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The Substantial Presence Test (SPT) is a criterion used by the Internal Revenue Service (IRS) in the United States to determine whether an individual who is not a citizen or lawful permanent resident in the recent past qualifies as a "resident for tax purposes" or a "nonresident for tax purposes"; [1] [2] it is a form of physical presence test.
[6]: 6 An individual is a resident alien of the United States if he or she passes either the Substantial Presence Test or the Green Card Test, although there are also some other cases; individuals who have taxable income in the United States but fail the criteria for being resident aliens must file as nonresident aliens for tax purposes.
Non-resident alien employees receive a completed version of this form from their withholding agent if they have one. For example, a postdoctoral student from a foreign country who receives a stipend from an American university would receive Form 1042-S from the university, but if the person is receiving payment in exchange for work done (such ...
The criteria for residence for tax purposes vary considerably from jurisdiction to jurisdiction, and "residence" can be different for other, non-tax purposes. For individuals, physical presence in a jurisdiction is the main test. Some jurisdictions also determine residency of an individual by reference to a variety of other factors, such as the ...
A nonresident alien is defined as an individual who is foreign-born and has not met the criteria of either the green card test or a substantial presence test. Nonresident aliens engaged in a trade or business within the United States during the fiscal year are obligated to file Form 1040NR.
For gift tax purposes, the test is different in determining who is a non-resident alien compared to the one for income tax purposes (the inquiry centers around the decedent's domicile). This is a subjective test that looks primarily at intent.
Income tax obligations of individuals with H-1B status depend on whether they are classified as resident aliens or nonresident aliens for tax purposes. This classification is determined using either the green card test or the substantial presence test established by the Internal Revenue Service .
In addition, the bona fide residence test takes into account factors such as the individual's intention, the purpose of the trip, and the length and nature of the stay. There are special deductions and exclusions that accompany this only if the individual is a U.S. citizen or U.S. resident alien and has a tax treaty.