Substantial Presence Test (SPT) – Explained Simply
The Substantial Presence Test (SPT) is a rule used by the IRS to determine if a foreign national (like an H-1B, F-1, or J-1 visa holder) qualifies as a U.S. tax resident (and must pay taxes like a citizen).
How It Works
You meet the SPT (and become a resident alien for tax purposes) if you were physically present in the U.S. for:
- At least 31 days in the current year, AND
- 183+ days over 3 years (current year + 2 prior years), calculated as:
- All days in the current year, +
- 1/3 of days from the previous year, +
- 1/6 of days from the year before that.
Example Calculation (2024 Tax Year)
Year | Days Present | Weighted Days |
---|---|---|
2024 | 180 days | 180 (full) |
2023 | 120 days | 40 (120 ÷ 3) |
2022 | 60 days | 10 (60 ÷ 6) |
Total | – | 230 days |
✅ Result: You pass the SPT (230 > 183) and are a tax resident for 2024.
Who Is Exempt?
Some visa holders don’t count days toward the SPT, including:
- F-1/J-1 students (exempt for first 5 calendar years).
- J-1 scholars/teachers (exempt for 2 out of last 6 years).
- Diplomats (exempt indefinitely).
⚠️ Important: Even if exempt, you must file Form 8843 to prove your status.
Why It Matters
- Tax Resident (SPT passed): Pay taxes on worldwide income (like a U.S. citizen). File Form 1040.
- Nonresident (SPT failed): Pay taxes only on U.S. income (e.g., wages). File Form 1040-NR.
Common Scenarios
Visa | First Years | Later Years |
---|---|---|
F-1 OPT | Nonresident (exempt) | Resident (if SPT passed after 5 years) |
H-1B | Resident (usually passes SPT Year 1) | Resident |
J-1 | Depends on category (often exempt) | Resident if SPT passed |
What If You Pass the SPT Mid-Year?
You may be a dual-status alien (part-year resident + part-year nonresident). In this case:
- File both 1040 and 1040-NR (or a combined return).
- Only income earned after becoming a resident is taxed globally.
Key Takeaways
- The SPT decides if you’re a U.S. tax resident.
- F-1/J-1 students are usually exempt early on but must track their 5-year limit.
- H-1B workers almost always become residents in their first year.
- File Form 8843 if exempt to avoid errors.