4 Common Tax Mistakes Made By Non-US Citizens

The US tax code is very complex and being from another country and non-US residents make a lot of mistakes on their tax returns. In this post related to US tax returns for non residents, we are going to reveal the most common mistakes made by non-US citizens.

Not Declaring All Of Their Income

Do you know if The Internal Revenue Service finds out that you haven’t declared all of your income, then you will be penalties and interest?  This will negatively impact your application for US citizenship. If United States Citizenship and Immigration Services (USCIS) discover that you haven’t paid your taxes or owe back taxes, then your citizenship application can be denied.

Filing as a ‘resident’ in place of ‘non-resident alien’

A US resident will file their tax return on Form 1040 while a non-resident will file Form 1040NR. Also, for non-US citizens and non-Green Card holders, there is an IRS Substantial Presence Test that uses a formula based on the number of days physically present in the U.S. over the past 3 years to find out if you’re a resident. Those on F & J visas and other individuals who just moved here are taxed as a non-resident. So, you should have filed Form 1040NR. This is a very common mistake and often made by those who try to file their taxes themselves online.

[SEE also: 6 Very Frequently Asked Questions From US Non Resident Taxpayers]

Incorrectly Completing Form W4

Your employer will ask you on your first day at work to fill out a W4 form (an Internal Revenue Service tax form). This form tells your company how much to withhold from your paycheck to give to the Internal Revenue System over the course of the year. If you’re a non-US citizen or considered a nonresident alien, then you have to fill out the W4. If you fill out the form incorrectly, you might have much withholding or not enough.

Here Are Some Tips on  For Completing Your W4 Form:

Section 1 + 2: Input your name and Social Security number

Line 3: PICK single irrespective of what you truly are

Line 4: Pay no attention to unless your name differs from the one on your social security card

Line 5: Put “1”

Line 6: write “non-resident alien” On the dotted line after “each paycheck,”

Line 7: Don’t claim to be exempt

Sign! And give the form to the HR Manager

Failure to make proper treaty claims.

Many aliens who are subject to the U.S. can usually reduce or eliminate the tax and withholding simply by making timely tax treaty claims on the basis of one of the 68 tax treaties and 18 estate tax treaties that the U.S. maintains with other countries. Unluckily, taxes are often withheld as the timely election was not made as well as a tax paid was not recovered due to the taxpayer was not aware of the tax treaty provisions.

Some other mistakes include Claiming the Dependent Child Tax Credit for Children Who Don’t Live with You, Wrongly Claiming That You Are A Head of Household and Filing As A Non-Resident Alien If You Are A Resident Alien.

Read More: Tax Planning Tips To Follow For U.S. Expats Living Abroad