If you are a nonresident wanting to receive education credits and additional benefits of your tax return, you must file your taxes as a resident alien. Filing as a resident alien requires you to file a regular 1040 tax form. This is the same form which U.S. citizens complete for taxes. If you are a nonresident on a visa, you may qualify to file your taxes as a resident alien if you pass the substantial presence test for the tax year.
What is the substantial presence test?
The substantial presence test is used to determine how many days you were in the U.S. for the past 3 years. If you exceed the total days required, then you are allowed to file your tax return as a resident and get the benefits. This test can be tough to understand so let’s look at an example.
Paul, an international student from France, came to the U.S. in August 2015 on an F-1 student visa. He is filing his taxes for the year 2019 and is wondering if he should file his taxes as a resident or as a nonresident. Throughout the years, Paul travelled outside of the U.S. to his home country for fall breaks only. Other than that, he remained in the U.S. during spring breaks (10 days), summer breaks (106 days), and Christmas breaks (21 days). Let’s determine whether Paul should file his taxes as a resident or a nonresident.
First, let us determine how many years Paul has been in the U.S. Paul arrived in 2015 and it is now the end of 2019, he has been in the U.S. for 5 years. These years include 2015, 2016, 2017, 2018, and 2019. Although he was not in the U.S. for the entire year 2015, it still counts as a complete year under this test. Since Paul has a student visa and has been in the U.S. for 5 years, he qualifies to take the substantial test.
Next, let’s count the amount of days he was present in the U.S. but not a student to determine if it all adds up to a total of 183 days. Since Paul has been in the U.S. for at least 31 days in 2019, he can now count all the days he remained in the U.S. in 2019. The total days for spring break were 10 days, summer was 106 days, and Christmas break was 21 days. This is a total of 137 days physically present in the year 2019. Since he stayed in the U.S. for the same amount of time every year, it means that he remained for 137 days each year.
According to the substantial presence test, within a three-year period, Paul must count the total amount of days he was in the U.S. but not a student. This includes the total amount of days present in 2019, one third of the days in 2018, and one sixth of the days present in 2017. This gives a total of 137 days for 2019, 45 days for 2018, and 23 days for 2017.
In total, Paul has been physically present for 205 days within the 3-year period. Since 205 days exceeds 183 days required by the substantial presence test, Paul passes the test. Therefore, he can choose to file his taxes as a resident for the year 2019 and all other years going forward.