U.S. Tax Residency: Substantial Presence Test Explained

The short answer

For U.S. tax purposes, you are a resident if you meet the green card test or the substantial presence test for the calendar year.
Substantial presence test: at least 31 days in the current year and at least 183 days over three years, counting all days of the current year, one-third of the previous year and one-sixth of the year before that.
Resident aliens are generally taxed on worldwide income. Nonresident aliens are taxed on income from U.S. sources and on income connected with a U.S. trade or business.
You can meet the substantial presence test and still be treated as a nonresident under the closer connection exception or a tax treaty.
Residency is about you as an individual: your U.S. LLC does not decide it.

Table of contents

Why it matters
The two tests
Example of the formula
Exceptions and treaties
The year you arrive or leave
What residency does not depend on
Keep a day log
Other countries
What MyUSAService offers
Frequently asked questions

If you own a U.S. company from abroad, one question shapes how the United States taxes you: are you a U.S. tax resident? The answer depends on your days in the country, your immigration status and, in some cases, a tax treaty. It does not depend on where your company is formed.

This guide covers the U.S. rules for individuals. Your country of residence has its own rules: ask a tax professional there as well.

Why it matters

According to the IRS, resident aliens are generally taxed on their worldwide income, the same as U.S. citizens. Nonresident aliens are taxed only on income from sources within the United States and on certain income connected with a U.S. trade or business. For a founder abroad, that gap is the difference between reporting everything to the IRS and reporting only what connects to the United States. See our guide to U.S. business taxes.

The two tests

An individual who is not a U.S. citizen is treated as a nonresident for U.S. tax purposes unless meeting one of two tests for the calendar year:

The green card test. You are a resident if you were a lawful permanent resident of the United States at any time during the year.

The substantial presence test. You must be physically present in the United States on at least:

31 days during the current year, and
183 days during the three-year period that includes the current year and the two years before, counting all the days you were present in the current year, one-third of the days in the first year before, and one-sixth of the days in the second year before.

Example of the formula

Suppose you spent 120 days in the United States this year, 90 days last year and 60 days the year before. Counting: 120 + (90 / 3) + (60 / 6) = 120 + 30 + 10 = 160. That total is below 183, so you would not meet the test. The numbers are invented, for illustration. Days in transit and other exceptions have specific rules: see Publication 519.

Exceptions and treaties

Even if you meet the substantial presence test, you can still be treated as a nonresident if you qualify for an exception. The IRS lists, among others:

The closer connection exception, which asks you to show that you have a closer connection to a foreign country than to the United States. It is claimed on Form 8840.
Tax treaties. A treaty between the United States and your country can decide which country treats you as a resident. Treaty positions are usually reported on Form 8833.

Both depend on the facts and have conditions and deadlines. Ask a professional before relying on either.

The year you arrive or leave

You can be a nonresident and a resident during the same year, which usually happens in the year you arrive in or leave the United States. In that case you file a dual-status return. The IRS also describes a first-year choice to be treated as a resident, in specific conditions.

What residency does not depend on

Where your U.S. LLC is formed or where its address is.
Where your customers are.
Where your bank account is.

Your days, your status and any treaty decide.

Keep a day log

If you travel to the United States, record your days of presence each year: dates of entry and exit and the purpose. The formula counts three years, so an old year can matter. A simple spreadsheet is enough.

Other countries

Your home country and any country where you work may treat you as a tax resident under their own rules, which often look at where you live, where your ties are and where a company is managed. A person can be treated as a resident by two countries at once: treaties usually contain tie-breaker rules for that case. This guide does not cover those rules.

What MyUSAService offers

MyUSAService prepares U.S. returns for companies owned from abroad, from $951 for a single-member LLC or a C corporation. Personal residency questions, such as the substantial presence test or a treaty position, need a tax professional who reviews your days and your case. Prices as of September 2026.

Frequently asked questions

How many days can I spend in the U.S. without becoming a tax resident?

There is no single number. The substantial presence test looks at 31 days this year and a weighted total of 183 days over three years. Exceptions and treaties can change the result.

Does my U.S. LLC make me a U.S. tax resident?

No. Residency depends on you: your days, your immigration status and any treaty.

What is the closer connection exception?

An exception that can treat you as a nonresident even if you meet the substantial presence test, when you show a closer connection to a foreign country. It is claimed on Form 8840.

What is dual-status?

A year in which you are a nonresident and a resident, usually the year you arrive in or leave the United States.

Where can I find the official rules?

In IRS Publication 519, U.S. Tax Guide for Aliens.

Not sure if you are a U.S. tax resident?

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Sources

First published January 15, 2026. This article is general information, not tax advice for your situation. U.S. tax return filing | Book a free call