Tax Residency Status Examples

 

The following are examples of the application of the tax residency rules to various situations involving visitors to the United States and individuals temporarily present in the United States as students, trainees, scholars, teachers, researchers, exchange visitors, and cultural exchange visitors.

Note: The term “U.S. resident” is used in the examples below to refer to an individual who is not a U.S. citizen but is a resident of the United States for federal tax purposes within the meaning of Internal Revenue Code (IRC) section 7701(b)(1)(A).  The term “nonresident” is used to refer to an individual who is neither a U.S. citizen nor a U.S. resident within the meaning of IRC section 7701(b)(1)(A).

Example 1

W was a citizen and resident of a foreign country immediately prior to entering the United States. W is temporarily present in the United States as a graduate student at a university on an F-1 visa (student visa) and had never been in the United States before arriving on 08-15-2016. Assuming W substantially complies with the requirements of the visa, does not change immigration status, and remains in the United States throughout 2021, determine W’s residency starting date.

Solution:

Date of entry into United States: 08-15-2016
Student F-1 visa
Exempt individual for 5 calendar years (2016 through 2020)
To determine whether W met the substantial presence test (183 days), begin counting days on 01-01-2021.
Number of nonexempt days in United States during 2021: 365 days

Count days as follows:

Current year (2021) days in United States (365) × 1 = 365 days
Prior year (2020) days in United States (0) × 1/3 = 0 days
Year before that (2019) days in United States (0) × 1/6 = 0 days
Total = 365 days

W met the substantial presence test on 07-02-2021 (the 183rd day of 2021). W's residency starting date under IRC § 7701(b) is 01-01-2021, first day of presence in the United States during the calendar year in which W met the substantial presence test.

Example 2

W's spouse L, who had also never been to the United States before, arrived the same day as W on an F-2 visa (spouse or dependent of a student on an F-1 visa). However, on 06-15-2018 L changed nonimmigrant status from F-2 to a Temporary Protected Status pursuant to an official announcement of the U.S. Citizenship and Immigration Services (USCIS). L received an Employment Authorization Document (EAD) from USCIS and went to work for a United States employer who petitioned USCIS to secure lawful permanent resident status for L. On 09-15-2019, USCIS approved L’s status as a lawful permanent resident of the United States and later issued L a green card under the routine procedures of the USCIS. Determine L’s residency starting date.

Solution:

Date of entry into United States: 08-15-2016
Date of change in status out of F-2: 06-15-2018
Exempt individual from 08-15-2016 through 06-14-2018
Begin counting days on 06-15-2018
Number of nonexempt days in United States during 2018: 200 days

Count days as follows:

Current year (2018) days in United States (200) × 1 = 200 days
Prior year (2017) days in United States (0) × 1/3 = 0 days
Year before that (2016) days in United States (0) × 1/6 = 0 days
Total = 200 days

L met the substantial presence test on 12-14-2018 (the 183rd day after 06-14-2018). L's residency starting date under IRC § 7701(b) is 06-15-2018 (the first day counted as present in the United States during the calendar year in which L met the substantial presence test). An "exempt individual" is never counted as being physically present in the United States for purposes of the substantial presence test. For tax purposes it does not matter that L later became a lawful permanent resident on 09-15-2019 because L had already become a U.S. resident under the substantial presence test on 12-14-2018.

Example 3

Assuming the same facts as in Examples 1 and 2 above. What kind of federal income tax returns will both taxpayers file for 2020 and 2021?

Solution:

2020:
Option #1: W will file Form 1040NR as a nonresident, married filing separately. L will file Form 1040 as a U.S. resident, married filing separately.

Option #2: W and L may take advantage of the option allowed by IRC § 6013(g), Election to Treat Nonresident Alien Individual as Resident of the United States, to file a joint Form1040 for 2020 because L is a U.S. resident at the end of 2020. See Nonresident Spouse for more information on the election to treat a nonresident spouse as a resident and file a joint return.

