Resident or nonresident alien? How the IRS decides your tax status

Tax status is not immigration status

The IRS does not care what your visa is called. For federal income tax, every non-citizen is either a resident alien or a nonresident alien, and the label comes from two mechanical tests — the green card test and the substantial presence test — not from your I-94. An H-1B worker can be a nonresident in the year they arrive. An F-1 student can become a resident in their sixth calendar year without changing status. A green card holder living abroad stays a resident until the card is formally given up.

The default is nonresident. If you are not a US citizen and you meet neither test, you are a nonresident alien for that year. That matters because the two statuses file different forms, are taxed on different income, and get different deductions.

The green card test

You are a resident alien for tax purposes if you were a lawful permanent resident at any time during the calendar year. Residency under this test starts on the first day you are present in the US as a permanent resident — the day you enter on an immigrant visa, or the day your adjustment of status is approved. It does not end when you move abroad. It ends only when you formally abandon the status in writing to USCIS, or when it is terminated administratively or by a federal court. Letting the physical card expire changes nothing about your tax residency.

The substantial presence test

If you do not hold a green card, this is the test that decides. You are a resident for the year if you were physically present in the US on at least:

• 31 days during the current year, and
• 183 days over the three-year window made up of the current year and the two years before it — counting all of the days you were present this year, one-third of the days last year, and one-sixth of the days the year before that.

Any part of a day in the US counts as a day, with a short list of exceptions: days you commute from a home in Canada or Mexico, days in transit for under 24 hours, days as a crew member of a foreign vessel, days you could not leave because of a medical condition that arose here, and days you were an exempt individual. That last category is where most students and scholars live.

Someone who arrives on an H-1B on March 1 and stays passes with room to spare — roughly 300 days in the current year alone. Someone who arrives on October 1 does not: about 90 days is short of 183, and with no earlier US presence to weight in there is nothing to add. Run your own dates through the substantial presence calculator before you assume either way.

Exempt individuals: F, J, M and Q days that do not count

An exempt individual is not exempt from tax. They are exempt from counting days. If you are in the US on an F, J, M or Q visa, some or all of your days are excluded from the substantial presence test — for a limited number of years.

• Students on F, J, M or Q visas stop being exempt once they have been exempt as a student, teacher or trainee for any part of more than five calendar years. A year in which you held that status for even one day counts as a full year, and years from an earlier stay count toward the total. An F-1 who arrives in August 2022 is exempt for 2022 through 2026; from January 1, 2027 every day counts, and they typically become a resident once they cross 183 days that year.
• Teachers and trainees on J or Q visas are not exempt in the current year if they were exempt as a teacher, trainee or student for any part of two of the six preceding calendar years. Publication 519 describes a narrower exception for people whose pay came entirely from a foreign employer.

Publication 519 extends the same treatment to the immediate family members of exempt students and teachers, so an F-2 or J-2 spouse follows the principal’s clock. To exclude the days, each person must file Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition, for every year the exemption is claimed — attached to Form 1040-NR if you file one, or mailed on its own by the return due date if you have no filing requirement.

The closer-connection exception (Form 8840)

You can pass the substantial presence test and still be treated as a nonresident if you were present fewer than 183 days in the current year, kept a tax home in a foreign country for the entire year, and had a closer connection to that country than to the US — measured by where your permanent home, family, belongings, bank accounts, driver’s license and voter registration actually are. You claim it on Form 8840, Closer Connection Exception Statement for Aliens, filed with your return or on its own by the due date. File it late and the exception is generally lost for that year.

Two things disqualify you outright: 183 or more days in the current year, and having an application pending for — or having taken steps toward — permanent residence. The IRS lists the specific forms that count on its closer-connection page, and an employer’s immigrant petition filed on your behalf is one of them. If you are in the green card pipeline, this exception is not for you.

Dual-status years and the first-year choice

The year you arrive and the year you leave are often dual-status years: nonresident for part of the year, resident for the rest. Under the substantial presence test your residency starts on the first day you are present in the US in the year you pass, so an H-1B who lands on March 1 is a nonresident for January and February and a resident from March onward.

