By Bethany Bouw
So, you are in the US and don’t know if you need to file as a resident or a nonresident. It can be hard for people to know which box or both they fit in. This has an impact on which return type they file, what income gets reported, and how they are taxed.
Are you a resident?
Generally, if you have a green card/are a lawful permanent resident and spend one day in the US, you are a resident alien for tax purposes. If not, you need to consider your days of presence in the US.
In most cases, you are a resident alien under the substantial presence test if:
- You spent at least 31 days in the US in the current year and
- 183 days of the past three years as calculated by a special method. The 183 days is determined by:
- 100% of your days in the current year,
- 1/3 of the days in the first-year prior, and
- 1/6 of the days in the second prior year
- You take the sum of those three sets of the number of days and if it is 183 days or more, the 183-day test has been met. You should then file as a resident alien.
If you are struggling with whether or not you are a resident, please contact your tax professional.
183 Day Test Exceptions
There are exceptions that may apply when considering the 183-day test. You do not count days that happened in the following situations:
- That you were commuting from a residence in Canada or Mexico
- If you spend less than 24 hours in the US in transit
- If you are unable to leave the US as the result of a medical condition that developed while in the US
- If you are an exempt individual
- If you are a member of a crew of a foreign vessel traveling between the US and foreign country/US possession
It is possible to meet the test of the days for substantial presence but still have a closer connection to another country and be a nonresident alien. There are several things to consider regarding the closer connection:
- Days present in the US in the current year
- Location of tax home
- Connections to the other country
- And immigration status
If there is a closer connection, there may be an additional/separate form to be filed.
Ryan & Wetmore has assisted clients with their resident alien and nonresident alien returns over the years. We would be happy to assist you if you have concerns about your residency and filings.
The International Tax Team at Ryan & Wetmore is well-versed in foreign informational filings. For questions or concerns regarding your international accounts and assets, click here to email our foreign tax team. Please be aware that tax issues are complicated and may vary based on the details of your situation. For this reason, an initial phone call is generally required to obtain the facts and address the questions.
Bethany Bouw CPA, is a manager at Ryan & Wetmore and has been with the firm for over eight years. She has experience with offshore voluntary compliance and assisting taxpayers with foreign asset and entity reporting requirements.
Traci Getz CPA, is a partner with Ryan & Wetmore, P.C. Traci has over fifteen years of experience providing accounting, tax, and consulting services to small and medium-sized business owners. She works with clients to understand their accounting and tax issues while specializing in international tax, healthcare, and construction.
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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