For a non-U.S. citizen, federal tax residency can arise under either the Green Card Test or the Substantial Presence Test. The tests reach the same basic tax question through different facts. The Green Card Test is based on lawful permanent resident status, while the Substantial Presence Test is based mainly on countable days of physical presence in the United States.
A person does not have to satisfy both tests. Passing either test can create U.S. resident alien status under the domestic federal tax rules. The distinction becomes more complicated when a green card holder spends little time in the United States, when a person without a green card accumulates enough U.S. days, or when both tests are met during the same calendar year.
Green Card Test vs. Substantial Presence Test
| Question | Green Card Test | Substantial Presence Test |
|---|---|---|
| What triggers the test? | Lawful permanent resident status | Countable physical presence in the United States |
| Is a green card required? | Yes, in the sense that the person must have lawful permanent resident status | No |
| Is there a 31-day current-year requirement? | No | Yes |
| Does the test use a three-year calculation? | No | Yes |
| Can some U.S. days be excluded? | Not as part of determining whether lawful permanent resident status exists | Yes, when a specific SPT exclusion applies |
| Can both tests be met in the same year? | Yes. This can affect the federal tax residency starting date. | |
| Can the closer connection exception affect the result? | It is not an exception that cancels Green Card Test status | It can affect an SPT result when all applicable conditions are met |
The Green Card Test Is Based on Lawful Permanent Resident Status
The IRS Green Card Test is met when an individual is a lawful permanent resident of the United States at any time during the calendar year. A person generally has this status after being given the privilege under U.S. immigration law to reside permanently in the United States as an immigrant. USCIS generally documents the status with Form I-551, Permanent Resident Card.
This means the Green Card Test is not a 183-day test. A lawful permanent resident who spends fewer than 183 days in the United States does not become a nonresident merely because the Substantial Presence Test is not met.
Fewer than 183 U.S. days does not, by itself, defeat the Green Card Test. The 183-day calculation belongs to the Substantial Presence Test and to certain separate tax rules, not to the basic determination of whether lawful permanent resident status satisfies the Green Card Test.
Physical departure from the United States also does not automatically end Green Card Test residency. Under the IRS rule, resident status under this test generally continues until lawful permanent resident status is voluntarily abandoned in writing, administratively terminated, or judicially terminated.
Tax residency and immigration status should still be kept separate conceptually. The Green Card Test uses an immigration-law status as the trigger for a federal tax result, but federal tax residency itself is a tax classification.
The Substantial Presence Test Is Based on Countable U.S. Days
The Substantial Presence Test can make an individual a U.S. resident for federal tax purposes even when that individual has never been a lawful permanent resident. It uses physical presence during the current calendar year and the two immediately preceding calendar years.
Both of the following requirements are part of the test:
- At least 31 countable days of presence in the United States during the current year; and
- At least 183 weighted days across the three-year calculation.
The weighted calculation is:
All countable current-year days + 1/3 of countable days from the previous year + 1/6 of countable days from the second previous year.
The result does not require 183 actual days in the United States during the current year. Prior-year presence can push the weighted total to 183 even when current-year physical presence is lower.
| Presence | Example A | Example B |
|---|---|---|
| Current year | 120 × 1 = 120 | 170 × 1 = 170 |
| Previous year | 120 × 1/3 = 40 | 60 × 1/3 = 20 |
| Second previous year | 120 × 1/6 = 20 | 30 × 1/6 = 5 |
| Weighted total | 180 | 195 |
| 183-day requirement | Not met | Met |
Example A also mirrors the calculation method used in the IRS’s own SPT example: 120 days in each of three years produces only 180 weighted days. Example B shows the opposite situation. With 170 actual current-year days, prior-year presence can raise the weighted calculation above 183.
Physical Presence Does Not Always Mean a Countable SPT Day
For the Substantial Presence Test, a person is generally treated as present in the United States on a day when physically present in the country at any time during that day. The IRS provides several exclusions, however.
- Certain days commuting to work in the United States from a residence in Canada or Mexico as a regular commuter
- Certain periods of less than 24 hours in the United States while in transit between two places outside the United States
- Certain days as a crew member of a foreign vessel
- Certain days when a medical condition that developed while in the United States prevented departure
- Days for which the person is an exempt individual under the SPT rules
“Exempt individual” has a narrow meaning here. It does not mean that the person is generally exempt from U.S. tax. It means that qualifying days are not counted toward the Substantial Presence Test.
The IRS categories include certain foreign government-related individuals under qualifying A or G visa classifications, certain J or Q teachers and trainees, certain F, J, M or Q students, and certain professional athletes temporarily present to compete in charitable sports events. Each category has its own conditions and limits.
