All non-U.S. nationals within the borders of the country are called aliens. The Immigration and Nationality Act of 1952 (INA) sets the basis for categorizing a person as an alien. The Act also defines various categories for classifying aliens, such as non-immigrant or immigrant aliens, illegal/undocumented or documented aliens, and non-resident or resident aliens.
An alien is classified as “resident” if the person meets one of these two tests: the substantial presence test or green card test. If an alien is physically present within the U.S. borders for a minimum of 31 days during a calendar year and 183 during a three-year period, including the current and immediately preceding two years, the person is said to meet the substantial presence test and considered a resident alien for tax purposes.
If an alien does not meet any of the above two tests, the individual is classified as non-resident alien. For instance, a person who has just arrived on a F-1 or J-1 visa is usually a non-resident alien. These individuals are only taxed on the income earned from the U.S. sources and earnings associated with business or trade transactions within the country.
An alien with a green card issued by the U.S. Bureau of Citizenship and Immigration Services is a permanent U.S. resident as per the law. Such individuals are also classified as resident aliens. They have been awarded the privilege of permanently residing in the country as immigrants.
U.S. employers are required by law to verify the immigration status of all new employees by completing an I-9 and asking for acceptable documents to verify the worker’s identity and eligibility to work in the U.S. An employer can assist an individual who is not a permanent resident of the U.S. with a petition to obtain the correct immigrant or non-immigrant status.