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I disagree with Bob78164 #18993. If you look at IRS Publication 515, Table 1, you will see that the tax rates on all kinds of income vary with the citizenship of the recipient, according to tax treaties. Now, I am unclear on the implications of this. Suppose someone from Austria is here on a J-1 (Exchange Visitor) visa. Such a person is not a permanent resident (has no green card) but I don't know if he is a resident for tax purposes.

Yes, non-resident aliens are subject to withholding tax at a rate determined by their country of residence, or 30% if no lower rate has been determined.

Residency for tax purposes is not related to residency as defined by the INS. The IRS looks at the number of days you have been resident in the current year and the last two years (I think). Once you 'qualify' as resident for tax purposes you have to pay US tax on your worldwide income (you can claim a tax credit for tax paid in other countries that have tax treaties with the US). You'll note it is much easier to become resident in the IRS's opinion than to be accepted as resident by the INS.

Because tax residency is based on number of days physically in the US in a year, and other countries have both different calculations and different tax years, it is possible to be resident in two (or more) countries at once for tax purposes, or resident in none. The latter is usually preferable :-).

A Moose

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