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How to Define U.S Alien Tax Status: Resident or Non-resident?

How to Define U.S Alien Tax Status: Resident or Non-resident?
Ines Zemelman, EA
22 December 2020

If you are not a U.S. citizen and not a green card holder, you are considered a non-resident alien for U.S. tax purposes until you either meet a substantial presence test for a calendar year. There’s a 183 days rule that will help you determine your status. 

183 days rule

You might wonder how you should count the number of days you’re present in the United States during the three-year period. To do it correctly and find out if a person passes the substantial presence test, please make sure that this person:

  • Has been physically present 31 days during the current tax year;
  • Has been present at least 183 days during the three-year period. This period includes the current your and the two previous years.

The days of presence should be counted in a special way:

  • Current year: all the days are counted;
  • The first year before the current year: one-third of the days the person was physically present in the US;
  • The second year before the current year: one-sixth of the days the person was physically present in the US.

For example, if you’ve been present in the United States for 180 days in 2018, 2019, and 2020, the days will be counted this way:

  • One-sixth for 2018: 30 days;
  • One-third for 2019: 60 days;
  • All days for 2020: 180 days.

The total for the three-year period is 270 days, this way a person will pay taxes as a resident alien.

If you’ve been present in the United States for 120 days in 2018, for 150 days in 2019, and for 90 days in 2020, the days will be counted this way:

  • One-sixth for 2018: 20 days;
  • One-third for 2019: 50 days;
  • All days for 2020: 90 days.

The total for the three-year period is 160 days, this way a person will pay taxes as a non-resident alien because the 183-days rule will not apply.

There are days that do not count as days when you’re physically present in the US because of some circumstances:

  • Days a person commutes to work in the US from a residence in Canada or Mexico in case a person commutes on a regular basis;
  • Days a person is in the US for less than 24 hours in order to transit between two places outside the US;
  • Days a person is in the US as a crew member of a foreign vessel;
  • Days a person is unable to leave the US because of a medical condition that develops while you are in the country;
  • Days a person is an exempt individual.

The term "exempt individual" refers to anyone in the following categories:

  • An individual temporarily present in the US as a foreign government-related individual under an “A” or “G” visa, other than individuals holding “A-3” or “G-5” class visas;
  • A teacher or trainee temporarily present in the US under a "J" or "Q" visa, who substantially complies with the requirements of the visa;
  • A student temporarily present in the US under an "F," "J," "M," or "Q" visa, who substantially complies with the requirements of the visa;
  • A professional athlete temporarily in the US to compete in a charitable sports event.

 

Ines Zemelman, EA
Founder of TFX