Days Not Counted for Determining Tax Residency Under Internal Revenue Code ?

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Days of presence in the United States , like other countries determines tax residency . Under substantial presence test , one counts the days of presence in USA for three years including current year for which you are determining tax residency under Internal Revenue Code ( Code 26) . However , there are some exceptions under which certain number fo days of presence of an Individual is not counted or added for determination of tax residency .

These are :

  1. Days you commute to work in the United States from a residence in Canada or Mexico, if you regularly commute from Canada or Mexico.
  2. Days you are in the United States for less than 24 hours, when you are in transit between two places outside the United States.
  3. Days you are in the United States as a crew member of a foreign vessel.
  4. Days you are unable to leave the United States because of a medical condition that develops while you are in the United States.
  5. Days you are an exempt individual.

Who is an Exempt Individual ?

You will be regarded as an  “exempt individual” if you fall under any of the following categories :

  1. An individual temporarily present in the United States as a foreign government-related individual under an “A” or “G” visa, other than individuals holding “A-3” or “G-5” class visas.
  2. A teacher or trainee temporarily present in the United States under a “J” or “Q” visa, who substantially complies with the requirements of the visa.
  3. A student temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa, who substantially complies with the requirements of the visa.
  4. A professional athlete temporarily in the United States to compete in a charitable sports event.

As you can see, if you are a teacher or student or trainee or professional athlete or holding “A” or “G” VISA , you are considered Exempt Individual and your presence in USA for those days shall not be counted for determination of tax residency under Substantial Presence Test.

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What is expected if You Claim Exempt Individual Status?

It is desired under the US tax law that If you claim status of an exempt Individual , because you fall in any of the aforesaid categories ,you must file a fully-completed Form 8843, which is titled Statement for Exempt Individuals and Individuals with a Medical Condition .

Attach Form 8843 to your 2014 income tax return.

If you do not have to file a return, send Form 8843 to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, by the due date for filing Form 1040NR or Form 1040NR-EZ [/infobox]