There are many dominating misconceptions about the tax liability of G4 visa holders visiting the US. Some believe that G4 visa holders entitle the visa holder to non-resident status, but this is not the case. These specific visas are not mentioned in any relevant codes or regulations, and the residential status of G4 visa holders is much more important than you may believe.

In the United States, residents and non-residents are taxed in different ways based on income. Non-residents are only subject to taxation if they are sourcing their income from the US. If a visa holder earns wages from work completed within the nation, and/or receives dividends from US-based entities, they are subjected to taxation. US residents, i.e. those that are not holding a G4 visa, can be taxed on all income earned internationally or nationally. All sources of earnings and profit can be taxed in the US, even if they have already been taxed in their respective country. Any investments in foreign trusts or out-of-country businesses must be thoroughly reported as well, and any foreign assets beyond a specific limit must be detailed in forms such as Form 8938 and FBAR.

Many tax specialists refer to the Substantial Presence Test (SPT) to determine when and if a tax-paying person becomes an income tax resident of the US. SPT generally dictates that any active foreign national who is in the United States for at least 183 days within a year automatically turns into a US resident subject to income tax. Under certain circumstances, once a person exceeds the 183 day statute and remains present in the US for 31 days of the current year, they may be fully classified as a US tax resident.

If you had “exempt” status for a certain day or days-long timeframe, those days will not be considered time present in the US. If you are spending time in the country explicitly for full-time work with an international organization, or if this applies to a member of your immediate family, these “exempt” days will not count, and only non-resident income taxes will apply.

The biggest take-away is this: G4 visa holders who work for an international organization and were paid for their work in the United States are not responsible for United States income tax. This can include all types of compensation based on the contract or other written agreement between yourself and your employer. 

There is an alternate residency test applied when considering capital gains tax liability. It is very similar to the SPT, but differs in a few crucial ways. If a G4 visa holder’s stay surpassed 183 days in the US within a tax year, their capital gains (from a US source) will be subject to taxation at a rate of 30% minimum. This will alter your identity as a resident in regards to the capital gains tax, and you will be taxed in the amount of 30%.

Complying with US tax law is essential, but it can certainly be confusing. While in a foreign country, consistently analyze your finances, and determine what is considered income, a gift, estate gains, or capital gains that may be taxed. Identify when and where you may be liable, and if you require additional assistance, contact Dimov Tax and let them analyze your finances with their expert eye.