2021:
W and L may file a joint Form 1040 because both spouses are U.S. residents for 2021, or each spouse may file Form 1040 as married filing separately.

Example 4

A was a citizen and resident of a foreign country just prior to arriving in the United States. A is a research scholar at a university and arrived in the United States for the first time ever on 08-29-2019 on a J-1 visa. A has substantially complied with the requirements of the visa and has remained in the United States ever since. Assuming A has not changed to another immigration status, determine A’s residency starting date.

Solution:

Date of entry into United States: 08-29-2019
Research scholar J-1 visa
Exempt individual for 2 calendar years: 2019 and 2020
Begin counting days on 01-01-2021
Number of nonexempt days in United States during 2021: 365 days

Count days as follows:

Current year (2021) days in United States (365) × 1 = 365 days
Prior year (2020) days in United States (0) × 1/3 = 0 days
Year before that (2019) days in United States (0) × 1/6 = 0 days
Total = 365 days

A met the substantial presence test on 07-02-2021 (the 183rd day of 2021). A's residency starting date under IRC § 7701(b) is 01-01-2021 (the first day of presence in the United States during the calendar year in which A met the substantial presence test).

Which federal income tax returns will A file for 2019, 2020, and 2021?

2019:
A will file Form 1040NR as a nonresident.

2020:
A will file Form 1040NR as a nonresident.

2021:
A will file Form 1040 as a U.S. resident.

Example 5

G was a citizen and resident of a foreign country just prior to arriving in the United States. G, an employee of a foreign corporation affiliated with a U.S. corporation, arrived in the United States for the first time ever on 04-30-2019 on an L-1 visa to work for the U.S. affiliate. G does not intend to leave the United States until 04-29-2022. Determine G’s residency starting date.

Solution:

Date of entry into United States: 04-30-2019
Nonexempt individual
Begin counting days on 04-30-2019 (date of arrival)
Number of days in United States during 2019: 246 days

Count days as follows:

Current year (2019) days in United States (246) × 1 = 246 days
Prior year (2018) days in United States (0) × 1/3 = 0 days
Year before that (2017) days in United States (0) × 1/6 = 0 days
Total = 246 days

G met the substantial presence test on 10-29-2019 (183rd day in the United States). G's residency starting date under IRC § 7701(b) is 04-30-2019 (first day of presence in the United States during the calendar year in which G met the substantial presence test).

What kind of federal income tax returns will G file for 2019, 2020 and 2021?

2019:
G will file a dual-status tax return as a dual-status individual .

2020:
G will file Form 1040 as a U.S. resident.

2021:
G will file Form 1040 as a U.S. resident.

Example 6

R was a citizen and resident of a foreign country immediately prior to arriving in the United States. R first arrived in the United States on 03-15-2019 as a tourist on a B-2 visa and remained continuously in the United States thereafter. In 2019 R enrolled as a student at a university and as a result changed nonimmigrant status to F-1 (student) on 11-15-2019. Determine R’s residency status for 2019, 2020, and 2021.

Solution:
Analysis for 2019

Date of entry into United States: 03-15-2019
Nonexempt individual 03-15-2019 through 11-14-2019
Exempt individual 11-15-2019 through 12-31-2023
 (As a student on an F-1 visa, if R continues to substantially comply with the requirements of the visa, R will remain an “exempt individual” for 5 calendar years, 2019 through 2023.)
Begin counting days on 03-15-2019
Stop counting days on 11-14-2019

Number of nonexempt days in United States during 2019: 245 days
Number of exempt days in United States during 2019: 47 days

Count days as follows:

Current year (2019) days in United States (245) × 1 = 245 days
Prior year (2018) days in United States (0) × 1/3 = 0 days
Year before that (2017) days in United States (0) × 1/6 = 0 days
Total for 2019 = 245 days

R met the substantial presence test on 09-13-2019 (the 183rd day after arriving in the United States). R's residency starting date under IRC § 7701(b) is 03-15-2019 (first day of presence in the United States during the calendar year in which R met the substantial presence test).

