Determining Whether You are a Resident or Non-Resident for Tax Purposes

Immigration & Tax Law Definitions

How to Determine Residency for Tax Purposes

The "Green Card" Test

The Substantial Presence Test

Immigration and Tax Law Definitions

The information in this section is provided as a general guide

on residence status for U.S. tax purposes. Please note that there

are significant differences between the definitions of residence

status for immigration law purposes and for tax law purposes.

Immigration Law

A non-resident alien for immigration purposes is a person who

is not a citizen or lawful permanent resident of the U.S. and

who has been admitted to the U.S. for a temporary stay that

will end when the purpose of that stay has been met. Individuals

in non-immigrant visa status have visas which begin with letters:

B, F, J, TN, H, L, O, etc.

A resident alien for immigration purposes is the same as an

immigrant, a lawful permanent resident (a "green card"

holder) who is not a U.S. citizen but has been authorized to

live and work in the U.S. indefinitely.

Tax Law

A non-resident alien for tax purposes is a non-U.S. citizen

or permanent resident who, during his or her stay in the U.S.,

either pays U.S. tax only on income from sources inside the

U.S., or is exempted from paying U.S. income tax because of

a treaty between the U.S. and the government of his/her country

of residence. With a few exceptions most non-resident aliens

are not eligible to take tax exemptions for dependents. A non-resident

alien for tax purposes must file an income tax return on IRS

FORM 1040NR or 1040NR EZ, U.S. Nonresident Alien Income Tax

Return.

A resident alien for tax purposes must pay tax to the U.S.

government on income from all sources worldwide and may, in

certain limited circumstances, enjoy benefits of tax treaty

exemptions. Individuals who are resident aliens for tax purposes

can claim exemptions for dependents. A resident alien for tax

purposes files a return on IRS FORM 1040, 1040A, OR 1040EZ.

Categories established for immigration purposes do not necessarily

coincide with those set up for tax purposes. Under certain circumstances,

a non-resident alien for immigration purposes may be classified

as a resident for tax purposes. Thus, students and scholars

who are not citizens of the United States must take care to

determine whether they are resident or non-resident aliens for

tax purposes. Only then will they know how their income will

be taxed and which income tax return form to file. For current

information on tax laws regarding resident and non-resident

aliens, consult IRS publications 513, 515, 519 and 901.

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How to Determine Residency for Tax Purposes

A resident for tax purposes is a person who is a U.S.

citizen or a foreign national who meets either the "green

card" or "substantial presence" test as described

in IRS Publication 519, U.S. Tax Guide for Aliens.

In general:

  • F and J student visa holders are considered residents after

    five calendar years in the U.S.

  • J researchers and professors are generally considered residents

    after two calendar years in the U.S.

  • H-1, TN, and O-1 visa holders are considered residents once

    they meet the "substantial presence" test.

A non-resident for tax purposes is a person who is not

a U.S. citizen and who does not meet either the "green card"

or the "substantial presence" test as described in IRS

Publication 519, U.S. Tax Guide for Aliens.

In general:

  • F and J student visa holders are generally considered non-residents

    during their first five calendar years in the U.S.

  • J professors and researchers, are generally considered non-residents

    during their first two calendar years in the U.S.

  • H-1, TN and O-1 visa holders are considered non-residents

    until they meet the "substantial presence" test.

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The "Green Card Test"

Lawful permanent residents of the U.S. are considered to be residents

for tax purposes. A person has this status if he/she has been

granted resident status by the U.S. Immigration and Naturalization

Service (INS) and/or has been issued an alien registration card,

also known as a "green card".

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The "Substantial Presence Test"

A foreign national in non-immigrant visa status may be considered

a resident for tax purposes as soon as he/she meets the "substantial

presence" test for a calendar year (January 1 to December

31). To meet this test, the person must be physically present

in the U.S. on at least:

  • 31 days during the current calendar year and
  • 183 days during the three-year period that includes the current

    calendar year and the two years immediately preceding. The individual

    should count: all the days he/she was present in the U.S. in

    the current year, 1/3 of the days present in the U.S. the preceding

    year, and 1/6 of the days present the year before that.

Days That Are Not Counted:

  • A J-1 professor or researcher who is complying with the requirements

    of the visa, does not count days for the first two calendar

    years.

  • An F-1 or J-1 student, who is complying with the requirements

    of their visa, does not count days for the first five calendar

    years.

A foreign national will not meet the "substantial

presence" test if:

  • he/she is present in the U.S. on fewer than 183 days during

    the calendar year; and,

  • it is established for the current year that the person has

    a tax home in a foreign country, and that he has a closer connection

    to that country than to the U.S.

IRS Publication 519, U.S. Tax Guide for Aliens, provides details

on what is required to establish a closer connection to a foreign

country, including such things as the location of a person's permanent

home, family, personal belongings, etc.

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