Misidentifying your tax residency status can have significant consequences, as each status comes with distinct tax implications.
Resident and non-resident aliens have different filing requirements, tax rates, tax credits, etc. So, misidentifying your status has serious implications. For example, it can make you file the wrong tax forms, resulting in inaccurate tax returns and reporting penalties from the IRS. It can also lead to paying taxes on the wrong rates or missing out on eligible credits.