Under the general rule, the residency ending date under the substantial presence test is December 31st of the year in which the individual ceases to be present in the United States. However, an exception is allowed for a residency ending date that is earlier than December 31st of a non-U.S. citizen’s last calendar year in the United States. Refer to Residency Starting and Ending Dates.

The exception allows one’s residency ending date to be the last day during the calendar year in which they cease to be present in the United States if, for the remainder of the calendar year:

  1. their tax home is in a foreign country (Rev. Rul. 93-86); and
  2. they maintain a closer connection to that foreign country than to the United States (Treas. Reg. § 301.7701(b)-2(d)).

If R had qualified for the exception, R's residency ending date under the exception to the general rule would have been 11-14-2019.

However, R did not qualify for the exception to the general rule for determining one’s residency ending date because, after 11-14-2019, R did not have a tax home in a foreign country and did not maintain a closer connection to a foreign country than to the United States.

Since R does not qualify for the exception to the residency ending date general rule, R’s residency ending date is 12-31-2019.

Analysis for 2020

Date of entry into United States: 03-15-2019
Nonexempt individual: 03-15-2019 through 11-14-2019
Exempt individual: 11-15-2019 through 12-31-2023 (provided R substantially complies with the requirements of the F-1 student visa)
Begin counting days on 03-15-2019
Stop counting days on 11-14-2019

Number of nonexempt days in United States during 2020: 0 days
Number of exempt days in United States 366 days

Count days as follows:

Current year (2020) days in United States (0) × 1 = 0 days
Prior year (2019) days in United States (245 nonexempt days) × 1/3 = 81 2/3 days
Year before that (2018) days in United States (0) × 1/6 = 0 days
Total for 2020 = 81 days

R did not meet the substantial presence test for 2020. Per the analysis for 2019 above, R's residency beginning date was 03-15-2019 and R’s residency ending date, under the general rule, was 12-31-2019. Since the substantial presence test is applied on a year-to-year basis, R is a nonresident for calendar year 2020.

Analysis for 2021

Date of entry into United States: 03-15-2019
Nonexempt individual: 03-15-2019 through 11-14-2019
Exempt individual: 11-15-2019 through 12-31-2023 (provided R substantially complies with the F-1 student visa)
Begin counting days on 03-15-2019
Stop counting days on 11-14-2019

Number of nonexempt days in United States during 2021: 0 days
Number of exempt days in United States during 2021: 365 days

Count days as follows:

Current year (2021) days in United States (0) × 1 = 0 days
Prior year (2020) days in United States (0) × 1/3 = 0 days
Year before that (2019) days in United States (245) × 1/6 = 40 5/6 days
Total for 2021 = 40 days

R does not meet the substantial presence test for 2021.

What kind of federal income tax returns will R file for 2019, 2020, and 2021?

2019:
R will file a dual-status tax return as a dual-status individual, since R is a nonresident from 01-01-2019 through 03-14-2019 and a U.S. resident under the substantial presence test from 03-15-2019 through 12-31-2019.

2020:
R will file Form 1040NR as a nonresident.

2021:
R will file Form 1040NR as a nonresident.

Example 7

K was a citizen and resident of a foreign country just prior to arriving in the United States. K had never been to the United States prior to arriving on 08-25-2019 as a student on an F-1 visa. On 02-02-2020 K married a United States citizen. On 03-01-2020 K petitioned USCIS for a change in immigration status to that of lawful permanent resident based upon the marriage. On 05-15-2021 USCIS approved K’s petition to become a lawful permanent resident of the United States and issued K a green card later in the year under the routine procedures of the USCIS. Determine K’s residency starting date.

Solution:
Analysis for 2019

Date of entry into United States: 08-25-2019
Exempt individual: 08-25-2019 through 05-14-2021
Begin counting days on 05-15-2021
Number of nonexempt days in United States during 2019: 0 days
Number of exempt days in United States during 2019: 129 days (08-25-2019 through 12-31-2019)

Count days as follows:

Current year (2019) days in United States (0) × 1 = 0 days
Prior year (2018) days in United States (0) × 1/3 = 0 days
Year before that (2017) days in United States (0) × 1/6 = 0 days
Total for 2019 = 0 days

K does not meet the substantial presence test in 2019.

