For tax purposes, an alien is anyone who is not a U.S. citizen. An alien’s legal tax obligations are determined in large part by whether he or she is classified as a resident or nonresident alien. Nonresident aliens typically include college students or teachers, domestics, farm workers, and people in technical occupations. A dual-status alien is someone who is both a resident and a nonresident alien in the same tax year. An alien’s residency status affects the amount of income reported, deductions available, and treaty benefits.Both resident and nonresident aliens use Form M1 to file a Minnesota return. Nonresident aliens start with federal taxable income from their federal form (1040-NR or 1040NR-EZ), while resident aliens would use federal Form 1040. Both file Minnesota Form M1.Resident aliensAn alien is presumed to be a nonresident unless one of the following tests is met:Green card testAliens who have been given lawful permanent residency in the United States for immigration purposes are considered resident aliens beginning the first day they are in the U.S. as a lawful permanent resident.Substantial presence testThis test involves counting the days residing in the U.S. for the current and some portion of the 2 preceding years to see if the total exceeds 183 days. Generally, individuals with a student visa are considered nonresident aliens for the first 5 years of physical presence in the U.S.There is also an exception to the substantial presence test if a person can show a closer connection to a foreign country. For detailed information see Publication 519, U.S. Tax Guide for Aliens. Married to U.S. citizenAn individual who is married to a U.S. citizen, but does not meet the green card test or the substantial presence test can elect to be treated as a resident by filing a joint individual income tax return with his or her spouse.Taxation of resident alienA resident alien is subject to the same filing requirements and is taxed on worldwide income the same as any U.S. citizen. Resident aliens use the 1040 form series.See Filing requirements for individuals.Back to topNonresident aliensNonresident aliens who are required to file a federal return may also be required to file a Minnesota return and be taxed on their income to the same extent it is taxed on the federal return.On the federal return, they are allowed a state income tax deduction on Schedule A. For Minnesota this deduction will have to be added back on Form M1. See State tax additions.Since Minnesota does not have any specific provisions regarding nonresident aliens, they may also qualify for other additions, subtractions and credits. Those who qualify for the federal dependent care credit or earned income credit can also qualify for the Minnesota version of those credits. See Credits, subtraction and additions.Filing requirements for nonresident aliensNonresident aliens generally cannot be domiciled in Minnesota. They file as follows:
Category
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Pay tax to Minnesota on
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Use
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Met 183-day rule and maintained an abode in MN for less than full year (considered part-year resident)
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Their Minnesota sources of income including all income while considered a MN resident (if Minnesota gross income exceeds the current year personal exemption - $3,650 for 2009)
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M1 and
M1NR
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Met 183-day rule and maintained an abode in MN for the entire year (considered MN resident)
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All of their income
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M1
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Did not meet 183-day rule
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Their Minnesota sources of income (if Minnesota gross income exceeds the current year personal exemption - $3,650 for 2009)
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M1 and
M1NR
| Back to topNonresident aliens and the property tax refundMinnesota has a refundable credit which individuals can claim, if they qualify. It is based on property tax paid while renting or owning a home and on household income. To qualify, nonresident aliens must meet the 183-day rule and maintain an abode in Minnesota and cannot be considered a dependent.In order to figure if you are eligible for this refund, use Form M1PR, your Certificate of Rent Paid (CRP) or Property Tax Statement (if you own a home, this comes from your county of residence). When computing your total household income on your Form M1PR, nonresident aliens must include income not included on the federal Form 1040NR such as: interest, scholarships and wages excluded due to federal tax treaty benefits.You also may be able to claim a subtraction based on the number of your dependents and if you or your spouse are age 65 or older or disabled. However, to claim a dependent subtraction, your dependent must be a U.S. citizen unless a dependent exemption is allowed by federal tax treaty.Sailing permitsGenerally, all aliens leaving the United States are required to obtain a departing certificate of compliance, commonly known as a "sailing permit."The sailing permit ensures that all tax responsibilities have been met prior to their departure from the U.S. This usually involves showing that taxes for all prior years have been filed and paid, and that sufficient tax has been reported and paid on the income received in the current year through the date of departure. No state requirementAliens should visit their local Internal Revenue Service office to receive clearance and obtain a sailing permit. They should contact the IRS to find out what documents are needed before they visit their local walk-in office. Minnesota has no comparable requirement for aliens desiring to leave the United States.Back to top
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Contents
resident_nonresident_aliens Table of Contents
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resident and nonresident aliens related links
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