A non-US citizen may be classed as a resident or non-resident alien. If a person is not classified as a resident alien then they may be classified as non-resident alien – although there are some special categories of individuals whom the IRS deems as non-resident aliens even though they would otherwise be classified as resident aliens (see below). In the US, a tax year for individuals is the same as a calendar year: January 1 to December 31.
A non-US citizen is classified as a resident alien if they meet either of two tests:
- They have a green card. i.e. They are a lawful US resident (“the green card test”), or
- They have been in the US for at least 31 days in the year for which the tax return is being filed and 183 days in total in the tax year and prior 2 years (“the substantial presence test”) calculated using the formula:
Total of (number of days present in the US in the tax year) plus
1/3 [one third] of (number of days present in the US in the year before the tax year) plus
1/6 [one sixth] of (number of days present in the US in the year two years before the tax year)
For the purposes of counting, days for the substantial presence test you may exclude days in the US if you were:
- A foreign national on a governmental related visa (generally A or G visas but neither A-3 or G-5 visas).
- A foreign student on an F, M, J, or Q visa in the United States for no more than 5 calendar years, including part years, who substantially complies with the requirements of the visa.
- A professional athlete temporarily in the US to compete in a charitable sports event.
- Present while in transit between two places outside of the United States and you are in the US for less than 24 hours.
- A teacher or trainee temporarily present in the United States under a J or Q visa, who substantially complies with the requirements of the visa
- unable to leave the US due to medical condition or medical problem.
Even if you are found to have passed the substantial presence test you may still be treated as a non-resident alien if you have a closer connection to a foreign country. To determine this matter, the IRS has both a general test and a specific test (for students).
An individual who is resident in the tax year but was present, but not resident, in the prior tax year may elect to be resident in that prior year from the date present if they were present for more than 31 days in a row in the prior year and their total days presence in the United States in that prior year is at least 75% of the number of days running from the first day of the 31 day period to the end of that prior year, allowing for up to five days absence in that prior year as days of presence in the United States.
If an individual meets either of the green card or substantial presence test in any tax year then the individual is a resident alien from the earliest date that either test is met.
If an individual is found to be resident in both the United States and their home country for any period then, if their home country has a tax treaty in force with the US, there will most likely be a tie-breaker clause to decide residence (for example, Article 4(4) of the US-UK Tax Treaty (2001) sets out the rules and tests to be applied to determine status when an individual is resident of both states).
If you have questions about this test or other international tax issues, please contact our firm for assistance.