Which residency status is applicable when an individual is neither a U.S. citizen nor a resident alien for tax purposes?

Individuals who are neither U.S. citizens nor resident aliens for tax purposes are classified as non-resident aliens. This status applies to foreign nationals who do not meet the substantial presence test or are not lawful permanent residents (green card holders). Non-resident aliens are typically taxed only on their income that is effectively connected with a trade or business in the United States, as well as certain types of U.S. source income.

The classification is important because it determines the tax obligations and reporting requirements the individual must follow. Non-resident aliens typically file Form 1040-NR to report their U.S. income. Understanding this classification allows for proper compliance with U.S. tax laws and regulations concerning foreign individuals' income.