If I Study and / or Teach in the US would I pay taxes on my World Wide Income?

President Reagan signed H.R. 4170 into law on July 18,
1984.  Thus, effective for tax years beginning after 1984, objective
definitions of the terms residents aliens (“RAs”) and nonresidents aliens
(“NRAs”) for Federal income tax purposes are incorporated into the
Code.   


It is very important to note however, that the new definitions
do not affect the determination of

residence for Federal estate and gift tax purposes (discussed
later).  In addition, the Joint Explanatory Statement of the
Committee of Conference (the “Joint Statement”) also makes it clear that it is
not intended that the definitions of RA and NRA affect the determination of
whether an estate or trust is a U.S. or foreign estate or trust, “except
insofar as that determination itself turns on the residence or

non-residence of particular alien individuals.”

RESIDENCE TESTS

Code Section 7701(b) sets forth the following two (2) tests
pursuant to which an alien individual will be considered a RA with respect to
any calendar year if he:

  • (i)                  is a lawful permanent resident of the United
    States at any time during the calendar year (the “Green Card Test”); 

or

  • (ii)                is present in the U.S. for thirty-one (31)
    days or more during the current calendar year and has been present in the
    United States for a substantial period of time--one hundred eighty-three (183)
    days or more during a three (3) year period weighted toward the present year
    (the “Substantial Presence Test”). 

Pursuant to Section 7701(b)(1)(A), an alien individual is to be
considered a RA for any calendar year, if and only if, he satisfies the requirements
of the Green Card Test, the Substantial Presence Test or the First Year
Election.

  •           The Green Card Test: A lawful permanent
    resident is defined as an individual who has the status of having been lawfully
    accorded the privilege of residing permanently in the United States in
    accordance with the immigration laws, and if such status has not been revoked
    (and has not been administratively or judicially determined to have been
    abandoned).  Thus, a lawful permanent resident continues to be a
    resident for income tax purposes until he officially loses or abandons the
    status of lawful permanent resident.
  •        The Substantial Presence Test: An alien
    individual is classified as a RA as to a calendar year (the “current year”) if
    he is present in the United States for thirty-one (31) or more days in the
    current year and has been present in the United States for one hundred eighty
    three (183) days or more during a three (3) year period, weighted toward the
    current year. This weighting takes place as follows: an alien is considered a
    RA during the current year if the sum of the days he is present in the United
    States during the current year, plus one-third (1/3) of the days present during
    the first preceding year, plus one-sixth (1/6) of the days present during the
    second preceding year, equals or exceeds one hundred eighty-three (183)
    days.  

Source: https://www.mooresrowland.tax/2018/06/more-on-pre-immigration-us-tax-planning.html

     But there are exceptions to the substantial
presence test.  These exceptions include

·       
An individual who is
temporarily in the United States as a foreign government-related in
dividual

This type of person will hold an “A” or “G” visa
but not an “A-3” or “G-5” class visa.

·       
A teacher or trainee who is temporarily in the United States
under a “J” or “Q” visa

This person must substantially comply with the
requirements of the visa.




·       
A student who is temporarily in the United States under an
“F,” “J,” “M,” or “Q” visa

This person must substantially comply with the
requirements of the visa.




·       
A professional athlete who is temporarily in the United
States to compete in a charitable sports event

Let’s talk about J visas.

A teacher or trainee is an individual, other than a student, who
is temporarily in the United States under a "J " or "Q "
visa and substantially complies with the requirements of that nonimmigrant
status. You are considered to have substantially complied with the requirements
of that nonimmigrant status if you have not engaged in activities that are
prohibited by U.S. immigration laws and could result in the loss of your
nonimmigrant status. Any nonimmigrant temporarily present in the U.S. in "J"
or "Q" status who is not a student is included within the definition
of "Teacher or Trainee." For example, alien physicians, au pairs,
short-term scholars, and summer camp workers temporarily present in the U.S. in
"J" nonimmigrant status are included within the IRS definition of
"Teacher or Trainee." In addition, cultural exchange visitors in
"Q" nonimmigrant status are also included within the IRS definition
of "Teacher or Trainee".

Also
Included Are Immediate Family Members of Exempt Teachers and Trainees

Members of the immediate family include the individual's spouse
and unmarried children (whether by blood or adoption), but only if the spouse's
or unmarried children's nonimmigrant statuses are derived from, and dependent
on, the exempt individual's nonimmigrant status. Unmarried children are
included only if they meet all the following:

  • Are
    under 21 years of age.
  • Reside
    regularly in the exempt individual's household.
  • Are
    not members of another household.

The immediate family of an exempt individual does not include
attendants, servants, or personal employees.

When a
Teacher or Trainee is Not Exempt

You will not be an exempt individual as a teacher or trainee if
you were exempt as a teacher, trainee, or student for any part of 2 of the 6
calendar years preceding the current year.
However, you will be an
exempt individual if you were exempt as a teacher, trainee, or student for any
part of 4 (or fewer) of the 6 preceding calendar years and:

  • A
    foreign employer paid all of your compensation during the current year.
  • A
    foreign employer paid all of your compensation during each of the
    preceding 6 years
  • you were present in the United States as a teacher or
    trainee.

A foreign employer includes an office or place of business of an
American entity in a foreign country or a U.S. possession.

If you qualify to exclude days of presence as a teacher or
trainee, you must file a fully-completed Form 8843, Statement for Exempt Individuals and
Individuals with a Medical Condition
 with the IRS. Form 8843
may be attached to your U.S. federal income tax return for the tax year, or it
may be mailed separately to the address indicated in the General Instructions
attached to the Form 8843.

Example:

Carla is temporarily present in the United States as a teacher
in J-1 nonimmigrant status. She entered the United States on August 15,
2012, and is employed by a university in California.  She has never been
in the United States prior to this visit. Carla is an Exempt Individual
for calendar years 2012 and 2013 because during those two years she meets the
test that prior to the current year she was not present during two years in the
United States in F, J, M, or Q nonimmigrant status during the 6 calendar
years prior to the current year. However, for calendar year 2014 she is no
longer an Exempt Individual because she was present during two years in the
United States in F, J, M, or Q nonimmigrant status during the 6 calendar
years preceding the current year. For calendar year 2014, Carla must count her
days of presence in the United States for the purpose of passing the Substantial
Presence Test
.

Source: https://www.irs.gov/individuals/international-taxpayers/exempt-individuals-teachers-and-trainees

What about a Student?

A student is an individual who is temporarily present in the United
States under an “F,” “J,” “M,” or “Q” visa and who substantially complies with
the requirements of the visa.  If you
were a student under an “F,” “J,” “M,” or “Q” visa, you are considered to have
substantially complied with the visa requirements if you haven’t engaged in
activities that are prohibited by U.S. immigration laws and could result in the loss of your visa status.

Even if you meet these requirements, you can’t exclude days of presence
in 2018 as a student if you were exempt as a teacher, trainee, or student for
any part of more than 5 calendar years unless you

establish that you don’t intend to reside permanently in the United
States. The facts and circumstances to be considered in determining if you have
established that you don’t intend to reside permanently in the United States include,
but aren’t limited to:

1. Whether you have maintained a closer connection to a foreign country
than to the United States (for details, see Pub. 519), and

2. Whether you have taken affirmative steps to change your status from nonimmigrant
to lawful permanent resident.

Source: https://www.irs.gov/pub/irs-pdf/f8843.pdf

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