IRS view: Resident vs Nonresident alien

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From the IRS perspective, anyone who is not a U.S. citizen or U.S. national is an “alien,” and then that alien is classified as either a resident alien or a nonresident alien for tax purposes.​

  • Resident alien for tax purposes
    • You are not a U.S. citizen, but you meet either:
      • the Green Card test (you were a lawful permanent resident at any time during the year), or
      • the Substantial Presence test (enough days physically present in the U.S. over a 3‑year period).​
    • Tax treatment: taxed essentially the same as a U.S. citizen, on worldwide income (U.S. and foreign‑source), and normally file Form 1040.​
  • Nonresident alien for tax purposes
    • You are not a U.S. citizen and you do not meet the Green Card test or the Substantial Presence test for that year.​
    • Tax treatment: taxed only on U.S.‑source income and certain income effectively connected with a U.S. trade or business, usually file Form 1040‑NR.​

This classification can change from year to year as facts (days in the U.S., green card status, treaty positions) change.​

Immigration status vs tax residency: different systems

Immigration law and tax law use similar words (“resident,” “nonimmigrant,” etc.) but they answer different questions.

  • Immigration law
    • Asks: “Are you allowed to be here, and under what conditions?”
    • Uses categories like immigrant (green card), nonimmigrant (F‑1, J‑1, H‑1B, B‑2, etc.), and undocumented.​
  • Tax law (IRS)
    • Asks: “Are you a tax resident of the U.S. this calendar year?”
    • Uses only resident alien vs nonresident alien tests (Green Card test and Substantial Presence test).​

Because these systems are different:

  • You can hold a temporary student visa (F‑1 / J‑1) and still become a resident alien for tax purposes once you have been in the U.S. long enough and your exempt period ends.​
  • You can lose tax residency (for example, by giving up a green card and leaving the U.S.) even if you previously had an immigrant status.​
  • Many immigration categories (F, J, M, Q) have special rules that exclude some days from the Substantial Presence test for a limited time; after that, their days start to count and they can turn into tax residents even though their visa label did not change.​

Real‑life example 1: F‑1 student who becomes a tax resident

Facts

  • Minji arrives from Korea on an F‑1 student visa in August 2021 to start a 4‑year degree program.
  • She stays in the U.S. continuously as a full‑time student through 2025, and then stays on for OPT in 2026.

Tax residency pattern

  • Under IRS rules, F‑1 students are typically treated as “exempt individuals” (days do not count toward the Substantial Presence test) for their first 5 calendar years, assuming they meet conditions and file Form 8843.​
  • So for 2021–2025 (Minji’s first five calendar years), Minji is generally a nonresident alien for tax purposes.​
    • She files Form 1040‑NR (if she has U.S. income) and reports only her U.S.‑source income (U.S. wages, taxable scholarship, etc.).
    • Her Korean bank interest, rental income from an apartment in Seoul, or Korean stock dividends are not reported to the IRS while she remains a nonresident.​
  • In 2026, Minji is no longer “exempt” as a student. All of her U.S. days start to count for the Substantial Presence test. She spends at least 183 weighted days in the U.S., so she meets the test.​
    • For 2026, Minji becomes a resident alien for tax purposes, even though her visa is still F‑1 (on OPT).

What changes in 2026

  • Minji now files a Form 1040 as a U.S. tax resident.
  • She must report worldwide income, including:
    • U.S. wages from her OPT job, and
    • Korean bank interest, dividends, and any rental income from Korea.​

Key lesson: Minji’s visa never changed (F‑1 all along), but her tax status did—from nonresident alien to resident alien—once she satisfied the Substantial Presence test and her exempt period ran out. Immigration status and tax residency are not the same thing.

Real‑life example 2: H‑1B worker becomes tax resident immediately

Facts

  • Mr. Park is hired by a U.S. tech company and comes to the U.S. on an H‑1B work visa in January 2026.
  • He works and lives in the U.S. full‑time from that point.

Tax residency pattern

  • H‑1B visas do not get the same “exempt days” treatment that F and J students do. Days in the U.S. count toward the Substantial Presence test from day one.​
  • Because Mr. Park is in the U.S. for essentially the entire year (well over 183 days), he satisfies the Substantial Presence test in 2026.
  • For 2026, he is a resident alien for tax purposes.

Tax consequences

  • Even though H‑1B is a “temporary nonimmigrant” status in immigration terms, he is taxed like a U.S. resident:
    • He files Form 1040.
    • He must report worldwide income (U.S. salary plus any investment or rental income from Korea).​

Key lesson: A “temporary” work visa does not mean “temporary tax treatment.” In many cases, H‑1B workers are tax residents from their first full year in the U.S. because their days count fully toward the Substantial Presence test.

Real‑life example 3: Green card holder who is a tax resident even while abroad

Facts

  • Ms. Lee obtained a U.S. green card in 2022 but accepted a multi‑year assignment back in Korea in 2024.
  • She spends most of 2024 and 2025 living and working in Korea, with only a short visit to the U.S. each year.

Tax residency pattern

  • Under the Green Card test, anyone who is a lawful permanent resident at any time during the calendar year is generally treated as a resident alien for tax purposes unless that status is formally abandoned or treated differently under a tax treaty tiebreaker.​
  • Ms. Lee keeps her green card and returns briefly to the U.S. each year, so she remains a resident alien for 2024 and 2025.

Tax consequences

  • She must file Form 1040 and report worldwide income, including:
    • Salary from her job in Korea.
    • Korean bank interest, dividends, and other investment income.
  • She may need to file foreign asset reports (FBAR, Form 8938) if thresholds are met, because she is a U.S. tax resident.​

Key lesson: Even if immigration authorities might later question whether she is truly “residing” in the U.S., as long as she holds a valid green card and has not properly given it up (or reclassified under a treaty), she is usually treated as a resident alien for tax purposes, regardless of how many days she actually spent inside the U.S. that year.​

Real‑life example 4: Short‑term visitor remains a nonresident alien

Facts

  • Mr. Choi lives in Korea and comes to the U.S. for business trips:
    • 2024: 60 days
    • 2025: 60 days
    • 2026: 60 days
  • He has no green card and no student/teacher “exempt” status; every day counts.

Substantial Presence test for 2026

  • 2026: 60 days × 1 = 60
  • 2025: 60 days × 1/3 = 20
  • 2024: 60 days × 1/6 = 10
  • Total = 90 days, less than 183.

He does not meet the Green Card test or the Substantial Presence test, so for 2026 he is a nonresident alien for tax purposes.​

Tax consequences

  • He pays U.S. tax only on U.S.‑source income (for example, consulting fees linked to work physically done in the U.S.), usually via Form 1040‑NR.​
  • His Korean salary, Korean bank interest, and Korean investments are outside U.S. taxation as long as he remains a nonresident alien.

Key lesson: Even with recurring U.S. travel and no special exemptions, some foreign individuals remain nonresident aliens because their U.S. days never add up to the Substantial Presence threshold.

Note: This article is intended for informational purposes only and does not constitute tax advice. For personalized guidance, please consult a tax professional.