Frequently Asked Questions
You may see the term “non-resident aliens” as NRA in various documents. Persons who are not U.S. citizens (or who do not have a green card) and who do not meet the “substantial presence” test can be defined as a “non-resident alien”. In other words, they are people who are legally in the U.S. for a short time.
For example, students who come to the U.S. for the first time on a J or F visa are considered to be NRA during the first 5 calendar years in the U.S.; and professors and researchers arriving on a J visa are generally considered so for the first 2 calendar years in the U.S. H-1, TN and O-1 visa holders are considered NRA until they meet the “substantial presence test”.
There is no value added tax in the U.S. VAT is rather more specific to the continental Europe, and Turkey.
In the U.S., States impose sales tax on goods and services at different rates. The retail price of products / services is usually mentioned as excluding the sales tax. However, this tax is eventually paid by consumers or the end users.
Businesses or entrepreneurs in the U.S. are obliged to report the amount of sales tax collected within the scope of their retail sales to the State in which they operate.
A wholesale license can also be called as a wholesale permit, a seller’s permit, or wholesale ID. The wholesale license is used to obtain sales tax exemption in B2B sales. In this way, wholesale companies do not pay sales tax when selling products to retailers, i.e. businesses that sell to end users.
Companies can obtain the wholesale license by completing a reseller permit application. While States have different procedures for obtaining a wholesale license, companies are generally required to have a sales tax permit (or sales tax license), and a federal tax identification number.
It is a number used by the Internal Revenue Service (and the Social Security Administration) to identify individuals or companies, track tax and credit related information, and for tax enforcement purposes. It is a 9-digit number.
There are 5 types of tax identification number: Social Security Number (SSN); Employer Identification Number (EIN); Individual Taxpayer Identification Number (ITIN); Adoption Taxpayer Identification Number (ATIN) for pending legal adoptions, and Preparer Taxpayer Identification Number (PTIN).
The Social Security Number (SSN) is issued by the Social Security Administration, while the Internal Revenue Service assigns all other tax identification numbers.
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This is the form that non-resident aliens must fill out when filing tax returns. Non-resident aliens are required to complete Form 1040-NR (along with Schedule OI), even if they do not have any U.S.-sourced income.
If you have any commercial or investment activities in the U.S., or if you earn any income from working in the U.S., you must indicate these income items on Form 1040-NR.
It is very important to comply with American tax laws due to visa requirements. Also, filing an annual tax return is the only way to get a tax refund if you have overpaid.
Failure to complete Form 1040NR may result in the loss of your right to tax refund, and will adversely affect your visa status, and current or potential business activities.
Click to download Form 1040-NR.
Depending on the total time you have been in the U.S., you may gain the status of “resident of the United States” for tax purposes. For example, students or entrepreneurs who meet the “substantial presence” test prepare their tax return on Form 1040. Thus, taxable income of individuals, and if any, tax refunds are calculated.
Click to download Form 1040.
Form 1120 (U.S. Corporation Income Tax Return) is a version of Form 1040 that is to be completed by C-Corps. Form 1065 is used when the business form is a partnership; and Form 1120S is used when it is S-Corp.
Click to download Form 1120.
Form 5472 (along with Form 1120) must be filed if at least 25% of a U.S. business (incorporation or limited liability company) is directly or indirectly owned by non-US residents at any time during the tax year. In other words, this form acts as a notification with a view to learn about the revenues and the address of U.S. companies that are wholly or partially owned by foreigners.
Form 5472 must be completed for the year after the company was registered, and regularly every year thereafter. For example, if you register your company in May 2022, it must be completed by April 2023, or by October 2023 if you request an extension. Failure to complete the form in a timely manner may result in penalties of up to $25,000.
Click to download Form 5472.