And then you`d probably want to dig deeper into publication 519 because I know that`s a lot to take. However, this non-forfeiture rule applies to a foreign national who has been a resident of the United States for part of two consecutive taxation years. And this generally applies in situations where a person terminates their residency in a year and becomes a resident of the United States again the following year. Under this rule, a person who has been a resident of the United States for part of the previous calendar year and who has been a resident of the United States for part of the current year or year will continue to be taxed as a resident at the beginning of the current year. You would therefore be taxed as a resident for both years. Similarly, a person who has been a resident of the United States for part of the current year and who has also been a resident of the United States. Residents for part of the following year will be taxed as residents until the end of the current year, even if they have a closer connection to a foreign country than to the United States of the current year. ALL RIGHT. Switch again. Again, I know there is a lot of information to include. Let us talk about the dual-resident taxpayer.
What about a person who, under the national law of each country, is a tax resident in both the United States and another country? We refer to such a person as a taxpayer with dual residence. To avoid this, you need to establish a home in the Sunshine State – voting, getting a driver`s license and registering a car there is a good start. New York, known for its vigorous audits, will also likely check to see if your Florida home is comparable in size to the one you occupy in the North. You must also spend at least 183 days a year in Florida. If the New York City Tax Department sues you, you must provide store receipts or other documents that may support this claim. A non-resident is a person who is not a U.S. citizen, lawful permanent resident, or green card holder and who has failed the significant attendance test and has not conducted a first-year election under 7701(d)(4). And finally, a foreigner with dual status is a person who is both a non-resident foreigner and a resident foreigner in the same tax year. And this is what usually happens in the year of, their first year of stay or their last year of stay. Now that we`ve defined the different categories of foreigners for U.S. income tax purposes, let`s talk about the impact they have on taxation.
And that`s largely the topic of this whole webinar. As mentioned earlier, resident foreigners are taxed on their worldwide income. And that means they must report and pay applicable federal income taxes on all their income, regardless of source, unless it`s specifically exempted under the Internal Revenue Code or a provision of an income tax treaty. And they usually file a Form 1040. The tax provisions for non-resident aliens are found in section 871 of the Internal Revenue Code. Non-resident aliens are taxed on U.S. capital gains. And they are also income taxes that are actually associated with the conduct of a business or business in the United States. The taxation of non-resident aliens is something we will also discuss in more detail later in this webinar. A non-resident alien who is married to a U.S. citizen or resident has the option to make the choice to be taxed as a U.S.
citizen and file a joint tax return with their spouse in accordance with IRC 6013(g) or (h). And we`ll talk about that later in this presentation. But for now, I think it may be time to ask an investigative question. Rich? FURLONG: Bethany, indeed. It is time for our first inquiry question. So, here`s the question. When deciding which Form 1040 or 1040NR to file, the deciding factor is A, the source of income, whether at home or abroad; B, U.S. income tax residency status; C, the postal address at home or abroad; or, D, none of the above. So, let me read this question to you if you`re still thinking about the right answer. When deciding which form, either Form 1040 or Form 1040NR, to file, the deciding factor is A, the source of income at home or abroad; B, residence status for U.S. income tax purposes; C, the postal address at home or abroad; or, D, none of the above. So let me give you a few more seconds as we capture all your answers.
ALL RIGHT. ALL RIGHT. Now the correct answer is B, which determines which form to file for U.S. income tax purposes. And very well, very well. Ninety-three percent of you have understood correctly. So, Bethany, they were paying attention. So let me give it back to you, Bethany, to move forward.
KRAUSE: Okay. Thank you, Rich. ALL RIGHT. As I mentioned earlier, a person who is both a non-resident alien and a resident alien in the same tax year is called a foreigner with dual status. And as I said, this usually happens in the year of arrival or departure from the United States. An alien with dual status may be taxed both as a resident and as a non-resident alien in that year, as a resident alien for part of the year and as a non-resident alien for the part of the year in which he or she was a non-resident alien. .