TN 10 (04-97)
GN 05010.040 Substantial Presence Test
An individual who has not been lawfully admitted to the U.S. for permanent residence can be considered a U.S. resident if he meets a substantial presence test.
Under this test, presence in the U.S. is determined under IRS law and policy and is not necessarily a period of residence for SSA purposes.
An exempt person (see C.2.d.) is:
A foreign-government related individual in the U.S. with full-time diplomatic or consular status;
An individual temporarily in the U.S. as an employee of an international organization;
An individual temporarily in the U.S. as a member of the immediate family of a person described in the first or second bullet;
A teacher or trainee (other than a student) temporarily in the U.S. under a “J” visa and who complies with requirements for being so present. He cannot keep this status if he has been exempt (as a teacher, trainee or student) in any part of 2 of the preceding 6 calendar years;
A student who is temporarily in the U.S. under an “F” or “J” visa and complies with the requirements of that visa. This status cannot be kept for more than 5 years without IRS approval; or
A professional athlete temporarily in the U.S. to compete in a charitable event.
An individual meets the substantial presence test in any year in which:
He is present in the U.S. (see 2.) on at least 31 days (they do not have to be consecutive days); and
The sum of the number of days on which he was present in the U.S. in the current and preceding two years is not less than 183 days,as determined under IRS's formula (see 3.).
EXCEPTION: An alien who meets the substantial presence test is not treated as a U.S. resident in any year in which he is present in U.S. on less than 183 days and he has a tax home (see 4.) in another country and a closer connection (see 5.) to that country than to U.S.
This exception does not apply to any year in which an individual has an application pending for adjustment of his status or has taken other steps to apply for lawful permanent resident status.
2. Presence in the U.S.
An individual is present in the U.S. on any day he is present in the U.S. for any part of the day except an individual is not considered present:
On any day he commutes if he regularly commutes to a place of employment or self-employment in the U.S. from a residence in Canada or Mexico;
EXAMPLE: A Mexican resident, who crosses the border every day to work in the U.S. and returns to his home in Mexico each night, is not considered present in the U.S. on any of these days. However, if he leaves home every Monday and returns every Friday, he may be considered present in the U.S. on Tuesday, Wednesday and Thursday.
On any day he is unable to leave the U.S. because of a medical condition which arose while he was in the U.S.;
During transit time if he is in transit between two points outside the U.S. and physically present in the U.S. for less than 24 hours; or
On any day he is an exempt person (see B.)
3. Computing Days Present in the U.S.
The number of days of presence in the U.S. in the 3-year period is the total of number of days present the U.S. in the:
current year multiplied by 1;
first preceding year multiplied by one-third; and
second preceding year multiplied by one-sixth.
Round fraction of days up to the next number.
EXAMPLE: Zoltan Brown was present in the U.S. on 43 days in the current year (1989), 164 days in 1988 and 167 days in 1987. Substantial presence is computed under the IRS formula as follows.
|43 (days in 1989) × 1||=||43 |
|164 (days in 1988) × 1/3||=||55 |
|167 (days in 1987) × 1/6||=||28 |
|Total days in U.S.|| ||126|
Mr. Brown does not meet the substantial presence test for 1988 since he was not presence for at least 183 days during the applicable 3 years.
4. Tax Home
An individual who is fully retired or unemployed does not have a tax home within the IRC meaning.
For alien tax withholding, this exception is applicable only if a claimant/ beneficiary is/was employed or self-employed during the period of presence being considered.
The “tax home” concept is used by IRS to determine whether certain living and travel expenses are deductions for tax purposes. It is generally an individual's main place of business or post of duty.
If an individual is employed or works in two places (even for the same employer), his tax home is the area in which his main place of business or work is located. The tax home is the place he regularly lives if an individual does not have a regular place of business because of the nature of his business.
A tax home is determined by considering the:
Total time ordinarily spent working in each area;
Degree of his business activity in each area; and
Relative amount of his income from each area.
5. Closer Connection to Another Country
There is no one factor which establishes a closer connection in every case to another country than to the U.S.
A decision on closer connection involves, but is not limited to, the following:
Reason the individual came to the U.S.
Living arrangements in each country. For example, does he own a home, rent a house on an annual basis, stay with relatives, etc.
Utility bills sent to his U.S. address;
Listing in the City Directory. (A listing is not conclusive evidence of a closer connection but adds to the total picture.)
Country in which he participates in regular and frequent social programs.
Place of regular attendance at religious services.
Place he considers his primary and/or regular medical source to be and where his records are kept.
Place at which the bulk of his household goods are kept.
Place he keeps his personal clothing and belongings.
Place at which his banking is done. (If banking is done in the U.S. as a convenience or because of currency problems in another country, this would not indicate a closed connection to the U.S.)