G-5, A-3 and NATO-7 Domestics: Guidance on Income Taxation
DISCLAIMER: HomeWork Solutions specializes in payroll and payroll tax compliance for household employers. We cannot assist clients with personal income tax matters per Internal Revenue Service regulations. We strongly encourage G-5 visa holders to obtain qualified professional assistance with their income tax filings, most especially in the first year they file. The following is provided as general background only, and all questions should be directed to professionals licensed to prepare personal income tax returns.
HomeWork Solutions provides payroll and employment tax services to employer’s with domestics working in the US on a G-5, A-3 and NATO-7 Visa. These employers and their G-5, A-3 and NATO-7 domestics are often confused about income taxation. The following are general guidelines that apply to the vast majority of G-5, A-3 and NATO-7 domestics.
Income tax filings are typically due on or before April 15 for the prior calendar year. The G-5 must file income taxes because, unlike their G-4 sponsor, their income is subject to US income taxation. The G-4 sponsor has the obligation to insure their domestic complies with US income tax filing obligations, and failure to file the proper documents can result in a denial of visa renewal or extension.
Which Federal Form to File?
A G-5, A-3 and NATO-7 domestic who is filing as a Resident Alien in the current tax year will complete Federal Form 1040 (or 1040EZ) according to it’s instructions. Resident aliens are eligible for all exemptions, deductions and credits available to U.S. citizens. Please remember that to be entitled to valid exemptions for a spouse or dependent children, the family members MUST be legally present in the United States. A resident alien who provides material support to dependents abroad MAY NOT claim these dependents on his/her tax returns.
A G-5, A-3 and NATO-7 domestic who is filing as a Non-Resident Alien in the current tax year will file Form 1040NR (or form 1040NR-EZ).
The determination of whether the G-5 domestic is a Resident or Non-Resident Alien is based upon the Substantial Presence Test.
Substantial Presence Test
The G-5, A-3 and NATO-7 will be considered a U.S. Resident Alien for tax purposes if s/he meets the substantial presence test for the calendar year. To meet this test, s/he must be physically present in the United States on at least:
- 31 days during the current year, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
- All the days you were present in the current year, and
- 1/3 of the days you were present in the first year before the current year, and
- 1/6 of the days you were present in the second year before the current year.
» IRS Form 1040 Instructions: Section 6 Dependents (pg. 19)
» IRS Publication 519
Newly Arrived G-5 Visa Holders
Non-Resident Alien status typically applies to a G-5, A-3 or NATO-7 domestic who worked less than 6 months in their first tax (calendar) year in the United States. The Non-Resident Alien does not meet the Resident Alien test above.
G-5, A-3 or NATO-7 domestic who is filing as a Non-Resident Alien will file Form 1040-NR and will not have access to all of the deductions, exemptions and credits that apply to Resident Aliens.
A G-5, A-3 and NATO-7 domestic who is working in the United States is considered SINGLE for tax reporting purposes if s/he IS single – or – if s/he is married but the spouse is not present in the US as a legal resident of the United States.
The G-5, A-3 and NATO-7 domestic may be considered married for tax reporting purposes ONLY if the spouse is also a legal US resident. G-5, A-3 and NATO-7 domestic may claim head of household ONLY if s/he is a Resident Alien in the tax year (see below) and the dependents being supported are legally present in the United States.
There are many special circumstances that can cause the general rules outlined above to change. Please consult » IRS Publication 519 or a qualified income tax practitioner for more assistance. HomeWork Solutions’ staff cannot provide further assistance in determination of marital status or qualified exemptions other than the guidelines above.
» G-5 Domestics and Income Taxation