Every other page in this guide gives two answers: one for a U.S. person, one for everyone else. This page tells you which of the two you are.
Be careful with the word "resident" here. It has nothing to do with where you feel at home, where your company is registered, or which passport you carry. For tax purposes, the IRS decides it with two tests. You run the tests, and whatever they say is the answer.
The two tests
If you pass either test in a calendar year, the IRS treats you as a resident and taxes you like a U.S. citizen.
Test 1: the green card test
The IRS puts it simply. You are a resident "if you are a lawful permanent resident of the United States at any time during the calendar year."
Two things to notice.
First, at any time. You do not have to hold the green card all year. If you are a lawful permanent resident at any point during the year, this test is met.
Second, the status does not expire on its own. The IRS says it continues until you give it up in writing to USCIS, or until USCIS or a federal court ends it. Moving abroad does not end it. People who left the United States years ago are often surprised by this.
Test 2: the substantial presence test
This test is just arithmetic. You pass it if you were physically in the United States for:
- at least 31 days this year, and
- 183 days when you add up three years using the weights below.
| Year | How many of those days you count |
|---|---|
| This year | All of them |
| Last year | One third of them |
| The year before that | One sixth of them |
Here is what that means in practice. Say you spend 120 days a year in the United States, every year. You count 120 + 40 + 20 = 180 days. You are under the line, so you are not a resident.
Now say you spend 130 days a year instead. You count 130 + 43 + 22 = 195 days. You are over 183, so the IRS treats you as a U.S. resident — and nobody tells you that it happened.
A day counts if you were "physically present in the country, at any time during the day." Even a three-hour layover counts as a full day, unless one of the exceptions below applies.
Days that do not count
The IRS leaves some days out of the count:
- Days you commute regularly from a home in Canada or Mexico.
- Days you are in transit through the United States for less than 24 hours.
- Days you work as a crew member on a foreign ship.
- Days you could not leave because of a medical condition that started while you were there.
- Days you spent in the country as an exempt individual.
"Exempt individual" is a confusing name. It does not mean you pay no tax. It means the IRS does not count your days at all. You are one if you are:
- On an A or G visa as a foreign government worker (but not A-3 or G-5).
- A teacher or trainee on a J or Q visa.
- A student on an F, J, M or Q visa.
- A professional athlete competing in a charity sports event.
If you want those days left out, you have to say so on Form 8843. This catches a lot of international students who start companies. You can live in the United States for years, still count as a non-resident for tax, and still owe that form every year.
One way out if you fail the second test
You can pass the substantial presence test and still be treated as a non-resident, but the door is narrow. It is called the closer connection exception.
To use it, all of the following must be true:
- You were in the United States for fewer than 183 days this year.
- You kept a tax home in another country for the whole year.
- You had a closer connection to that country than to the United States.
You claim it by filing Form 8840.
There is one thing that shuts the door completely. You cannot use this exception if you "personally applied, or took other steps during the year, to change your status to that of a Lawful Permanent Resident," or if you had an application pending to adjust your status. Filing an I-485, I-130 or I-140 rules you out.
The mistake almost everyone makes
Owning a U.S. company does not make you a U.S. person.
You can set up a Wyoming LLC from Seoul, get an EIN, open a bank account, and sell to American customers. Through all of that, you are still a non-resident. The company is American. You are not. These are two separate questions, and most articles online blur them together.
The opposite mistake costs more money. You can slowly become a U.S. resident without meaning to, simply by visiting your own American customers 130 days a year. No letter arrives to tell you.
What changes when the answer flips
| 🇺🇸 U.S. person | 🌏 Not a U.S. person | |
|---|---|---|
| What the U.S. taxes | Everything you earn, anywhere | Only income connected to the U.S. |
| Your personal tax return | Form 1040 | Form 1040-NR |
| If you own a single-member LLC | The LLC is ignored for tax; you report it on your 1040 | The LLC is still ignored, but you must also file Form 5472 with a pro forma 1120 |
| S-corporation | You can choose it | You cannot. Non-resident aliens are not allowed to be shareholders |
| Being your own registered agent | Possible, if you have a street address in that state | In practice, no |
| Opening a bank account | Routine | The hardest step |
Each row above is its own page in this guide. Start with whichever one is blocking you right now.
Common mistakes
🇺🇸 If the IRS counts you as a U.S. person
- Assuming an old green card stopped counting because you moved away. It did not. The IRS keeps counting you until USCIS or a court formally ends the status.
- Mixing up two different questions: whether you are a resident for immigration, and whether you are a resident for tax. They have different answers.
🌏 If it does not
- Counting only this year's days and forgetting the two years before.
- Assuming that because your student days do not count, you have nothing to file. You still owe Form 8843.
- Assuming that because your company is American, you are too.
FAQ
Does forming a U.S. LLC make me a U.S. resident for tax purposes?
No. Where your company is registered and where you are a resident are two different questions. Your LLC is American. Your own status depends on the green card test and the substantial presence test. Many non-residents own U.S. LLCs and stay non-residents.
I spent 130 days in the U.S. this year, and 130 in each of the two years before. Am I a resident?
Add them up with the weights: 130 + (130 ÷ 3 = 43) + (130 ÷ 6 = 22) = 195 days. That is more than 183, and you were there at least 31 days this year, so you meet the substantial presence test. The only way out would be one of the exceptions above, or the closer connection exception.
I am on an F-1 student visa. Do my days count?
Usually not. Students on F, J, M or Q visas are "exempt individuals," which means the IRS does not count their days. But you have to file Form 8843 to claim that. The exemption does not last forever, so check how many years you have already used it.
Can I use the closer connection exception if my green card application is pending?
No. The IRS blocks anyone who applied for permanent resident status during the year, or who has an application pending.
Does the green card test stop applying once I move abroad?
No. The IRS keeps treating you as a resident until you formally give up the status in writing to USCIS, or USCIS or a court ends it. Leaving the country is not enough on its own.