Alien - Examples: Green Card & Substantial Presence Test

The Green Card Test determines that you are a resident for tax purposes automatically the day when you become a lawful permanent resident.

The Substantial Presence Test (SPT) is a calculation and deems an individual a resident for tax purposes on the day that SPT has been met. SPT has two components:

  1. The individual must be present in the United states for at least 31 days during the calendar year and
  2. The individual must be present in the United States a total of 183 days during a 3 year look back counted as follows:
    • Current year – count each day as 100% U.S. presence
    • 1st preceding calendar year - count each day as 33% U.S. presence
    • 2nd preceding calendar year – count each day as 16% U.S. presence

Provided is a chart that explains the residency start and end dates:

 Residency Start DateResidency Ending Date
Green Card Test1st day during the calendar year on which the alien is physically present in the United States as a lawful permanent resident.The day of the calendar year in which the person is no longer a lawful permanent resident.
Substantial Presence Test1st day during the calendar year on which the person is present in the United States.The last day of the calendar year in which the alien ceases to be a U.S. resident for tax purposes.

Green Card Test - Example

An individual is granted legal permanent residency on 3/15/08. On 7/6/09, the employee decides to revoke his lawful permanent resident status.

For 2008

The start date of residency based on the Green Card Test is 3/15/08. For 2008, the residency end date is 12/31/2008.

For 2009

The start date of residency based on the Green Card Test is 1/01/09. The residency end date is 5/6/09 since he chose to revoke his permanent residency on 5/6/09.

Substantial Presence Test - Example 

A visitor enters the U.S. (H1B status) on October 3, 2008 and plans to remain until December 31, 2009. Applying the Substantial Presence Test to determine residency for 2008 & 2009:

2008 Tax Year – Visitor is a nonresident for tax purposes

  1. The visitor’s presence (Oct. 3, 2008 – Dec. 31, 2008) is greater than the “31” days requirement.
  2. However, the days of total U.S. presence is 90 days which is less than the requirement 183.

2009 Tax Year – Visitor is a resident for tax purposes

  1. The visitor’s presence (Jan. 1, 2009 – Dec. 31, 2009) is greater than the “31” days requirement.
  2. The days of total U.S. presence (395) is greater than 183. Calculated as:
    1. Jan. 1, 2009 – Dec. 31, 2009 = 365 @ 100% = 365 days Plus
    2. Oct. 3, 2008 – Dec. 31, 2008 =  90 @   33% =  30 days     
  3. The residency start date is January 1, 2009. The date he leaves the country (12/31/09) is the residency end date

The U.S. presence when an individual is most likely to meet the Substantial Presence Test is indicated in the chart below:

Visa TypeDescription of Visa Type Most likely meets the Substantial Presence Test* 
F1Student visain the 6th year of U.S. presence
H1Worker in specialty occupationin the 1st year of  U.S. presence
J1Exchange Research/Scholarin the 3rd year of  U.S. presence
Exchange Student/Doctoratein the 6th year of  U.S. presence
Exchange Specialistin the 3rd year of U.S. presence
J2Dependent of J1 visa holderdepends on J1 visa holders visa type (3rd or 6th year)
O1Extraordinary abilityin the 1st year of U.S. presence
PRPermanent Residentautomatic resident for tax purposes 
RFRefugee/Asyleein the 1st year of U.S. presence
TNTrade NAFTAin the 1st year of U.S. presence
B1**Visitor on Businessshould never meet the SPT test
WT** Waiver Touristshould never meet the SPT test
*SPT (Substantial Presence Test) - days counted after all exempt years have been exhausted

**Immigration grants status up to 90 days - Note: Due to a provision in the "American Competitiveness and Workforce Improvement Act of 1998," service period for the B1 & WT can never be greater than 9 days for payment. e.g. Honorarium or Independent Personal Services

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