US Tax Residency (Non-Citizens)

Core rule

For non-US-citizens, US tax residency (as a "resident alien") is determined by two tests. Meet either test → resident alien (taxed on worldwide income like a US citizen). Meet neither → non-resident alien (taxed only on US-source income).

Note: US citizens and green-card holders are ALWAYS US tax residents regardless of where they live. This skill covers non-citizens on temporary visas only.

Test 2: Substantial Presence Test (SPT)

Present in the US for 183 days or more using a 3-year weighted formula:

Days this year × 1  +  Days last year × 1/3  +  Days 2 years ago × 1/6  ≥  183

Must also be present at least 31 days during the current year.

Days that do NOT count:

• Days as an exempt individual (certain F, J, M, Q visa holders; diplomats; commuters from Canada/Mexico)
• Days unable to leave due to medical condition that arose in the US

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Closer Connection Exception

Even if SPT is met, the person is not a resident alien if:

• Present in the US for fewer than 183 days in the current year, AND
• Has a tax home in a foreign country, AND
• Has a closer connection to that country (family, bank accounts, driving licence, social memberships, etc.)

Filed on Form 8840 (due 15 June for prior year).

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First-Year Election

A non-resident alien who does not meet SPT in the current year but meets SPT in the following year can elect to be treated as a US resident from a qualifying date in the current year.

Conditions: present at least 31 consecutive days and 75% of days from qualifying date to 31 December. Filed with Form 1040 + statement.

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Treaty Tie-Breaker

If a person is a resident of both the US and a treaty country under each country's domestic rules, the treaty tie-breaker (Article 4 of most DTAs) determines residence:

1. Permanent home
2. Centre of vital interests
3. Habitual abode
4. Nationality
5. Competent authority

File Form 8833 to claim treaty-based position.

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Dual-Status Returns

In the year of arrival or departure, a person may be a resident for part of the year and a non-resident for the rest. A dual-status return covers both periods:

• Resident period: worldwide income taxed
• Non-resident period: only US-source income taxed

Restrictions on dual-status returns: cannot use standard deduction; cannot file jointly (unless making election to be treated as full-year resident).

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When US residency ends

Residency terminates on the last day of the year the person was present in the US as a resident, unless a closer connection exception applies.

Important: The year of departure requires careful analysis — if SPT is met for the year, the person may be a US resident for the full year even after physically leaving mid-year.

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Sources

• IRC §7701(b) — definition of resident alien
• IRS Publication 519 (US Tax Guide for Aliens)
• Form 8840 (closer connection), Form 8833 (treaty-based position)
• Form 1040-NR (non-resident alien return)

Working paper only. Immigration status and tax status are separate; holding a US work visa does not automatically make you a tax resident. Have a qualified US CPA or tax attorney review the specific visa category and day count.