Are You a U.S Tax Resident?

Author: Peter Harper

The U.S. imposes its income taxes on U.S. Persons[1] (i.e. U.S. tax residents) on a worldwide basis and non-residents on U.S. sourced income.  A taxpayer is a U.S. Person if they are Citizens or a ‘resident of the United States’ [2].  A taxpayer is a resident of the U.S. if they are a Green Card holder, meet the requirements of the ‘substantial presence test’, or elect to be taxed as a U.S. Person.

A taxpayer will meet the requirements of the substantial presence test if (i) they are physically present in the U.S. in the current year and spend more than 183 days in the U.S. in a calendar year; or (ii) have spent at least 31 days in the U.S. in the current year and are calculated to have spent more than 183 days in the U.S. by the following formula:

a. Days in the U.S. in current year x 1; plus

b. Days in the U.S. in year immediately preceding the current year x 1/3; plus

c. Days in the U.S. in the year immediately preceding the year referenced in paragraph 8.b. x 1/6.

By way of example if you spend 150 days in the U.S. in 2016, 150 days in the US in 2015 and 140 days in the U.S. in 2014 you will be a resident of the U.S. in the 2016 year because you will have been calculated to have spent more than 223 days in the U.S.

If you have any questions about U.S. residency feel free to contact one of our specialists today.


[1] Section 7701(a)(30) Internal Revenue Code of 1986.

[1] Section 7701(a)(30) Internal Revenue Code of 1986.

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Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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