Form 8843 is relevant when days are excluded under certain exempt-individual or medical-condition rules. Whether particular days may be excluded depends on the applicable classification, facts, tax year and IRS requirements rather than simply on the number of days spent in the country.
A Green Card Holder Can Fail the SPT and Still Be a Resident Alien
Consider a lawful permanent resident who spends only 90 countable days in the United States during the current year and does not accumulate enough weighted days to meet the Substantial Presence Test.
Failing the SPT does not erase the Green Card Test. If lawful permanent resident status remains in effect, the domestic federal tax residency analysis can still produce resident alien status through the Green Card Test.
This is why “I spent fewer than 183 days in the United States” is not enough information to determine the federal tax residency of a green card holder. Lawful permanent resident status has to be considered separately from physical presence.
A Person Without a Green Card Can Become a Resident Alien Under the SPT
The reverse situation is also possible. A foreign national can have no green card and still meet the Substantial Presence Test through countable U.S. presence.
For example, 150 countable current-year days, 90 days in the previous year and 60 days in the second previous year produce:
150 + 30 + 10 = 190 weighted days.
Assuming those are countable days and no applicable exception changes the treatment, the mathematical SPT requirements are met because the individual also exceeds the separate 31-day current-year minimum.
This tax result does not turn the individual into a lawful permanent resident for immigration purposes. Resident alien status for federal tax purposes and permanent resident status under immigration law are not interchangeable terms.
What Happens When Both Tests Are Met in the Same Year?
The tests are not mutually exclusive. A person can satisfy the Substantial Presence Test and later become a lawful permanent resident during the same calendar year.
When both tests are met in the same year, the IRS generally sets the residency starting date at the earlier of:
- the first day of presence in the United States during the year for purposes of the Substantial Presence Test, or
- the first day of presence in the United States as a lawful permanent resident.
Suppose an individual begins countable U.S. presence in February, later accumulates enough days to meet the SPT, and becomes a lawful permanent resident in July. Meeting the Green Card Test in July does not necessarily make July the federal tax residency starting point. If the SPT also applies, the earlier applicable SPT starting date may control.
The rule works differently where the Green Card Test is met but the SPT is not. In that situation, the IRS generally uses the first day during the calendar year that the person is present in the United States as a lawful permanent resident. If the green card is received while the person is abroad, the IRS describes the starting date as the first day of physical presence in the United States after receiving the green card.
Residency Can Begin Partway Through a Calendar Year
Passing a residency test during the year does not always mean resident alien treatment starts on January 1. A first year of U.S. residency can contain both a nonresident period and a resident period.
If an individual is a U.S. resident for the calendar year but was not a U.S. resident at any time during the preceding calendar year, IRS Publication 519 generally treats the part of the year before the residency starting date as nonresident and the part beginning on that date as resident. This is one way dual-status treatment can arise.
There is also a prior-year residency rule. If an individual was a U.S. resident during any part of the preceding calendar year and is again a resident during any part of the current year, the IRS generally treats that individual as a resident from the beginning of the current year.
For an SPT residency starting date, Publication 519 contains another narrow rule involving up to 10 days of actual U.S. presence. Qualifying days may be disregarded in determining the residency starting date when the person had a foreign tax home and a closer connection to that foreign country during those days. Those days still count when determining whether the SPT itself is met, and the IRS requires a statement to support their exclusion from the starting-date calculation.
The Two 183-Day Rules Should Not Be Combined
The number 183 appears in both the Substantial Presence Test and the closer connection rules, but the two uses measure different things.
SPT 183 days: a weighted three-year total.
Closer connection 183 days: actual presence in the United States during the current year must be fewer than 183 days, along with the other requirements for that exception.
The earlier 170-day example shows why this distinction matters. A person with 170 actual current-year days could have 195 weighted SPT days after prior-year presence is included. The person may therefore meet the mathematical SPT while still having fewer than 183 actual days in the current year.
That does not automatically produce a closer connection exception. Actual current-year days are only one part of that rule.
The Closer Connection Exception Belongs to the SPT Side of the Analysis
Under the general closer connection exception, a person who meets the Substantial Presence Test can still be treated as a nonresident for U.S. tax purposes when the applicable statutory conditions are satisfied.
The IRS describes the general conditions as including:
- fewer than 183 actual days of U.S. presence during the year;
- a tax home in a foreign country during the required period;
- a closer connection to the relevant foreign country than to the United States; and
- no disqualifying steps toward lawful permanent resident status and no pending application for adjustment to lawful permanent resident status.
