The definition of a US tax resident is not as simple as you might think. The US rules are very different to other countries and sometimes even go against common sense! The 4 tests below will assist you in determining whether you are a US tax resident.
Test #1: US citizenship test
You will be considered a US tax resident if you hold the US citizenship. You can obtain the US citizen when: (1) you are born in the US (de jure birthright), (2) you are born from US parents who are US citizens, (3) you apply to become a US citizen (naturalization). You will remain a US citizen even if you no longer live in the US and have not surrendered your US passport.
To read more on what happens if you did not know you were a US tax resident (“Accidental American”): https://www.kbfinancials.biz/am-ricain-accidentel/
Test #2: Green card test
You can be considered a US tax resident if you become a Lawful permanent resident (LPR) of the US. You will obtain the LPR when you obtain the US permanent residence card (green card). You will remain a LPR even if you no longer live in the US and have not surrendered your green card (form I407).
To read more about the green card: https://www.kbfinancials.biz/la-carte-verte-am-ricaine-us-green-card/
Test #3: Substantial presence test (SPT)
You can be considered a US tax resident if you are physically present in the US for at least 31 days in the current year, and satisfy the 183 days rule over the current & prior 2 years. Some days are excluded from the computation such as: (1) days commuting to work from Canada or Mexico, (2) days as a crew member, (3) medical days, (4) and in certain circumstances, days as a diplomat, professor, member of a international organization, student or athlete.
To read more on the SPT: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test
To read more on how the IRS check your days (I-94): https://i94.cbp.dhs.gov/I94/#/recent-search
To read more on special treatment of US visas: https://www.kbfinancials.biz/u-s-visas-and-their-tax-obligations/
Test #4: Election test
You can be considered a US tax resident if make an election to the IRS. You can make one of the following elections to be considered a US tax resident: (1) first-year choice to be treated as a resident, (2) nonresident spouse treated as a resident.
To read more about the First year choice : https://www.irs.gov/individuals/international-taxpayers/tax-residency-status-first-year-choice
To read more about the nonresident spouse: https://www.irs.gov/individuals/international-taxpayers/nonresident-spouse
If you meet one of the above tests and do not wish to be considered a US tax resident, contact Karine Bauer to review if you qualify for an exception to the above rules.
As always, bear in mind the date of this article as tax laws change over time
For assistance with your international tax needs, please contact Karine Bauer, EA, JD – HERE.
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Updated on January 15th, 2023