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Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

Substantial Presence Test for Residency Status

(Posted May 24, 2001)

Question 104: In the last question you mention the substantial presence test. Would you explain that in more detail?

Answer: Yes. An alien who satisfies the substantial presence test is treated as a resident alien. There are other ways of having residency status. (See Q&A 103.)

You must meet two requirements to satisfy the substantial presence test under IRC 7701(b)(3) for a given year.

You must be physically present in the U.S. for at least 31 days during the year.
During the current year and the two prior years you must be in the U.S. a total of at least 183 days. For purposes of this test, count only 1/3 of the days you were here last year, and 1/6 of the days you were here two years ago.

Let's consider this definition in terms of practical examples.

Juan entered the U.S. 1/1/2001. For 2001, he will be a resident if he remains in the country until July 3, 2001, 183 days later.

Yvette came to the U.S. 1/1/1999. She leaves 1/30/2001. She is not a resident for 2001 because he was not here 31 days during 2001.

Pierre also came to the U.S. 1/1/1999. He leaves 2/1/2001. He has satisfied the 31 day rule for 2001 by being here 32 days. He was here 366 days in 2000 and 365 in 1999. For purposes of the substantial presence test, he was here 185 (32 + 122 + 60) days, after you divide last year's days by 3 and the prior year's by 6. He satisfies the substantial presence test.

Chin was in the U.S. continuously from 1994 through August 1, 1999. He leaves the U.S. for roughly two years and returns August 1, 2001. He is in the U.S. 153 days in 2001. He was in the U.S. 203 days in 1999. Divide the 1999 days by 6 and you have 33. Add that to his 153 days in 2001 and you have 186. He satisfies the substantial presence test in 2001.

There are several exceptions and special rules in the IRC 7701(b)(3), including rules affecting aliens whose departure is delayed for medical reasons, foreign government employees, teachers, and students.

Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.