As we discussed last in the last post, it is important to determine whether you are non-resident alien or resident alien. One major tax issue we discussed is about the substantial presence test. This test is used to determine whether you are resident or non-resident alien. Along with the basics, today we discuss situations that some individuals can exempt the days they are actually present in the United States.
In general, there are several categories of individuals who can exempt the days of presence in the United States. For example, days in transit, or days related to regular commuting to work from Canada or Mexico are not counted as presence for tax purposes. Individuals also don’t count days as crew members of a foreign vessel. In addition, students, trainees, foreign government related individuals, and professional athletes, are exempt within certain parameters.
The Form 8843 is designed to serve this purpose of determining if a person is exempt. If you are an alien individual (other than a foreign government-related individual), you need to file Form 8843 to explain the rationale of your claim that you can exclude days of US presence in the United States as exempt individuals. In addition, this form can be used for people who are unable to leave the United States because of a medical condition or medical problem. This form is required to be attached to your Form 1040NR or Form 1040NR-EZ (note these are the non-resident income tax forms).
The first group of alien individuals this form covers is teachers and trainees. This group of people is present in the United States under “J” or “Q” visa. The second group is students. An international student normally holds an “F”, “J”, “M” or “Q” visa. Similarly, this group will be considered as complied if they have not done anything prohibited. However, you cannot exclude the days of presence if you are a student for any part of more than five calendar years unless you can establish that you don’t have the intention to reside in the United States permanently. Therefore, if a student takes 6 years to gain their US degree, it will have to be proven that it was reasonable that the school work had to take more than five years to complete. If you can not do this, then after five years you will be potentially a US subject taxpayer even with the student visa. Some possible facts can establish this statement if you maintain a close connection with your home country or you did not take any step to change your immigration status. Often, a personal statement will be attached. The last group of exempt individuals is professional athletes. You can exempt the days if you are here to compete in a charitable sports event. Therefore, most athletes end up paying US taxes on their income.
For people who have medical condition or medical problems, individuals can exempt from the days when they are trying to leave the United States, but they couldn’t due to their condition. Different categories are required to fill in different sections of the form and attach to your return. Normally, non-resident aliens are required to file paper returns, instead of e-filing.