Analysis for 2020

Date of entry into United States: 08-25-2019
Exempt individual: 08-25-2019 through 05-14-2021
Begin counting days on 05-15-2021
Number of nonexempt days in United States during 2020: 0 days
Number of exempt days in United States during 2020: 366 days

Count days as follows:

Current year (2020) days in United States (0) × 1 = 0 days
Prior year (2019) days in United States (0) × 1/3 = 0 days
Year before that (2018) days in United States (0) × 1/6 = 0 days
Total for 2020 = 0 days

K does not meet the substantial presence test for 2020 and K does not meet the green card test for 2020. The filing of a petition with USCIS does not constitute a change of status under immigration law.

Analysis for 2021

Date of entry into United States: 08-25-2019
Exempt individual: 08-25-2019 through 05-14-2021
Begin counting days on 05-15-2021.
Number of nonexempt days in United States during 2021: 231 days (05-15-2021 through 12-31-2021)
Number of exempt days in United States during 2021: 134 days (01-01-2021 through 05-14-2021)

Count days as follows:

Current year (2021) days in United States (231) × 1 = 231 days
Prior year (2020) days in United States (0) × 1/3 = 0 days
Year before that (2019) days in United States (0) × 1/6 = 0 days
Total for 2021 = 231 days

K met the substantial presence test on 11-13-2021 (the 183rd day after 05-14-2021). K met the green card test on 05-15-2021.

Since K was already in the United States when K became a lawful permanent resident (green card test), K’s residency starting date under IRC § 7701(b) is 05-15-2021, per both the green card test (the date USCIS changed K’s status to lawful permanent resident) and the substantial presence test (the first day of presence in the United States during the calendar year in which K met the substantial presence test). An "exempt individual" is never counted as being physically present in the United States for purposes of the substantial presence test.

What kind of federal income tax returns will K file for 2019, 2020, and 2021?

2019:
K will file Form 1040NR as a nonresident.

2020:
Option # 1. K will file Form 1040NR as a nonresident, married filing separately.

Option # 2. K will file a joint 1040 with K’s United States citizen spouse (they were married on 02-02-2020), making an election under IRC § 6013(g), Election to Treat Nonresident Alien Individual as Resident of the United States. If so, K must file as a U.S. resident in subsequent years.

2021:
Option # 1. If K did not file jointly for 2020 (Option 2, above) K can file as a dual-status individual (Form 1040 with Form 1040NR attached as a schedule), married filing separately, as K became a lawful permanent resident on 05-15-2021.

Option # 2. K can file Form 1040, either separately or jointly with K’s U.S. citizen spouse.

Example 8

S was a citizen and resident of a foreign country who had never been to the United States prior to arriving 08-15-2020 as a professor on an H-1b visa. S intends to remain in the United States for two academic years and does not intend to change immigration status before returning home. Determine S’s residency starting date.

Solution:
Analysis for 2020

Nonexempt individual (individuals in H-1b status are never exempt individuals)
Date of entry into United States: 08-15-2020
Begin counting days on 08-15-2020
Number of nonexempt days in United States during 2020: 139 days (08-15-2020 through 12-31-2020)

Count days as follows:

Current year (2020) days in United States (139) × 1 = 139 days
Prior year (2019) days in United States (0) × 1/3 = 0 days
Year before that (2018) days in United States (0) × 1/6 = 0 days
Total = 139 days

S does not meet the substantial presence test during 2020.

As another option, S could make the first-year choice under IRC § 7701(b)(2)(A) and qualify for a residency starting date of 08-15-2020 because S did not meet either the green card or substantial presence test in the prior year (2019), was present in the United States for at least 31 days in a row in 2020, was present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period (08-15-2020) and ending with the last day of 2020, and met the substantial presence test in the subsequent year (2021). 

