The determination of an alien's residence status is subject to a set of relatively objective tests. These rules generally treat the following individuals as residents:
- All lawful permanent residents for immigration purposes (i.e. 'green card' holders). Resident alien status generally continues until the green card is formally relinquished. Thus, individuals who hold green cards but leave the United States to live abroad indefinitely or permanently will generally continue to be classified and taxed as resident aliens until the green card is relinquished. Complex rules also apply to individuals who relinquished their green cards if they held the green card in at least eight of the 15 years prior to relinquishment. Professional tax advice should always be sought prior to obtaining or relinquishing a green card.
- Individuals who meet the 'substantial presence test'. An individual meets this test if present in the United States for at least 31 days in the current year and a combined total of 183 equivalent days during the current year and prior two years. For the purposes of the 183-equivalent-day requirement, any part of a day the individual is present in the United States during the current calendar year counts as a full day; each day in the preceding year counts as one-third of a day; and each day in the second preceding year counts as one-sixth of a day. Note that an individual who has less than 183 days of US presence in the current tax year and can establish a ‘tax home’ in, and a 'closer connection' to, another country for the entire year still may qualify as a non-resident alien, even if the three-year, 183-equivalent-day requirement is met. Exceptions also are available for certain students, teachers, or trainees; crew members of foreign vessels; employees of foreign governments and international organisations; certain individuals with medical problems that arise while in the United States; and certain Mexican and Canadian residents who commute to work in the United States.
Special rules apply when determining the portion of the year an individual will be treated as a resident or non-resident in the first and last years of residency.
Due to COVID-19, taxpayers may have spent more time in the United States than originally intended due to travel restrictions and disruption, resulting in exceeding the 183-day threshold, meeting the substantial presence test, and becoming US resident for the 2020 tax year. As a result, changes have been made to the 2020 day count for purposes of the substantial presence test to include a new exception called the COVID-19 Medical Exception. For the purpose of this test, eligible individuals can exclude the 'COVID-19 Emergency Period,' consisting of a single period of days the individual was physically present in the United States, up to 60 consecutive calendar days that start on or after 1 February 2020 and end on or before 1 April 2020. An eligible individual means any individual (i) who was not a US resident at the close of the 2019 tax year, (ii) who is not a lawful permanent resident at any point in 2020, (iii) who is present in the United States (without regard to the new rule) on each of the days of the individual’s COVID-19 Emergency Period, and (iv) who does not become a US resident in 2020 due to days of presence in the United States outside of the individual’s COVID-19 Emergency Period.
Note that resident alien status often results in lower US tax than non-resident alien status, due to increased allowable deductions and lower tax rates for certain married taxpayers. Consequently, certain non-resident aliens may choose to elect resident alien status, if specific requirements are met.
The United States has income tax treaties with a number of countries for the purpose of eliminating double taxation (see Tax treaties in the Foreign tax relief and tax treaties section). If there is a tax treaty in effect between the United States and an individual's country of residence, the provisions of the treaty may override the US resident alien rules. Under many of these treaties, an individual classified as an income tax resident under the internal laws of both the United States and one's home country, who can show that a 'permanent home' is available only in the home country, will generally be classified as a non-resident alien for purposes of US income tax law. A form must be filed in order to claim non-resident alien status as the result of a tax treaty.