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Federal Taxation of Aliens Working in the United States and Selected Legislation, February 14, 2008 1 (February 14, 2008)

handle is hein.tera/crstax0023 and id is 1 raw text is: Order Code RS21732 Updated February 14, 2008 CRS Repo for Congress Federal Taxation of Aliens Working in the United States and Selected Legislation Erika Lunder Legislative Attorney American Law Division Summary A question that often arises is whether illegal aliens and other foreign nationals working in the United States are subject to U.S. taxes. The federal tax consequences for these individuals are dependent on (a) whether an individual is classified as a resident or nonresident alien and (b) whether a tax treaty or agreement exists between the United States and the individual's home country. Resident aliens are generally taxed in the same manner as U.S. citizens. Nonresident aliens are subj ect to different treatment, such as generally being taxed only on income from U.S. sources. Exceptions exist for aliens with specific types of visas or employment, and the provisions of a tax treaty or totalization agreement may reduce or eliminate taxes owed to the United States. Under H.R. 5140 (Economic Stimulus Act of 2008), which was signed into law on February 13, 2008, qualifying U.S. citizens and resident aliens may receive rebate checks so long as they provide Social Security numbers for themselves, their spouses (if filing a joint return), and any qualifying children. Other bills affecting the tax treatment of aliens include H.R. 279 and S. 43, both of which would address the unconstitutional manner in which totalization agreements are disapproved by Congress. Immigration Status Under U.S. immigration law, foreign nationals are legally admitted into the United States as immigrants to live permanently or as nonimmigrants to stay on a temporary basis.1 The terms immigrant and nonimmigrant are not used in the Internal Revenue Code. Instead, a foreign national, whether in the United States as an immigrant, nonimmigrant or unauthorized (illegal) alien, is classified as a resident or nonresident alien for federal tax purposes. For more information, see CRS Report RS20916, Immigration and Naturalization Fundamentals, and CRS Report RL31512, Visa Issuances: Policy, Issues, and Legislation, both by Ruth Ellen Wasem. Congressional Research Service -f-! The Library of Congress Prepared for Members and Committees of Congress

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