US Tax Residency for Newcomers: The Substantial Presence Test

The two ways to become a resident alien

1. The green card test. If you held a US green card at any time during the calendar year, you are a resident alien for that whole year. Simple.

2. The substantial presence test. You meet it if you were physically present in the US for:

• at least 31 days in the current year, and
• at least 183 days over a three-year weighted count: all days in the current year, plus one-third of the days in the prior year, plus one-sixth of the days in the year before that.

Any part of a day counts as a full day. Days as an exempt individual — such as an F, J, M, or Q student within the allowed years — do not count, and neither do days commuting from Canada or Mexico or days stuck by a medical emergency.

Counting days: a worked example

Suppose you spent 130 days in the US in 2026, 120 days in 2025, and 90 days in 2024:

• 2026: 130 × 1 = 130
• 2025: 120 × 1/3 = 40
• 2024: 90 × 1/6 = 15
• Weighted total: 185 days

Since 185 ≥ 183 and you were present more than 31 days in 2026, you meet the test and are a resident alien for 2026. Your residency start date is generally the first day you were present in the US that year.

A trickier example: 120 days in each of 2026, 2025, and 2024.

• 2026: 120 × 1 = 120
• 2025: 120 × 1/3 = 40
• 2024: 120 × 1/6 = 20
• Weighted total: 180 days

180 < 183 — you do not meet the test, even though you spent 360 total days in the US across three years. But there is an escape hatch below.

The closer-connection exception

If you meet the 183-day weighted test but were present fewer than 183 days in the current year, you can still be treated as a nonresident alien by showing a closer connection to another country — and maintaining a tax home there — for the entire year. This is claimed on Form 8840. It is designed for people like snowbirds who winter in Florida but clearly live in Canada.

Dual-status years and the first-year choice

The year you first meet the test, you may be a dual-status alien: nonresident for the part of the year before your residency start date, resident after. Dual-status returns are restrictive — you generally cannot use the standard deduction or file jointly.

There is a useful election: if you are married to a US citizen or resident alien at year-end, you can both choose to be treated as residents for the whole year (the first-year choice / Section 6013(g) election), which unlocks joint filing and the standard deduction. Run the numbers both ways before choosing.

What residency changes in practice

Resident aliens report foreign bank accounts over $10,000 on the FBAR and may face FATCA Form 8938 reporting — a rude surprise for newcomers who kept accounts back home.

FBAR and FATCA: the reporting that surprises newcomers

Become a US tax resident and your foreign financial life becomes reportable:

• FBAR (FinCEN Form 114): if the combined maximum value of your foreign financial accounts exceeded $10,000 at any point in the year, you file electronically by April 15 (automatic extension to October 15). No tax is due — it is purely informational — but penalties for non-willful failure start at $10,000 per violation.
• FATCA (Form 8938): higher thresholds (for single filers living in the US, $50,000 on the last day of the year or $75,000 at any point), filed with your tax return. It overlaps with FBAR but doesn't replace it.

Worked example: You arrive in June 2026 with a Canadian chequing account ($8,000), a savings account ($6,000), and a TFSA ($12,000). Combined maximum: $26,000 — over $10,000, so an FBAR is required for 2026 even though you were only a US resident for half the year. And a warning: the IRS does not recognize the TFSA as tax-free, so TFSA earnings are taxable in the US.

Treaty tie-breakers: when two countries claim you

If both the US and Canada consider you a resident, the treaty decides using a strict hierarchy:

1. Permanent home — where do you have a lasting dwelling?
2. Center of vital interests — where are your closer personal and economic ties?
3. Habitual abode — where do you normally live?
4. Citizenship — and if still tied, the countries settle it by mutual agreement.

You go down the list until one country wins; you don't get to pick the answer you like. The treaty position is disclosed on Form 8833. Common newcomer scenario: you move to Seattle in March but keep a Toronto condo, a Canadian driver's license, and a spouse in Toronto until December. Canada likely still claims you for most of 2026 — plan for a Canadian departure return and US dual-status year, not a clean break.