Starting date for Resident Alien

[IrinaN]

Hello.
I moved to the USA in August 2017 with L1 visa. Earlier I was in the USA from March to April 2017 with B1 visa. As I understand I passed Substantial Presence Test for 2017. I'm Resident Alien. My question is: from what date I'm Resident Alien for Tax Return purposes? From March or from August?
Thank you in advance.

 

[FlyingRon]

On the substantial presence test, the residency date is the first date you are present during the tax year. It doesn't matter that you left and came back, or that your status changed, etc...

That is, it doesn't start running from the time your 31 days accrued (or you meet the 183-in-three test), it goes back to the point you first were here (in that particular tax year).

That is, the date is your March entry date.

 

[IrinaN]

Thank you. Should I create new Thread or I can ask following questions in this Thread? My next question is: Is my income (from March to July) taxable for Tax Return purposes? This income I received in my native country, I paid tax in my native country.

 

[PayrollHRGuy]

Yes, please keep you questions in this thread.

 

[IrinaN]

Ok. Thank you. My next question is: what about my income, that I earned for period March-July 2017 in my native country and paid tax for it. Is it taxable for Tax return purposes?

 

[FlyingRon]

It's taxable, but you can claim a credit for foreign income tax paid on it. Your US tax obligation is decreased (possibly to zero) based on what you paid to the foreign country.

 

[LdiJ]

It's taxable, but you can claim a credit for foreign income tax paid on it. Your US tax obligation is decreased (possibly to zero) based on what you paid to the foreign country.

Isn't it only citizens and green card holders who are required to report their world wide income?

 

[FlyingRon]

Isn't it only citizens and green card holders who are required to report their world wide income?

No, it isn't.

US residents, to include those substantially present here, have that requirement. I was assuming the poster was correct in their statement that they were substantially present.

 

[LdiJ]

Hello.
I moved to the USA in August 2017 with L1 visa. Earlier I was in the USA from March to April 2017 with B1 visa. As I understand I passed Substantial Presence Test for 2017. I'm Resident Alien. My question is: from what date I'm Resident Alien for Tax Return purposes? From March or from August?
Thank you in advance.

In order to meet the substantial presence test in one single tax year you have to be present for 31 plus 183 days. So, depending on when in March you arrived, when in April you left, and when in August arrived, you may or may not have been here for a total of 214 days.

The following IRS site blocks it out pretty thoroughly:

https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

 

[FlyingRon]

In order to meet the substantial presence test in one single tax year you have to be present for 31 plus 183 days. So, depending on when in March you arrived, when in April you left, and when in August arrived, you may or may not have been here for a total of 214 days.

The following IRS site blocks it out pretty thoroughly:

https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

You better read that again. It is NOT 214 days. It's only 183 days. The 31 days in the first test overlap with the 183 days in the second. The 183 day test counts all the time in the current year (31 year) and then a fraction of the days in the previous years.

 

[LdiJ]

You better read that again. It is NOT 214 days. It's only 183 days. The 31 days in the first test overlap with the 183 days in the second. The 183 day test counts all the time in the current year (31 year) and then a fraction of the days in the previous years.

I do not read it that way, and neither does anyone else in our firm. However, I will concede that there may be other info out there that states it in less ambiguous language. I have known it as 214 days for at least the last 10 years.

 

[not2cleverRed]

Isn't it only citizens and green card holders who are required to report their world wide income?

No. No it is not.

Think about it: if you move mid-year between states with state income tax, you have to report income to both states, and use the total income in order to calculate what rate you are taxed at in each state.

Whether it is *taxable* at the federal level is another story. But you definitely need to include it in order to determine the tax rate. Also, there are various treaties that we have with other countries that can affect a NPR's taxes, and what Ron said...

 

[not2cleverRed]

I do not read it that way, and neither does anyone else in our firm. However, I will concede that there may be other info out there that states it in less ambiguous language. I have known it as 214 days for at least the last 10 years.

365/2 = 182.5 days. So it makes sense that someone is regarded as being hear substantially if they are present more than half a year.

https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Your firm is apparently misinterpreting the 31 days in the current year and the 183 days over the 3 year period to mean 31+183.

 

[FlyingRon]

I do not read it that way, and neither does anyone else in our firm. However, I will concede that there may be other info out there that states it in less ambiguous language. I have known it as 214 days for at least the last 10 years.

Gosh, that doesn't bode well for whatever "firm" you are involved in. There's nothing "ambiguous" about this.

The Substantial Presence Test is defined in IRC 7701 (b)(3)(A). It pretty much reads identically to the page you posted. There is nothing in the (ii) clause that says "don't count the 31 days in clause (i)" or even implies that.



I agree with not2cleverred as to his reasoning. 214 would be a rather arbitrary point, where as 183 is the "more than half" threshold. Not that this matters, what matters is what the statute says.


By the way, the IRS even provides some examples that also directly contradict you.

https://www.irs.gov/individuals/international-taxpayers/alien-residency-examples