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:
- The individual must be present in the United states for at least 31 days during the calendar year and
- 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 Date||Residency Ending Date|
|Green Card Test||1st 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 Test||1st 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.
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.
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
- The visitor’s presence (Oct. 3, 2008 – Dec. 31, 2008) is greater than the “31” days requirement.
- 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
- The visitor’s presence (Jan. 1, 2009 – Dec. 31, 2009) is greater than the “31” days requirement.
- The days of total U.S. presence (395) is greater than 183. Calculated as:
- Jan. 1, 2009 – Dec. 31, 2009 = 365 @ 100% = 365 days Plus
- Oct. 3, 2008 – Dec. 31, 2008 = 90 @ 33% = 30 days
- 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 Type||Description of Visa Type||Most likely meets the Substantial Presence Test*|
|F1||Student visa||in the 6th year of U.S. presence|
|H1||Worker in specialty occupation||in the 1st year of U.S. presence|
|J1||Exchange Research/Scholar||in the 3rd year of U.S. presence|
|J1||Exchange Student/Doctorate||in the 6th year of U.S. presence|
|J1||Exchange Specialist||in the 3rd year of U.S. presence|
|J2||Dependent of J1 visa holder||depends on J1 visa holders visa type (3rd or 6th year)|
|O1||Extraordinary ability||in the 1st year of U.S. presence|
|PR||Permanent Resident||automatic resident for tax purposes|
|RF||Refugee/Asylee||in the 1st year of U.S. presence|
|TN||Trade NAFTA||in the 1st year of U.S. presence|
|B1**||Visitor on Business||should never meet the SPT test|
|WT**||Waiver Tourist||should 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