What is Substantial Presence Test?
An IRS test using a day-count formula over three years to determine if a foreign national is a US tax resident.
Definition
The Substantial Presence Test determines US tax residency for foreign nationals based on the number of days spent in the US over a three-year period. You meet the test if you were present in the US for at least 31 days during the current year AND the sum of days present using a weighted formula (all days in the current year + 1/3 of days in the prior year + 1/6 of days in the year before that) equals 183 or more. Exceptions include the Closer Connection Exception and certain treaty provisions.
Who Needs to Know This?
Foreign nationals spending time in the US who need to determine if they are treated as US tax residents. Canadian snowbirds are especially at risk.
Key Deadline
N/A - this is a status determination test
Potential Penalties
If you meet the test and fail to file as a US resident, standard failure-to-file penalties apply
Related Forms
Common Mistakes to Avoid
- 1Not understanding the weighted day-count formula
- 2Forgetting to file Form 8840 for the Closer Connection Exception
- 3Not counting days in transit through the US
- 4Assuming you must be present 183 days in one year (the formula spans 3 years)
Related Terms
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