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One of the difficult aspects of U.S. tax law for foreign persons to understand is how they become accidental U.S. tax residents.  Even those here without a Green Card on non-immigration visas, can be required in any given year to file a U.S. tax return on the regular Form 1040 (as opposed to Form 1040 NR) reporting and paying U.S. tax on worldwide income, not just U.S. source income; and, required to file information returns about non-U.S. based assets and income.  It happens if they are present in the U.S. for too many days over a three-year look-back test period. This post expresses the surprise and chagrin of those caught in this trap for the unwary.

(To tune of, “Smile” by Charles Chaplin from the silent movie “Modern Times” (1936) with lyrics added in 1954 by John Turner & Geoffrey Parsons)

Smile, while we classify you
Smile, though our laws shanghai you
Just yesterday, NRA*
Not today

You’ve been here, too long without leaving
Where, dawdling leads to grieving
When days above 182

Sore? No use in complaining
Your CPA’s explaining
Now for returns, you must gear
Every year

Paying tax on your world-wide income
Taxed, feeling like a victim
But watch your gift tax domicile
And try to smile

Lyric © 2013 by Robert S. Steinberg, Esquire
All rights reserved

* NRA is a Non-resident Alien who would file Form 1040 NR only if he or she had U.S. source income.

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