What is a non-resident alien? And why is it so insanely challenging to open a US bank account for non-residents? We’re answering these questions and more in this article.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- What Is a Non-Resident Alien?
- Non-Resdient vs Resident
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
What Is a Non-Resident Alien?
A non-resident alien is an individual who is not considered a US person for tax purposes. This means that the person in question is not a US citizen or national and does not meet the requirements for US residency, either through the green card test or substantial presence test imposed by the Internal Revenue Service.
That said, non-resident aliens are able to open bank accounts in the United States. However, in most cases, they are asked to submit additional documentation, provide clear justification for their need to bank in the US, and meet higher deposit requirements.
Like elsewhere in the world, individuals in higher wealth brackets will have an easier time, as long as they can demonstrate liquid assets are of interest to the bank. That said, being super wealthy is not a prerequisite for banking in the United States.
Of course, not all US banks will accept non-resident alien account opening applications. This is especially true when it comes to opening accounts 100% remotely. However, there are a number of US banks that will accept non-resident applications from individuals without requiring an in-person visit to the bank.
It’s also worth noting that non-resident foreigners can, in certain instances, access digital, fintech, and online platforms, though many of these (like Venmo) do not support international transfers.
Non-Resident vs Resident
The main difference between a non-resident and a resident of the US is that a non-resident is not considered a resident of the United States for tax purposes. Whereas a US resident is a resident for tax purposes.
That said, US citizens are still obligated to report and pay taxes to the US government. Irrespective of their residency status. This is because the United States imposes citizenship-based taxation. However, there are certain exclusions for the income generated by US citizens living outside of the United States. If you fall into this category, you should consult a tax advisor to help you navigate your options.
Of course, non-US citizens are not subject to the US’s citizenship-based tax. But if they are a resident in the United States, they are obliged to report and pay tax on their global income.
From a banking perspective, the main difference between a non-resident and resident is that they will have to demonstrate ties to the US. But also, meet non-resident account opening requirements and in certain instances show up in person to open an account.
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Frequently Asked Questions
Below are three of the most common questions that we receive from people wondering what a non-resident alien is. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Is the Difference Between Resident Alien and Non-Resident Alien?
The difference between resident alien and non-resident alien is that a resident alien is a foreigner that has obtained residency status in the United States while a non-resident alien is a foreign that does not have residency status in the United States.
How Do I Know If I am a Resident Alien or Non-Resident Alien?
You can know if you are a resident alien or a non-resident alien by reflecting on whether you received approval to permanently reside in the United States as an immigrant. In other words, did you complete the formal process and receive final approval from US authorities to legally reside in the US. If so, you are likely a resident alien. If you did not receive this approval, you are likely a non-resident alien.
What Is the Difference Between a Resident Alien and a Permanent Resident?
The main difference between a resident alien and a permanent resident, is that a resident alien can include both permanent residents and conditional residents. Whereas a permanent resident refers to individuals who have received lawful approval to reside permanently in the United States.
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