FBAR and FATCA: Reporting foreign accounts as US Expat
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