How Aliens Are Taxed
U.S. taxation of aliens depends on their tax residency status. See IRS Publication 519, U.S. Tax Guide for Aliens.
- Resident aliens are taxed like U.S. citizens on their worldwide income, at graduated income tax rates.
- Nonresident aliens are taxed on their U.S. source income and/or effectively connected income (income connected to a U.S. trade or business conducted by a foreign person).
- Dual-status aliens (aliens who change their status from nonresident alien to resident alien and vice versa within the same tax year) are taxed differently for the resident and nonresident portions of the year.
Determining Tax Residency Status
- GLACIER, UCLA’s nonresident alien tax compliance system, is used to determine tax residency status for foreign students, scholarship and fellowship recipients, employees and other foreign payees including independent contractors.
- More information on GLACIER can be found at the Payroll Services website.
Year-End Tax Statements
- Form W-2, to report wages to both resident alien and nonresident alien employees.
- Form 1099-MISC to report payments of $600 or more during the tax year, to resident alien independent contractors.
- Form 1042-S, to report U.S. source income subject to withholding, to nonresident aliens (e.g., taxable scholarship and fellowship payments, independent contractor payments and wages to employees who claim tax treaty benefits).
- Form 592-B to report state withholding on payments to nonresident independent contractors for services provided in California (see Withholding on Payments to California Nonresidents in Related Information).
Tax Filing Requirements & Forms
Information on federal and state filing requirements, tax forms and instructions can be found at the IRS website and at the Franchise Tax Board (FTB) website.
- Resident alien forms - federal Form 1040, 1040A or 1040EZ, and state Form 540, 540A or 540 2EZ.
- Nonresident alien forms - federal Form 1040NR or 1040NR-EZ, and state Form 540NR.
- Dual-status aliens have to file a special federal tax return.
GLACIER Tax Prep, a web-based tax preparation system designed for nonresident aliens, can be used to prepare Form 1040NR or Form 1040NR-EZ. Filers with a GLACIER record can use GLACIER Tax Prep for free. More information is available at the GLACIER Tax Prep website.