H-1B Visa: Residency Status for Tax Purposes
Worrying about filing taxes right is normal, especially for H-1B visa holders. Whether you’re treated as an H-1B resident alien or nonresident depends on passing the substantial presence test: how long have you recently spent in the US? The exact language of the IRS rule is complicated, so we’ll provide an example as well as an explanation.
Substantial Presence Test
To meet the substantial presence test criteria, you must be physically present in the US for at least “183 days” over the last three years, including a minimum of 31 days in the current calendar year (January 1 – December 31). However, you can’t just sum up the days. The IRS calculation follows these rules:
- Count all the days from the current year
- Include only 1 / 3 of the days from last year
- Add only 1 / 6 from the year before last
What Counts as a “Physical Presence”?
If you’re here for any amount of time during a 24-hour period, that counts as “physical presence” for the day. All fifty states, as well as the territorial waters of the US, are included.
However, there are a considerable number of exceptions to the rule. Since alien and nonresident alien tax rates are so different, it’s worth tallying exempt days to see if your physical presence test result changes.
- Time spent in US territories
- Commuting to work from Canada or Mexico
- Days spent in transit between two foreign locations, with less than 24 hours in the US
Time as a crew member of a foreign vessel
- Periods you were stuck due to a medical condition that developed while you were here
- Days you were a teacher under a J or Q visa and time as a student under an F, J, M, or Q visa
To exclude days of presence, include Form 8843 Statement for Exempt Individuals and Individuals With a Medical Condition with your tax return.
Substantial Presence Test Example
Since the IRS calculation treats this year and previous years a little confusingly, we created an example for different scenarios. Remember, this year counts in full, one-third of last year’s days count, one of six days from two years ago are included, and the minimum number of days to pass is 183.
| This Year | Last Year | Two Years Ago | Total Days | Counted Days | Pass / Fail |
| 100 | 90 | 60 | 250 | 140 | Fail |
| 120 | 90 | 60 | 270 | 160 | Fail |
| 150 | 90 | 60 | 300 | 190 | Pass |
| 40 | 360 | 360 | 760 | 220 | Pass |
| 20 | 360 | 360 | 740 | 200 | Fail* |
*While more than 183 days in this example count, you still fail the test since you were here less than 31 days in the current calendar year.
Would You Like Help Filing Your Taxes? We’re Here to Help!
It’s normal for H-1B resident aliens to feel anxious about staying IRS compliant. You can feel at ease knowing we have a rigorous hiring process for both our accountants and customer service reps. We hire the best; only an excellent CPA will touch your return from start to finish. Peace of mind is something we deliver year round, not just during tax season. Reach out to our expat tax services team today.
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