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Substantial Presence Test


How does a substantial presence test determine your Resident tax status?

Under the US Tax law, you are considered a U.S. resident for tax purposes if you meet the substantial presence test for a calendar year, if you were physically present in the United States on at least:

  • 31 days during the tax year, and
  • 183 days during the 3-year period that includes the tax year and two preceeding years (eg. 2012, 2011, and 2010, for filing 2012 tax returns) counting:
    • a) All the days you were present in 2012,
    • b) 1/3 of the days you were present in 2011, and
    • c) 1/6 of the days you were present in 2010.

Example 1:

You were physically present in the United States on 120 days in each of the years 2010, 2011, and 2012. To determine if you meet the substantial presence test for
2012, and using the above guidelines:

  • 2012: 120 days
  • 2011: 1/3 of 120 = 40 days
  • 2010: 1/6 of 120 = 20 days

So the total would be 120 + 40 + 20 = 180 days, which is less than 183 days required under the substantial presence test. So for 2012, you would not be considered a Resident (for tax purposes only) under the substantial presence test.

Example 2:

If supposedly, in Example 1, if you would have stayed in the US for 125 days in 2012, the total days by the same calculation would have been 185, thus clearing the substantial presence test, and hence requiring you to file the tax return as a Resident.


Days considered to be of presence in the United States

You are treated as present in the United States on any day you are physically present in the country at any time during the day. However, there are certain exceptions to this rule. Do not count the following as days of presence in the United States for the substantial presence test:

  • Days you commute to work in the United States from a residence in Canada or Mexico if you regularly commute from Canada or Mexico
  • Days you are in the United States for less than 24 hours when you are in transit be tween two places outside the United States
  • Days you are in the United States as a crew member of a foreign vessel
  • Days you are unable to leave the United States because of a medical condition that arose while you are in the United States
  • Days you are an exempt individual. Certain non-immigrants (students), government-visa holders, and professional athletes(competing in a charitable sports event) who are in the United States are considered exempt from the Resident Tax Return filing requirement.

Exception to the Substantial Presence Test: Closer Connection to a Foreign Country

Under certain circumstances, even if you meet the substantial presence test, you can be treated as a nonresident alien (for tax purposes only) if you:

  • Are present in the United States for less than 183 days during the year
  • Maintain a tax home in a foreign country during the year, and
  • Have a closer connection during the year to one foreign country in which you have a tax home than to the United States (unless you have a closer connection to two foreign countries)

Closer connection to two foreign countries.

You can demonstrate that you have a closer connection to two foreign countries (but not
more than two) if you meet all of the following conditions.

  • You maintained a tax home beginning on the first day of the year in one foreign country.
  • You changed your tax home during the year to a second foreign country.
  • You continued to maintain your tax home in the second foreign country for the rest of the year.
  • You had a closer connection to each foreign country than to the United States for the period during which you maintained a tax home in that foreign country.
  • You are subject to tax as a resident under the tax laws of either foreign country for the entire year or subject to tax as a resident in both foreign countries for the period during
    which you maintained a tax home in each foreign country
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