{"id":43,"date":"2021-07-17T08:48:00","date_gmt":"2021-07-17T08:48:00","guid":{"rendered":"http:\/\/www.irstaxapp.com\/?p=43"},"modified":"2021-07-16T11:12:11","modified_gmt":"2021-07-16T11:12:11","slug":"how-to-find-if-you-are-tax-resident-of-usa","status":"publish","type":"post","link":"https:\/\/www.irstaxapp.com\/how-to-find-if-you-are-tax-resident-of-usa\/","title":{"rendered":"How to Find if You Are Tax Resident of USA ?"},"content":{"rendered":"\n

In order to determine the\u00a0\u00a0tax liability of a persons who visits USA or stays in USA or works in USA or earns any income connected to USA\u00a0, the first and foremost criteria is to find out the residential status of the person as per Internal Revenue Code . This is so , because the tax law for residents and non -residents are quite different. So , how do you determine if you are resident as per US tax laws ? Well the\u00a0Internal Revenue Code<\/a> (26 US Code ) \u00a07701 <\/em>provides the residency rules that define residency for tax purposes in a way that is very different from the immigration laws. <\/p>\n\n\n\n

Rules for Determining Residential Status<\/h2>\n\n\n\n

If you are an alien , it means you are not a U.S. citizen. Now an alien can be resident alien or nonresident alien .You are not a nonresident alien, if you pass one of two tests for the calendar year (January 1 \u2013 December 31). You are a\u00a0tax resident of USA under Internal Revenue Code if you satisfies<\/strong><\/em> any of the following conditions :<\/p>\n\n\n\n

  1. You are citizen of USA<\/li>
  2. If the U.S. Citizenship and Immigration Services (USCIS) (or its predecessor organization) has issued you an alien registration card, known as a \u201cgreen card.\u201d<\/li>
  3. You passed the Substantial Presence Test .<\/li><\/ol>\n\n\n\n

    What is substantial presence test ?<\/h2>\n\n\n\n

    The substantial presence test for calendar year 2020 means it shall be determined whether you were physically present in USA on at least<\/p>\n\n\n\n

    1. \u00a031 days during 2020, and <\/strong><\/li>
    2. 183 days during the 3-year period that includes 2020, 2019, and 2018, counting:
      1. \u00a0All the days you were present in 2020, and<\/li>
      2. 1 \/3rd of the days you were present in 2019, and<\/li>
      3. 1\/ 6th of the days you were present in 2018. <\/li><\/ol><\/li><\/ol>\n\n\n\n

        For example ,<\/p>\n\n\n\n

        Mr X was present in the United States on 120 days in each of the years 2018, 20119, and 2020.Although , it seems, he was present in USA for 3 x 120 days = 360 days , so , he passes the test of 31 days in 2020 and 183 days in previous 3 years including 2020.But that is not so, when the formula for determination of the tax resident is applied . So it will be counted as<\/p>\n\n\n\n

        120 days in 2020<\/em><\/p>\n\n\n\n

        1\/3 of 2019= 1\/3 * 120= 40\u00a0<\/em><\/p>\n\n\n\n

        1\/6th of 120 days in 2018 = 20 days\u00a0<\/em><\/p>\n\n\n\n

        So total number of days as per formula = 120+ 40+ 20= 180 days<\/strong><\/em><\/p>\n\n\n\n

        That does not satisfies the condition of 183 days in previous 3 years .Thus Mr X will\u00a0not be considered\u00a0a Tax Resident in the year 2015. You can check the substantial presence test calculator <\/a>under IRC<\/p>\n\n\n\n

        What is meaning of USA for determining physical presence ?<\/h2>\n\n\n\n

        Since the rule of physical presence is with respect to the term United States ,it is important to understand the geographical boundaries of USA for th purpose of determining tax residency . USA means <\/p>\n\n\n\n