Author: Peter Harper

The U.S. imposes its income taxes on U.S. Persons[1] (i.e. U.S. tax residents) on a worldwide basis and non-residents on U.S. sourced income.  A taxpayer is a U.S. Person if they are Citizens or a ‘resident of the United States’ [2].  A taxpayer is a resident of the U.S. if they are a Green Card holder, meet the requirements of the ‘substantial presence test’, or elect to be taxed as a U.S. Person.

A taxpayer will meet the requirements of the substantial presence test if (i) they are physically present in the U.S. in the current year and spend more than 183 days in the U.S. in a calendar year; or (ii) have spent at least 31 days in the U.S. in the current year and are calculated to have spent more than 183 days in the U.S. by the following formula:

a. Days in the U.S. in current year x 1; plus

b. Days in the U.S. in year immediately preceding the current year x 1/3; plus

c. Days in the U.S. in the year immediately preceding the year referenced in paragraph 8.b. x 1/6.

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By way of example if you spend 150 days in the U.S. in 2016, 150 days in the US in 2015 and 140 days in the U.S. in 2014 you will be a resident of the U.S. in the 2016 year because you will have been calculated to have spent more than 223 days in the U.S.

If you have any questions about U.S. residency feel free to contact one of our specialists today.


[1] Section 7701(a)(30) Internal Revenue Code of 1986.

[1] Section 7701(a)(30) Internal Revenue Code of 1986.

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