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Alien - Examples: Green Card & Substantial Presence Test

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:

  1. The individual must be present in the United states for at least 31 days during the calendar year and
  2. 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.

For 2008

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.

For 2009

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

  1. The visitor’s presence (Oct. 3, 2008 – Dec. 31, 2008) is greater than the “31” days requirement.
  2. 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

  1. The visitor’s presence (Jan. 1, 2009 – Dec. 31, 2009) is greater than the “31” days requirement.
  2. The days of total U.S. presence (395) is greater than 183. Calculated as:
    1. Jan. 1, 2009 – Dec. 31, 2009 = 365 @ 100% = 365 days Plus
    2. Oct. 3, 2008 – Dec. 31, 2008 =  90 @   33% =  30 days     
  3. 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