Worldwide income and its Tax implications
A U.S. tax treaty, if applicable, may give a green card holder the option to elect
non-resident alien (“NRA”) status and thereby be released from U.S.-tax-resident
status. This type of position is often very tricky and requires a detailed technical
analysis by a competent tax professional. Find one at Tax Services in Las Vegas
Perhaps it is less well known that one may also be considered a U.S. tax resident if
the substantial presence test is met for the calendar year. Under this test, one
must be physically present in the United States on at least: (a) 31 days during the
current calendar year; and (b) a total of 183 days during the current year and the 2
preceding years, counting all the days of physical presence in the current year, but
only one-third the number of days of presence in the first preceding year, and only
one-sixth the number of days in the second preceding year.
Generally, states impose tax only on individuals who are residents of the state. If
an individual is a resident of a particular state and then moves abroad, such
individual will most likely be treated as a part-year resident for the year of the
move and will most likely be required to pay tax at least on the portion of income
allocated to the period in which they were a resident.
However, with respect to the remainder of the year (and subsequent years), the
critical question is whether such individual is still considered “domiciled” in such
state under the state’s tax rules. Many people often think that if they no longer live
in the state, then they’re not considered residents of the state for purposes of filing
to find tax preparers in las vegas. Although this conclusion may sound logical, it is not always
correct. For example, in many states (such as California), the requirements for
breaking residency are fairly strict and require not only that one move out of the
state but also sever other ties they have with the state. Such ties include selling
property owned in the state, closing bank accounts and even relinquishing a state
issued driver’s licenses.
Your tax home is the general area of your main place of business,
employment, or post of duty, regardless of where you maintain your family home.
Your tax home is the place where you are permanently or indefinitely engaged to
work as an employee or self-employed individual. You are not, however, considered
to have a tax home in a foreign country for any period in which your “abode” is in
the United States. “Abode" has been variously defined as one's home, habitation,
residence, domicile, or place of dwelling. The location of your abode often will
depend on where you maintain your economic, family, and personal ties.
Net Investment Income Tax
If an individual has income from investments, the individual may be subject to a
3.8 percent Net Investment Income Tax (“NIIT”) on the lesser of their net
investment income (such as interest, dividends, capital gains, rental and royalty
income, among others), or the amount by which their modified adjusted gross
income exceeds the statutory threshold amount based on their filing status. The
current thresholds are $250,000 (married filing jointly), $125,000 (married filing
separately), or $200,000 (single or head of household). In general, NRAs and NRA
spouses are not subject to the NIIT.