IRS Grants Tax Relief for Foreigners Stuck in U.S. 

Travel and related disruptions resulting from the COVID-19 pandemic has resulted in some foreign individuals having to stay in the United States longer than planned this year – which can get a little tricky for tax purposes. Luckily, the Internal Revenue Service has recognized this and is offering relief.

Non-resident aliens who meet the “substantial presence test” under Section 7701(b)(3) of the Internal Revenue Code by spending a certain period of time in the U.S. within a given year are generally considered residents of the United States for federal income tax purposes and their qualifications for certain treaty benefits may be affected by this designation.

To help those affected by the current crisis, the IRS issued Revenue Procedure 2020-20, which allows a non-resident alien to exclude up to 60 days of presence in the United States to the extent the individual was unable to leave the country because of the COVID-19 pandemic. The key is that the individual must have been in the United States between February 1, 2020, and April 1, 2020, and must not have applied for or taken steps to become a lawful permanent resident of the United States.

There is no requirement to file a tax form to claim this relief, unless the individual already has a reason to file a 2020 tax return (i.e., because he or she generated certain U.S.-sourced income in 2020). However, anyone claiming this relief should be sure to retain records to show their travel history in 2020.

Contact me or another member of Kaufman Rossin’s international tax team with questions about recent tax changes and relief efforts that may impact your tax liability.