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Determining Residency White Sands Tax Solutions

Determining Residency

In order to be considered a US resident, you do need to meet one of two tests – either the green card test or the substantial presence test. If you do not have a Green card or have not applied for one, then you would have to qualify under the Substantial Presence Test.

How do I calculate the Substantial Presence Test?

The Substantial Presence Test requires that you be in the US for at least 31 days in the current year. The test covers a rolling three-year calendar period:

_____ x 1 Current year total days in the US (must be at least 31)
_____ x 1/3 Previous year total days in the US
_____ x 1/6 Second preceding year total days in the US

The total of the formula must equal or exceed 183 days in order for the Substantial Presence Test to be met.

Are you sure I am a US resident? I don’t really want to be…

If you do meet the substantial presence test but you were physically present in the US for less than 183 days, then your physical presence and your tax home must also show closer ties to the US than to another jurisdiction. Your tax home is located at your principal place of business. If you do not have a principal place of business, then your tax home is your principal place of abode. A permanent abode can be a house, apartment or furnished room and can be owned or rented. If you only have a permanent home in one country, then that is where your residency would be claimed.

If you do have a permanent home in both countries, then the country that you have a closer connection to would be considered your tax residency. Some of the facts and circumstances that are used to determine residency are as follows:

  • The country of residence that you indicate on forms and documents
  • The location of your family, personal belongings, business activities, memberships, and charitable organizations that you contribute to.
  • The jurisdiction of your driver’s license and where you vote
  • Whether you have access to a national health plan

It should also be noted that residency for tax purposes is not the same as residency for immigration purposes.

What if my spouse is a US Resident?

If you do not meet either the Green card test or the Substantial Presence Test, then under certain circumstances you may still qualify to be considered a US resident by making a first-year resident election. Only one spouse would need to meet one of the tests listed above. The other spouse can then make an election to also be treated as a US resident.

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