The main difference lies in how non-resident and resident aliens are taxed. For example, a resident alien can use foreign tax credits, whereas a non-resident cannot. However, in general, a resident alien is subject to the same taxes as a U.S. citizen, while a non-resident alien only pays tax on domestic income that is generated within the U.S., not including capital gains. Resident aliens are required to report worldwide income from sources both within and outside the United States. Income is reported using Form 1040. Non-resident aliens, on the other hand, report domestic income using Form 1040NR or Form 1040NR-EZ.