U.S. Tax Residency and Treaty Positions

Consulting Service

If you are a non-US citizen who has spent time in the United States, or you are a green card holder living abroad, you should consider the U.S. domestic rules and treaty provisions that determine your tax status. Our experts will analyze the full range of laws to help you arrive at a technically sound position with regards to your status.

Implications of US Tax Residency


A non-citizen is considered a resident alien for U.S. income tax purposes if he or she meets one of two objective tests: (1) the “lawful permanent residence” (green card) test or (2) the “substantial presence” test.

Absent a treaty, a resident alien is treated nearly identically to a U.S. citizen for tax purposes. This means being subject to worldwide taxation or taxation on all income no matter where it is sourced. It also means being subject to a complex U.S. tax system that uses anti-deferral regimes to ensure that taxes aren’t deferred via offshore companies or activities.

Fortunately, both U.S. domestic law and treaty law offer a number of exceptions that prevent non-US citizens from being classified as resident aliens.

Consulting for Non-Citizens


In the case of non-citizens, our analysis will center around two main exceptions to tax residency:

  • The “closer connection” test – establishing that you have a “closer connection” during the year to a foreign country in which you have a tax home
  • Treaty relief – utilizing a relevant treaty’s "tie-breaker rules" to justify nonresident alien status for U.S. tax purposes

In addition, our analysis would take into account both domestic law and treaty provisions that provide exceptions for a number of professions, such as teachers, students, and government workers, among others.

Consulting for Green Card Holders


A U.S. tax treaty, if applicable, may give a green card holder the option to elect non-resident alien status and thereby be released from U.S.-tax-resident status.

The IRS maintains a list of countries with which the United States has a treaty, which can be found here.

This type of position is often very sensitive and can have both tax and immigration implications. As such, it requires a detailed technical analysis by a tax professional.

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