Exempted days are days of your physical presence in USA , but still those days are out of counting of number of days present in USA for the purpose of tax residency. As readers are already know that tax residency of a person is found out by a test called substantial presence test . But it is equally important to know that while counting your physical presence in USA ,you can actually reduce certain days of visit to USA undertaken in special circumstance. These days are called Exempted Days .Here are eight FAQs on exempted days
1. For Daily Commuters to USA Which countries comes within this Rule?
Regular commuters from Mexico & Canada to USA for employment purpose can claim this exemption of days from being counted as present in USA.
2. If I commute for Canada or Mexico t US for work , is there law of exempting the period spent on commuting ?
If you regularly commute from Canada or Mexico to USA for employment purpose ,do not count the days on which you commute to work in the United States from your residence in Canada or Mexico .
3. What does the term “Commute” means ?
For purpose of tax residency rule regarding exempted days , “commute” means to travel to work and return to your residence within a 24-hour period. “Workdays” are the days on which you work in the United States or Canada or Mexico.
“Working period” means the period beginning with the first day in the current year on which you are physically present in the United States to work and ending on the last day in the current year on which you are physically present in the United States to work.
4. How to decide if I commute regularly or not?
You are considered to commute regularly if you commute to work in the United States on more than 75% of the workdays during your working period. What if I go for seasonal work only ?
5. How the % of time I commute be counted ?
If your work requires you to be present in the United States only on a seasonal or cyclical basis, your working period begins on the first day of the season or cycle on which you are present in the United States to work and ends on the last day of the season or cycle on which you are present in the United States to work. You can have more than one working period in a calendar year, and your working period can begin in one calendar year and end in the following calendar year. For Transit Day Exemption If you are in transit between two places outside the United States , then
1. Do not count period less than 24 days as a day.
2. The period you spend on airport for catching plain is not counted as present in USA.
6. How will you decide if I am in Transit ?
You are considered to be in transit if you engage in activities that are substantially related to completing travel to your foreign destination.So , if you travel between airports in the United States to change planes en route to your foreign destination, you are considered to be in transit.
7. Are there any other exception ?
Yes, if you attend a business meeting while in the United States, such period are counted and not exempt . This is true even if the meeting is held at the air- port For Crew Members of Vessels If you are present in the United States as a regular crew member of a foreign vessel (boat or ship) engaged in transportation between the United States and a foreign country or a U.S. possession, your presence is not counted for residency purpose . But this exception does not apply if you otherwise engage in any trade or business in the United States on those days.
8. If I suddenly become ill and could not leave US, is my presence counted ?
The answer is no , that day may be counted among exempted days. As per Internal Revenue Code rule says , if you could not leave the United States because of a medical condition or problem that arose while you were in the United States, relief of not counting the days of presence in USA will be given to person. So
Whether you intended to leave the United States on a particular day is determined based on all the facts and circumstances. The final authority to accept your contention vests with IRS. In the case mentally challenged Individual , proof of intent to leave the United States can be determined by analyzing the individual’s pattern of behavior before he or she was judged mentally incompetent. If you qualify to exclude days of presence because of a medical condition, you must file a fully completed Form 8843 with the IRS.