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Handbook for Payments to International Visitors
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Produced by:
WebTeam
Office of Accounting
Office of International Services
Contact: WebAdmin
Updated April 18, 2002

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5. Residency Test

You are a Resident Alien (RA) of the U.S. for tax purposes if you meet either of these two tests: Green Card Test or the Substantial Presence Test. If you do not meet either of the two residency tests, you are a Nonresident Alien (NRA). A Resident Alien is taxed on worldwide income. A Nonresident Alien is taxed only on "U.S. Source" income. The residency test is computed for each calendar year for which income is received.

  • Green Card Test
    Under the green card test, a foreign national is considered a U.S. Resident if at any time during the calendar year he/she entered the U.S. as a lawful permanent resident and has been given the privilege of residing permanently in the U.S.

  • Substantial Presence Test
    You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test you must be physically present in the U.S. at least:
    1. 31 days during the current calendar year, and
    2. 183 days during the 3-year period that includes the current calendar year and the 2 preceding calendar years, counting days as follows:
      1. All days you were present in the current calendar year, and
      2. 1/3 of the days you were present during the immediately preceding calendar year, and
      3. 1/6 of the days you were present in the second preceding calendar year.

    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 four exceptions to this rule:

    1. Days you regularly commute to work in the U.S. from a residence in Canada or Mexico.
    2. Days you are in the U.S. for less than 24 hours when in-transit between two places outside the U.S.
    3. Days you were unable to leave the U.S. because of a medical condition that developed while in the U.S.
    4. Days you were an exempt individual.

  • Exempt Individual
    The term "exempt individual" refers only to the calculation of the substantial presence test. The term does not refer to someone exempt from federal income tax, federal social security tax, or filing a U.S. income tax return. An exempt individual may exempt (exclude) certain defined days from the calculation of the substantial presence test. There are generally two categories of exempt individuals encountered at the Health Science Center:
    1. A student temporarily present in the U.S. under a J student visa or a F student visa is generally able to exclude days for five (5) lifetime calendar years upon entry into the U.S. as long as he/she substantially complies with the requirements of the visa.
    2. A teacher/researcher/trainee temporarily present in the U.S. under a J, non-student visa is generally able to exclude days for two (2) calendar years out of the six (6) previous calendar years upon entry into the U.S. as long as he/she substantially complies with the requirements of the visa.

  • 'Calendar Year' Concept
    A "calendar" year is the period January 1 through December 31. A calendar year is not any other consecutive twelve (12) month period. If the foreign national is in the United States for any part of a calendar year, that year will count as one calendar year.