Residency for Federal Tax Purposes
US Federal Tax Residency
Tax Resident versus Tax Nonresident
US federal tax laws distinguish between residents (who are taxed in the same way as US citizens and permanent residents) and nonresidents for tax purposes.
The IRS categorizes all US citizens and lawful permanent residents as tax residents. Most international students and scholars will be nonresidents for tax purposes, at least for their initial period of study or stay in the US. For example, F-1 and J-1 students are usually considered tax nonresidents for the first five calendar years of physical presence in F-1 status. J-1 scholars are considered nonresidents for the first two calendar years in the US.
Other visa holders such as H-1Bs, and F-1 and J-1 visa holders beyond the give / two year limits, may need to determine tax residency by following IRS guidance for determining tax status.
Tax residency affects your level of taxes and your tax benefits, and what kinds of tax forms you need to complete. Some of the differences include:
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- Residents for tax purposes will file their tax return on federal form 1040; Nonresidents for tax purposes need to file their tax return on federal form 1040-NR.
- In general, the US taxes the worldwide income of tax residents, but only the US-source income for nonresidents
- Tax residency will affect the definition of what counts as a taxable income, your tax benefits (including eligibility for tax treaty benefits), and how much tax may be withheld from your pay or other taxable income.
- There are significant differences in the kinds of benefits and deductions residents and nonresidents can claim
Tufts employees (including students, staff, and faculty) who will be working or receiving taxable income from Tufts, click here to complete a Foreign Tax Analysis to determine your tax residency and eligibility for tax treaty benefits.
Residents and nonresidents are taxed differently and are eligible for separate benefits, so it is very important when completing your tax return that you file correctly either as a resident (form 1040) or nonresident (form 1040-NR). Filing incorrectly as a resident or nonresident can have serious ramifications on your tax compliance and lead to complications in the future.
Most tax preparation services in the US provide robust filing options for tax residents, but may not be qualified to offer filing services for nonresidents. That is why we recommend nonresidents for tax purposes to use the Sprintax software provided by our office to complete their tax returns each year, as Sprintax is a tax service specifically catered to tax nonresidents.
If you are a nonresident for tax purposes but choose to use a separate tax preparation service, be sure to first verify with the service that they are able to prepare tax returns for nonresidents (form 1040-NR).
This is a common tax form that may be issued to you by Tufts University if you were enrolled as a student in a particular tax year. It is used to request a tax deduction based on tuition paid.
Nonresidents for tax purposes are not eligible to claim this deduction, and should therefore not use this form when completing their federal tax return.
Residents for tax purposes, however, can generally include this form with their tax filing.
DISCLAIMER: The information provided on this page is general guidance for the benefit of Tufts international students, scholars, and employees. The International Center is not authorized to provide specific tax guidance on individual tax situations.