The determination of an alien's residence status is subject to a set of relatively objective tests. These rules generally treat the following individuals as residents:
- All lawful permanent residents for immigration purposes (i.e. 'green card' holders). Resident alien status generally continues until the green card is formally relinquished. Thus, individuals who hold green cards but leave the United States to live abroad indefinitely or permanently will generally continue to be classified and taxed as resident aliens until the green card is relinquished. Complex rules also apply to individuals who relinquished their green cards if they held the green card in at least eight of the 15 years prior to relinquishment. Professional tax advice should always be sought prior to obtaining or relinquishing a green card.
- Individuals who meet the 'substantial presence test'. An individual meets this test if present in the United States for at least 31 days in the current year and a combined total of 183 equivalent days during the current year and prior two years. For the purposes of the 183-equivalent-day requirement, any part of a day the individual is present in the United States during the current calendar year counts as a full day; each day in the preceding year counts as one-third of a day; and each day in the second preceding year counts as one-sixth of a day. Note that an individual who has less than 183 days of US presence in the current tax year and can establish a ‘tax home’ in, and a 'closer connection' to, another country for the entire year still may qualify as a non-resident alien, even if the three-year, 183-equivalent-day requirement is met. Exceptions also are available for certain students, teachers, or trainees; crew members of foreign vessels; employees of foreign governments and international organisations; certain individuals with medical problems that arise while in the United States; and certain Mexican and Canadian residents who commute to work in the United States.
Special rules apply when determining the portion of the year an individual will be treated as a resident or non-resident in the first and last years of residency.
Note that resident alien status often results in lower US tax than non-resident alien status, due to increased allowable deductions and lower tax rates for certain married taxpayers. Consequently, certain non-resident aliens may choose to elect resident alien status, if specific requirements are met.
The United States has income tax treaties with a number of countries for the purpose of eliminating double taxation (see Tax treaties in the Foreign tax relief and tax treaties section). If there is a tax treaty in effect between the United States and an individual's country of residence, the provisions of the treaty may override the US resident alien rules. Under many of these treaties, an individual classified as an income tax resident under the internal laws of both the United States and one's home country, who can show that a 'permanent home' is available only in the home country, will generally be classified as a non-resident alien for purposes of US income tax law. A form must be filed in order to claim non-resident alien status as the result of a tax treaty.
To the extent that an individual is a green card holder and avails oneself of the residency override provisions of the treaty, the individual may be subject to the expatriation rules discussed above. Professional advice should be sought before claiming treaty benefits for this purpose.
FAQs
If you are not a U.S. citizen, you are considered a nonresident of the United States for U.S. tax purposes unless you meet one of two tests. You are a resident of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1 – December 31).
What does it mean to be a resident of the United States? ›
(A)The term “United States resident” means— (i)any individual who— (I)is a United States citizen or a resident alien and does not have a tax home (as defined in) in a foreign country, or (II)is a nonresident alien and has a tax home (as so defined) in the United States, and (ii)any corporation, trust, or estate which ...
What is the meaning of resident individual? ›
Resident individual means an individual that holds a domicile in a specific region for any period of time during the [taxable year], however, only for the duration of the residency in that particular region. Seen in 7 SEC filings. Resident individual means a person who is domiciled in a specific State.
How do I know if I am a resident for tax purposes? ›
California Residency for Tax Purposes
An individual who comes to California for a purpose which will extend over a long or indefinite period will be considered a resident. An individual who comes to California to perform a service for a short duration will be considered a nonresident.
How to calculate US residency? ›
The IRS considers you a U.S. resident if you were physically present in the U.S. on at least 31 days of the current year and 183 days during a three-year period. The three-year period consists of the current year and the prior two years.
How is residency determined in the US? ›
Your domicile is the state you regard as your home. If you spend a substantial amount of your time in two states, keep good records so you can prove which is your domicile. Most states will consider you a resident for tax purposes if you spend 183 days or more in that state.
Who is a resident in relation to an individual? ›
Residency – Individuals
The tax residency of an individual is important in determining whether and how their individual or employment income will be taxable in Kenya under the Income Tax Act (Cap. 470 of the Laws of Kenya) (ITA). In addition, taxation rates may differ depending on the residency of a taxable person.
Who is a non-resident individual? ›
A person of Indian origin living abroad is known as a Non-Resident Indian (NRI). The Income-tax Act, 1961, provides different tax rules for Indian residents and NRIs. Indian-origin individuals are considered residents when they live for a certain period in India.
What are the two types of residents? ›
A permanent resident, also known as a green card holder, is someone who has been given the lawful and legal right by the government to live in the United States. A conditional resident is someone who receives a two-year green card.
How does IRS define personal residence? ›
An individual has only one main home at a time. If you own and live in just one home, then that property is your main home. If you own or live in more than one home, then you must apply a "facts and circ*mstances" test to determine which property is your main home.
Use of the Form 8802 is mandatory. Form 6166 is a letter printed on U.S. Department of Treasury stationery certifying that the individuals or entities listed are residents of the United States for purposes of the income tax laws of the United States.
What's the difference between a U.S. citizen and a US resident? ›
Citizenship is permanent. Residency, on the other hand, is a permit that allows an individual to reside in a specific country with conditions that must be adhered to. Residency can be either temporary or permanent.
How do you determine if someone is a resident? ›
Here are some factors that, while not always determinative, weigh on the answer:
- Where does the person live most the year?
- Where does the person work, maintain bank accounts, pay taxes, and vote?
- Which state is his or her driver's license from?
- Which state does the person consider “home”?
According to the rule, if you spend at least 183 days of a year in a state — even if you have established your domicile in another state — you are considered a resident of the state for tax purposes. There are a few important factors to consider with this rule.
Is an F1 student a US resident? ›
Generally, foreign students in F-1, J-1, or M-1 nonimmigrant status who have been in the United States more than 5 calendar years become resident aliens for U.S. tax purpose if they meet the “Substantial Presence Test” and are liable for Social Security and Medicare taxes.
Can a US citizen be a resident of no state? ›
You can own multiple homes in different states, but you can only be a resident of one state, that is where you will vote and pay taxes.
