Am I a US tax resident? The question every international taxpayer should ask

Eric Newman, CPA1 min read

The question is important since the US taxes its citizens and residents on their worldwide income, whereas a non-resident (that is not a US citizen) will be taxed only on the income earned in the US or derived from US sources (which is another issue).

US residency is defined by two tests:

• Green Card Test
• Physical Presence Test

The Green Card test is simply whether you have applied and received a Form I-551 Permanent Resident Card which is more commonly known as the Green Card.

Under the Substantial Presence Test, you will be considered a US resident if you are physically present in the US 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.

The Substantial Presence Test can be a trap for international taxpayers who are not careful. You must carefully plan your travel and also keep records that show your days in and out of the US in case of an audit.