See Conditions for a Closer Connection to a Foreign Country. income tax purposes by satisfying the “closer connection” exception to the Substantial Presence Test. For details on the 3-year look-back formula refer to Substantial Presence Test.Īn H-1B alien who otherwise meets the Substantial Presence Test can nevertheless be treated as a nonresident for U.S. Generally, an H-1B alien who spends 122 days in the United States in each year of the 3-year period will meet the Substantial Presence Test for the current calendar year and be considered a U.S. Unless some other exception applies, an H-1B alien must count every day of physical presence in the United States for purposes of the Substantial Presence Test. days of presence do not apply to H-1B aliens. There are exceptions to this rule where certain days of physical presence in the United States do not count, including days a nonimmigrant is an “exempt individual.” However, the rules allowing an “exempt individual” to exclude U.S. For purposes of this 183-day test, any part of a day that a nonimmigrant alien is physically present in the United States is counted as a day of presence. The Substantial Presence Test is a mechanical test based on counting a nonimmigrant alien’s days of physical presence in the United States under a 3-year “look-back” formula. For more information on this choice, refer to the discussions on “First-Year Choice” and “Nonresident Spouse Treated as a Resident” in Publication 519, U.S. Under certain circumstances, an H-1B alien who fails to meet the Substantial Presence Test may be able to choose to be treated as a U.S. The test is applied on a calendar year-by-calendar year basis (January 1 – December 31). resident for federal income tax purposes if he or she meets the Substantial Presence Test. Generally, an alien in H-1B status (hereafter referred to as “H-1B alien”) will be treated as a U.S. citizens on their worldwide income, and nonresident aliens (with certain narrowly defined exceptions) are taxed only on income which is derived from sources within the United States and/or income that is effectively connected with a U.S. Resident aliens are taxed in the same manner as U.S. For tax purposes, there are two types of aliens: resident and nonresident aliens. Tax Residency StatusĪlthough the tax residency rules are based on the immigration laws concerning immigrant and nonimmigrant aliens, the tax rules define residency for tax purposes in a way that is very different from U.S. Citizenship and Immigration Services (“USCIS”) website ( I. It is important to distinguish between H-1B status and J-1 status because the tax consequences under each status are significantly different.įor more information about the H-1B immigration status, visit the U.S. Note, however, aliens may reside in the United States for purposes of teaching under several different immigration status classifications, including H-1B status and J-1 status. The H-1B status permits a qualified nonimmigrant alien, i.e., an alien who is not a lawful permanent resident (also known as a “green card holder”), to reside in the United States to perform services in a specialty occupation (including teaching), services of exceptional merit and ability relating to a Department of Defense cooperative research and development project, or services as a fashion model of distinguished merit or ability. H-1B Status (Specialty Occupations and Fashion Models)
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