Tax Rules for U.S. Residents and Nonresidents in 2025

Table of Contents
1. Introduction
2. Determining Tax Residency Status
3. Tax Obligations for U.S. Residents
4. Tax Obligations for Nonresidents
5. Filing Forms and Schedules
6. Treaty Benefits and Withholding
7. Dual-Status Filers
8. State Tax Considerations
9. How Maytor Business Solutions Can Help
10. Frequently Asked Questions (FAQs)
11. Next Steps & Contact Information

1. Introduction
Understanding whether you are a U.S. tax resident or nonresident alien is crucial for complying with IRS rules. Your status determines which income must be reported, eligible deductions, and applicable tax rates. This guide clarifies the distinctions and filing requirements.

2. Determining Tax Residency Status
– **Green Card Test**: You are a resident if you hold a valid green card at any time during the year.
– **Substantial Presence Test**: You qualify as a resident if you are physically present in the U.S. for:
– At least 31 days in the current year, and
– A total of 183 days over a 3-year period, counting:
– All days in the current year,
– 1/3 of days in the previous year,
– 1/6 of days two years prior.

3. Tax Obligations for U.S. Residents
– **Worldwide Income**: Must report and pay tax on all global income.
– **Deductions & Credits**: Eligible for standard deduction, itemized deductions, and credits such as the Child Tax Credit.
– **Forms**: File Form 1040; attach schedules for interest (Schedule B), business income (Schedule C), etc.

4. Tax Obligations for Nonresidents
– **U.S.-Source Income**: Taxable only on income effectively connected with a U.S. trade or business and certain U.S.-source passive income.
– **Flat Withholding Rates**: Often subject to 30% withholding on passive U.S.-source income unless reduced by treaty.
– **Forms**: File Form 1040-NR; attach required schedules for income and deductions.

5. Filing Forms and Schedules
| Filing Status | Form | Key Schedules |
|————————-|—————–|————————————|
| Resident Individual | Form 1040 | Schedules A–E, SE, and others |
| Nonresident Individual | Form 1040-NR | Schedule NEC (non-earned income) |
| Dual-Status Filer | Both Forms | Split-year reporting schedules |

6. Treaty Benefits and Withholding
– **Tax Treaties**: May reduce or eliminate U.S. tax on certain types of income.
– **Form W-8BEN or W-8BEN-E**: Nonresidents use these to claim treaty benefits and reduce withholding.
– **Filing to Claim Treaty**: Attach Form 8833 when required to disclose treaty-based positions.

7. Dual-Status Filers
– **First-Year Residents**: File both 1040-NR and 1040 for different parts of the year.
– **Benefits & Limitations**: Limited standard deduction; prorated exemptions.

8. State Tax Considerations
– **California Resident vs. Nonresident**: CA taxes worldwide income for residents; nonresidents pay CA tax on California-source income.
– **Part-Year Residency**: File CA Form 540NR for part-year filers.

9. How Maytor Business Solutions Can Help
Located in South Gate, CA, our experienced Enrolled Agents and CPAs provide:
1. Residency determination and guidance
2. Preparation of Form 1040, 1040-NR, and supporting schedules
3. Treaty analysis and claim preparation
4. State return preparation (CA & other states)
5. Dual-status filing assistance and representation

“Maytor’s expertise helped me navigate complex residency rules and maximize my treaty benefits.”
— International client

10. Frequently Asked Questions (FAQs)

Q: Can I choose to be treated as a resident?
A: In certain cases, nonresidents married to U.S. citizens can elect to be treated as residents by filing a joint return.

Q: What counts as U.S.-source income?
A: Wages for services performed in the U.S., rental income from U.S. property, and some royalties.

Q: How do I know if I need to file CA state tax?
A: CA residents file on worldwide income; nonresidents file if they have CA-source income above thresholds.

11. Next Steps & Contact Information
Ensure your tax residency status is correctly determined and your returns are filed accurately.
Schedule a free consultation:
– Phone: (562) 396-1872
– Email: info@maytorbsinc.com
– Address: 8432 State St, South Gate, CA 90240
– Hours: Mon–Fri, 9:30 am–6:00 pm

Maytor Business Solutions – Your expert partner in U.S. and California tax compliance.