Resident Alien

What Is a Resident Alien?

A resident alien is someone who is not a U.S. citizen, but lives in the United States on a permanent basis. In immigration law, this usually means a person who is holding a green card, which allows them to live and work in the U.S..

For tax purposes, the IRS also uses the term “resident alien” to describe a non-citizen who meets specific residency tests. These individuals are taxed on their worldwide income, just like U.S. citizens.

The IRS created the category of resident alien to separate those with close U.S. ties from temporary visitors. By doing this, the government ensures that permanent residents and individuals who spend significant time in the U.S. pay tax on all income, including income earned abroad.

How Someone Qualifies as a Resident Alien

There are two main ways a non-citizen may qualify as a resident alien for tax purposes:

• Green Card Test: You are a lawful permanent resident of the U.S. at any point during the year.

• Substantial Presence Test: You spend enough days in the U.S. over three years, based on an IRS formula*.

Both tests ensure that those with lasting ties to the U.S. are treated similarly to citizens for tax reporting.

Why It Matters for Israelis with U.S. Tax Ties

For Israelis who hold U.S. green cards or spend extended periods in the U.S., being classified as a resident alien can trigger worldwide reporting requirements. That includes rental income in Israel, Israeli bank interest, and other foreign income must be reported to the IRS. 

The U.S.-Israel Tax Treaty may help reduce double taxation. However, as always, proper planning is essential.

Philip Stein & Associates guides clients through residency status rules and helps coordinate Israeli and U.S. tax obligations to avoid unnecessary penalties. Contact us to learn more about your options. 

FAQs about Resident Aliens 

What is the difference between a citizen and a resident alien?

A citizen has full legal rights, including voting and holding a U.S. passport. A resident alien can live and work permanently in the U.S., but must maintain immigration status and does not have all political rights. For taxes, both must report worldwide income.

What is an example of a resident alien?

An Israeli with a green card who resides in New York is a resident alien under immigration law. For tax purposes, an Israeli businessperson who spends enough days in the U.S. to meet the substantial presence test may also be classified as a resident alien.

How do you prove you are a resident alien?

For immigration, proof comes through documents such as a green card. For tax purposes, you may need to show residency through IRS forms, passport entry stamps, or travel records.

*Topic no. 851, Resident and nonresident aliens | Internal Revenue Service. (n.d.). https://www.irs.gov/taxtopics/tc851