A resident alien is someone living in the United States who is not a U.S. citizen but meets specific requirements that subject them to the same tax obligations as American citizens. The Internal Revenue Service uses two primary tests to determine resident alien status. The green card test classifies anyone holding lawful permanent resident status as a resident alien from the day they receive their Form I-551. The substantial presence test requires physical presence in the United States for at least 183 days calculated over three years, including a minimum of 31 days during the current year. The calculation counts all days in the current year, one-third of days from the previous year, and one-sixth of days from two years prior.
Once classified as a resident alien, individuals must report their worldwide income to the IRS, just like U.S. citizens. This means all earnings from any country, including foreign bank account interest, overseas rental properties, international investments, and employment income from abroad must appear on Form 1040. Resident aliens can claim the standard deduction and access all tax credits available to citizens, unlike nonresident aliens who face significant restrictions. The filing deadline remains April 15, though resident aliens living abroad automatically receive an extension to June 15 without filing additional forms. Students on F or J visas typically remain exempt from resident alien classification for their first five calendar years in the United States, while teachers and researchers on J-1 visas stay exempt for their first two calendar years.
Foreign bank account reporting creates additional obligations for resident aliens through the Foreign Bank and Financial Accounts Report. Anyone whose combined foreign account balances exceeded ten thousand dollars at any point during the year must file this report electronically by April 15, with an automatic extension to October 15. This threshold applies to the total across all foreign accounts, meaning several smaller accounts together can trigger the requirement. Covered accounts include checking accounts, savings accounts, brokerage accounts, certain retirement accounts, and some cryptocurrency wallets held outside the United States. The FBAR does not create a tax liability itself, but failing to file when required leads to severe penalties ranging from sixteen thousand dollars for non-willful violations to over one hundred sixty thousand dollars or half the account balance for willful violations.
Understanding resident alien status proves essential because it determines your entire tax relationship with the United States government. Resident aliens face FICA withholding for Social Security and Medicare on their worldwide income, must maintain detailed travel records proving their days of physical presence, and should keep passport stamps and immigration documents as evidence of their status. Many individuals experience a dual-status tax year during their first or last year in the United States, requiring special filing procedures that split income between resident and nonresident periods. Tax treaties between the United States and other countries can modify these basic rules, though claiming treaty benefits requires additional documentation. State tax obligations also apply in most states, requiring resident aliens to file state returns reporting their worldwide income just as they do federally.