Analysis for 2021

Nonexempt individual (individuals in H-1b status are never exempt individuals)
Date of entry into United States: 08-15-2020
Begin counting days on 08-15-2020
Number of nonexempt days in United States during 2021: 365 days

Count days as follows:

Current year (2021) days in United States (365) × 1 = 365 days
Prior year (2020) days in United States (139) × 1/3 = 46 1/3 days
Year before that (2019) days in United States (0) × 1/6 = 0 days
Total = 411 days

S met the substantial presence test on 05-17-2021.  From 2020, 46 days, plus 137 days from 2021 (01-01-2021 through 05-17-2021) = 183 days.

S's residency starting date is 01-01-2021 (the first day of presence in United States during the calendar year in which S met the substantial presence test).

What kind of federal income tax returns will S file for 2020 and 2021?

2020:
Option #1. S will file Form 1040NR as a nonresident.

Option #2. S will file a dual-status tax return as a dual-status individual, making the first-year choice under IRC § 7701(b)(2)(A) with a residency starting date of 08-15-2020.

2021:
S will file Form 1040 as a U.S. resident.

Example 9

D was a citizen and resident of a foreign country just prior to arriving in the United States. D arrived in the United States for the first time ever on 08-15-2014 as a student on an F-1 visa. D remained in F-1 status until graduating in June 2019. D left the United States on 06-30-2019 and returned home. On 08-01-2020 D returned to the United States as a researcher on a J-1 visa. Determine D’s residency starting date for the most recent visit.

Solution:
Analysis for 2020

Date of (second) entry into United States: 08-01-2020
Exempt individual: 08-15-2014 through 12-31-2018
Nonexempt individual: 01-01-2019 through 06-30-2019 and 08-01-2020 through 12-31-2020

Begin counting days of presence in the United States on 08-01-2020. Because D is currently a J-1 non-student, apply the 6-year “lookback rule”. Because D had already been an exempt individual as an F-1 student during 2 of the 6 years prior to 2020, D cannot be an exempt individual during 2020 and must start counting days of presence on the date of arrival in the United States. During D’s prior visit as an F-1 student, applying the 5-year rule, D ceased to be an exempt individual on 12-31-2018.

Number of nonexempt days in United States during 2020: 153 days (08-01-2020 through 12-31-2020)

Count days as follows:

Current year (2020) days in United States (153) × 1 = 153 days
Prior year (2019) days in United States (181 for 01-01-2019 through 06-30-2019) × 1/3 = 60 1/3 days
Year before that (2018) days in United States (0) × 1/6 = 0 days
Total = 213 days

D met the substantial presence test on 12-01-2020.  From 2019, 60 1/3 days, plus 123 days from 2020 (08-01-2020 through 12-01-2020) = 183 days.

D's residency starting date is 08-01-2020. D had not been present in the United States long enough to establish residency during 2019, nor to qualify for the first-year choice under IRC § 7701(b)(2)(A) – D was present in the United States for less than 75% of the days from 01-01-2019 (first day present in the United States as a nonexempt individual)  to the last day of 2019. Thus, D’s residency must begin on 08-01-2020, the first day present in the United States during the year D met the substantial presence test.

Analysis for 2021

Date of entry into United States: 08-01-2020
Exempt individual: 08-15-2014 through 12-31-2018 (5 calendar years, 2014 through 2018)
Nonexempt individual 01-01-2019 through 06-30-2019 and 08-01-2020 through 12-31-2020
Begin counting days of presence in the United States on 08-01-2020
Number of nonexempt days in United States during 2021: 365 days

Count days as follows:

Current year (2021) days in United States (365) × 1 = 365 days
Prior year (2020) days in United States (153) × 1/3 = 51 days
Year before that (2019) days in United States (181) × 1/6 = 30 1/6 days
Total = 446 days

D met the substantial presence test for 2021.