A dual-status return is two returns in one envelope. If you are a resident on December 31 you file Form 1040 with a Form 1040-NR attached as a statement for the nonresident months; if you are a nonresident on December 31, the roles reverse. Dual-status filers cannot take the standard deduction, cannot use head-of-household rates, and cannot file jointly unless married to a US citizen or resident who elects to treat them as a resident for the full year.

If you arrive late in the year and fall short of 183 days, the first-year choice lets you elect to be a resident from your arrival date anyway — provided you were present for at least 31 consecutive days, were present for at least 75 percent of the days from the start of that period to the end of the year, and go on to pass the substantial presence test the following year. Because the election is only valid once you have passed the test in year two, people who use it often request an extension for the year-one return rather than file as a nonresident and amend later. It is worth the effort when it opens the door to a joint return.

What actually changes when you are a resident

These are the differences that move money:

• The form. Residents file Form 1040. Nonresidents file Form 1040-NR.
• What income is taxed. Residents report worldwide income — salary, foreign rental income, foreign interest and dividends, the gain on a home sold back home — and generally take a foreign tax credit for tax already paid abroad. Nonresidents report only US-source income: wages and business income at the normal graduated rates, and fixed or determinable US-source investment income at a flat 30 percent unless a treaty lowers it. Residents also pick up the foreign-account reporting duties — FBAR and Form 8938 — that nonresidents generally do not have.
• The standard deduction. Residents get it. Nonresidents cannot claim it, with one treaty exception for students and business apprentices from India.
• Social Security and Medicare. Nonresident F-1, J-1, M-1 and Q-1 students and exchange visitors are exempt from FICA on wages permitted by their status. That exemption ends when they become residents, and it never covered H-1B, L-1, TN or O-1 wages, which are subject to FICA from the first paycheck regardless of tax residency.
• Treaty benefits. Most treaty exemptions for wages, scholarships and student income are written for nonresidents. Once you are a resident, the treaty’s saving clause usually switches them off, though some student and teacher articles run for a fixed number of years regardless.
• Filing status. Nonresidents generally file as single or married filing separately and cannot use head of household. Residents get the full menu, including married filing jointly.

That last point has an escape hatch. If one spouse is a US citizen or resident at year end and the other is a nonresident, the couple can elect under Internal Revenue Code sections 6013(g) or 6013(h) to treat the nonresident spouse as a resident for the whole year. The election is made with a signed statement attached to a joint return, requires the nonresident spouse to hold an SSN or an ITIN, and has a price: both spouses report worldwide income for that year and every later year until the election is ended. For a couple whose nonresident spouse has little foreign income it usually saves money. For a couple with a spouse earning abroad, run both versions before you sign.

Which am I? Two typical cases

H-1B, first year. You arrived from abroad in the spring on an H-1B. You count every day from arrival. If you landed before early July you will pass 183 days by December 31 and be a resident from your arrival date — a dual-status year, with a nonresident stub for the months before you came. If you landed in the autumn you are a nonresident for the whole year unless you make the first-year choice after passing the test next year. From your second full calendar year you are simply a resident, and H-1B taxes work like anyone else’s.

F-1, fifth year. You arrived in August four years ago, so this is your fifth calendar year as an exempt student. None of your days this year count. You remain a nonresident, you file Form 1040-NR if you have income and Form 8843 either way, and your on-campus or OPT wages stay FICA-exempt. On January 1 of next year your days start counting, and you will normally become a resident that year with a residency start date of the first day you are present — usually January 1, so there is no dual-status split. If instead you change to H-1B on October 1 of this fifth year, you count days from October 1: about 90, still short of 183, so you stay a nonresident for the year — with the first-year choice available if you want it.

Other guides on this site

This page covers the status question. Once you know the answer, one of these picks up where it leaves off:

• Substantial presence test calculator — enter your days for the last three years and see where you land.
• F-1 student taxes — Form 8843, 1040-NR, treaty claims and the FICA exemption in detail.
• H-1B taxes explained — withholding, FICA and state tax once you are on payroll.