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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