Determining Tax Residency in the United States

Many of our clients are foreign citizens working in the US.  Whether its a band touring the US, an actor/director shooting in the US, or an entrepreneur starting or expanding your business in the US, we have the experience to guide, plan and ensure you are compliant with US tax law.  The first step is to determine your "tax status" in the US.  Here is a short summary of who is considered a US Tax Resident.  

The U.S. casts a wide net to capture tax on income earned in foreign countries by any “U.S. tax resident.”  Because residents and nonresident aliens are taxed differently, it is important to determine your tax status. 

You are considered a nonresident alien for any period that you are neither a U.S. citizen nor a resident alien for tax purposes.  You are considered a resident alien if during a calendar year you either meet the “Green Card Test” or the “Substantial Presence Test.” 

  1. Green Card Test: You are considered to have met the green card test if at any time during the calendar year you were a lawful permanent resident of the United States according to the immigration laws, and this status has not been revoked or administratively or judicially determined to have been abandoned.  If you receive your green card abroad, then the residency starting date is your first day of physical presence in the United States after you receive your green card. If you meet the green card test at any time during the calendar year, but do not meet the substantial presence test for that year, your residency starting date is the first day on which you are present in the United States as a Lawful Permanent Resident.  However, an alien who has been present in the United States at any time during a calendar year as a Lawful Permanent Resident may choose to be treated as a resident alien for the entire calendar year.

  2. Substantial Presence Test – You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:

    • 31 days during the current year, and

    • 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:

      • All the days you were present in the current year, and

      • 1/3 of the days you were present in the first year before the current year, and

      • 1/6 of the days you were present in the second year before the current year.

For more information, feel free to contact us.