The determination of a closer connection is based on facts and circumstances such as the location of a permanent home, family, personal belongings, business activities, driver’s license and other personal or economic connections. Form 8840 is used to claim the general closer connection exception, subject to its filing rules.
The exception should not be treated as a general rule allowing a green card holder to remain a nonresident merely by staying below 183 days. The Green Card Test is a separate route to resident alien status.
Applying for a Green Card Is Not the Same as Passing the Green Card Test
The Green Card Test is based on actually having lawful permanent resident status. Merely beginning an immigration process or having an application pending does not, by itself, mean the Green Card Test has been met.
Those immigration steps can still matter elsewhere in the tax residency rules. The IRS closer connection rules state that the general exception cannot be claimed when a person personally applied or took certain steps during the year to become a lawful permanent resident, or had an adjustment-of-status application pending during the year.
This creates an unusual but useful distinction: a person may not yet be a lawful permanent resident for the Green Card Test, while immigration steps already taken can affect whether the closer connection exception is available.
How Different Fact Patterns Affect the Two Tests
| Facts | Green Card Test | SPT | Domestic Federal Tax Residency Direction |
|---|---|---|---|
| Lawful permanent resident with only 90 U.S. days | May be met | May not be met | Failing the SPT does not cancel Green Card Test residency |
| No green card, but enough countable weighted days | Not met | May be met | Resident alien status can arise through the SPT |
| Green card obtained after enough U.S. presence to satisfy the SPT | Met | Met | The earlier applicable residency starting date generally controls |
| No green card and insufficient countable SPT days | Not met | Not met | Neither of these two domestic residency tests creates resident status |
| SPT mathematically met with fewer than 183 actual current-year days | Not necessarily met | Met before considering an exception | Closer connection rules may require separate review |
| Many calendar days in the U.S., but some qualify for SPT exclusion | Depends on LPR status, not the excluded-day calculation | Depends on countable days after applying the relevant rules | Calendar days alone may not determine the SPT result |
Tax Treaties Can Add Another Residency Layer
The Green Card Test and Substantial Presence Test are U.S. domestic federal tax rules. A person can also be treated as a resident of another country under that country’s domestic law.
When an applicable U.S. income tax treaty contains residency provisions, a dual-resident taxpayer may be subject to treaty tiebreaker rules. IRS Publication 519 explains that a person treated as a resident of the foreign country under an applicable treaty may be treated as a nonresident alien when computing U.S. income tax, while U.S. resident treatment can continue for certain other federal tax purposes.
Treaty residency therefore should not be reduced to a third day-count test. The result depends on the particular treaty, the person’s domestic residency in each country and the treaty provisions that apply to the facts.
What Changes After Federal Tax Residency Begins?
Resident aliens and nonresident aliens generally operate under different U.S. federal income tax rules. The IRS generally subjects resident aliens to U.S. income tax on worldwide income in much the same manner as U.S. citizens, while nonresident alien taxation generally focuses on income connected to U.S. sources and activities under separate rules.
The exact filing result can also depend on the portion of the year involved, income type, treaty position, elections, documentation and other tax facts. Federal Green Card Test and SPT results also do not determine state residency. States apply their own residency and filing rules.
The Order of Questions That Resolves Most Green Card Test vs. SPT Cases
- Determine whether lawful permanent resident status existed at any time during the calendar year.
- If it did, identify when presence in the United States as a lawful permanent resident began for the relevant residency-starting-date rules.
- Determine countable U.S. days for the current year and the two preceding years.
- Separate actual calendar presence from days that qualify for a specific SPT exclusion.
- Check the 31-day current-year requirement.
- Apply the three-year weighted SPT calculation.
- If both tests are met, compare their applicable residency starting dates.
- If the SPT is met with fewer than 183 actual current-year days, determine whether the separate closer connection rules are relevant to the facts.
- Where dual residency with another country exists, determine whether an applicable tax treaty changes the federal income tax treatment.
Resources Used
- IRS — U.S. Tax Residency: Green Card Test — lawful permanent resident status, continuation of Green Card Test residency and the Green Card Test starting-date rule.
- IRS — Substantial Presence Test — the 31-day requirement, three-year 183-day calculation, excluded presence and exempt-individual categories.
- IRS — Residency Starting and Ending Dates — starting dates when the Green Card Test, SPT or both tests apply.
- IRS — Closer Connection Exception to the Substantial Presence Test — actual-day limits, foreign tax home, closer connection conditions and lawful permanent resident application restrictions.
- IRS Publication 519, U.S. Tax Guide for Aliens — dual-status periods, residency starting dates, treaty residency and the special rule for up to 10 days of presence when determining an SPT residency starting date.