Updated 4 months ago

Any foreign national working in the United States is liable for taxes. This article has helpful information on the U.S. taxation system.

Personal taxation in the United States can be a very complex matter. Taxes are levied at a federal, state, and sometimes local level. The tax burden can vary significantly between states so it’s important to be aware of the taxation system where you're living. For this reason, it is recommended that you consult a professional to help you prepare your tax returns. Income tax, sales tax, and property tax are the main ones in the U.S.

 Good to know: The tax year in the United States corresponds with the calendar year. All tax returns must be filed with the Internal Revenue Service (IRS) by 15 April. If requested, extensions are granted until 15 October.

 Important: A social security number (SSN) is used to track individuals for tax purposes and is a common U.S. ID. Another option for expats is the Individual Tax Identification Number (ITIN). These IDs are issued based on your visa type. Permanent and temporary residents should request a SSN or ITIN as soon as they are granted a visa.

Income Tax

Foreign nationals living and working in the United States are subject to one of two different tax systems based on residency status. This tax status depends on whether you are classified as a resident alien or nonresident alien.

Your status is considered as a resident alien by the IRS if:

•You hold a green card
•You have lived in the United States for more than 183 days
•You have lived in the United States for more than 30 days during the last calendar year and at least 183 days during the current year and the previous last two years.

If you do not meet one of these criteria, you fall into the nonresident alien tax classification.

Resident aliens are liable for taxes on income from any source, regardless of its origin country. Nonresident aliens are taxed only on income from U.S. sources, such as U.S. salary or investments. Tax rates are calculated based on income and whether you are single, married, or filing as the head of household.

Resident aliens and nonresident aliens making more than USD $4000 per year are required to file a tax return at the end of the fiscal year. Professional tax preparation services and advisors are used by many U.S. citizens to ensure they pay all appropriate taxes and take advantage of all possible credits or deductions. It is highly advisable for expats working in the U.S. to hire a specialist familiar with expat taxes.

 Important: Nonresident aliens should check if tax treaties exist between their home country and the U.S., which could lower their tax burden.  

Social Security and Medicare Tax (FICA)

These taxes are automatically withheld from pay. The current FICA tax is a flat rate of 15,3% divided equally between employee and employer. This money is used to fund federal programs for retirement benefits and medical care for people over age 65. In order to receive these benefits, you must pay taxes into these programs for a total 10 years.

Sales Tax

Sales tax is levied at the state and local level by adding tax to the cost of retail items. Statewide sales tax ranges from 2.9% (Colorado) to 7.25% (California). Cities can then add additional sales tax at a local level bringing the total tax to 11% in some cases. These taxes are automatically added to items and paid at the time of purchase. Alaska, Delaware, Montana, New Hampshire and Oregon currently do not have a sales tax.

 Good to know: When shopping, keep in mind that the price that you’re seeing on the item does not include tax, which is only added at the counter when you’re paying for the item.

Property Tax

This tax applies only if you own a house or land in the U.S. Tax rates vary by state and range from 0.27% to 2.35% of the total appraised value of the property.

 Useful links:

SSN/ITIN for non-citizens
Internal Revenue Service (IRS) homepage
IRS - Information for international taxpayers
IRS - Information for taxation of nonresident aliens

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