Since D was a U.S. resident on 12-31-2020, and has not left the United States, D’s residency in the United States established in 2020 continues into 2021 with no residency ending date.

What kind of federal income tax returns will D file for 2020 and 2021?

2020:
D is a dual-status individual  and will file a dual-status income tax return.

2021:
D will file Form 1040 as a U.S. resident.

Example 10

M was a citizen and resident of a foreign country who had never been in the United States prior to arriving 08-15-2018 as a researcher on a J-1 visa. Without leaving the United States, M became a student and changed to F-1 status on 08-10-2020. Determine M’s residency starting date.

Solution:
Analysis for 2020

Date of entry into United States: 08-15-2018
Exempt individual: 2018 and 2019 (researcher on J-1 visa is an exempt individual for 2 calendar years with a 6-year “lookback rule”)
Nonexempt individual: 01-01-2020 through 08-09-2020

Begin counting days on 01-01-2020. However, days as an exempt individual start again on 08-10-2020. Since M became an F-1 student on 08-10-2020, the 6-year “lookback rule” does not apply to M after that date.

Since M has already been an exempt individual during 2018 and 2019, M’s status as a student exempt individual can only continue through 2020, 2021, and 2022. As a student in F-1 status, M is an exempt individual for 5 calendar years, 2018 through 2022.

During 2020 M’s status as an exempt individual begins on 08-10-2020. Therefore, the number of nonexempt days in the United States during 2020 is 222 days.

Number of nonexempt days in United States during 2020: 222 days (01-01-2020 through 08-09-2020)

Count days as follows:

Current year (2020) days in United States (222) × 1 = 222 days
Prior year (2019) days in United States (0) × 1/3 = 0 days
Year before that (2018) days in United States (0) × 1/6 = 0 days
Total = 222 days

M met the substantial presence test on 07-01-2020 (the 183rd day after 12-31-2019).

M's residency start date is 01-01-2020 (first day present in the United States during the year M met the substantial presence test).

Under the general rule, the residency ending date under the substantial presence test is December 31st of the year in which one ceases to be present in the United States. However, an exception is allowed for a residency ending date that is earlier than December 31st of a non-U.S. citizen’s last calendar year in the United States. Refer to Residency Starting and Ending Dates.

The exception allows M’s residency ending date to be the last day during the calendar year that M ceases to be present in the United States if, for the remainder of the calendar year:

  1. M’s tax home is in a foreign country (Rev. Rul. 93-86); and 
  2. M maintains a closer connection to that foreign country than to the United States (Treas. Reg. § 301.7701(b)-2(d)).

If M had qualified for the exception, M’s residency ending date under the exception to the general rule would have been 08-09-2020 (the date M ceased to be considered present in the United States, since M became an exempt individual on that date).

However, M did not qualify for the exception to the general rule for determining one’s residency ending date because, after 08-09-2020, M did not have a tax home in a foreign country and did not maintain a closer connection to a foreign country than to the United States.

Since M did not qualify for the exception to the residency ending date general rule, M’s residency ending date was 12-31-2020.

Analysis for 2021

Date of entry into United States: 08-15-2018
Exempt individual: 2018 and 2019
Nonexempt individual: 01-01-2020 through 08-09-2020
Number of nonexempt days in United States during 2020: 222 days (01-01-2020 through 08-09-2020)
Number of nonexempt days in United States during 2021: 0 days

Count days as follows:

Current year (2021) days in United States (0) × 1 = 0 days
Prior year (2020) days in United States (222) × 1/3 = 774 days
Year before that (2019) days in United States (0) × 1/6 = 0 days
Total = 74 days

M does not meet the substantial presence test for 2021.

Summary for M:

2018:
Nonresident

2019:
Nonresident

2020:
U.S. resident

2021:
Nonresident

What kind of federal income tax returns will M file for 2018 through 2021?

2018 and 2019:
M will file Form 1040NR as a nonresident each year.

2020:
M will file Form 1040 as a U.S. resident.

2021:
M will file Form 1040NR as a nonresident.

References/Related Topics

Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.