Immigration status and U.S. tax residencyTax residency for immigrants

Wang Law Firm, LLC · David Wang, Managing Attorney · Attorney-reviewed · Updated October 2026

Start here: ① “Resident” under U.S. tax law and “status” under immigration law are two separate standards, but they affect each other: a green card holder is in principle a U.S. tax resident from the time the green card is obtained and must report worldwide income to the United States; ② for people without a green card, the “substantial presence test” counts days, and for statuses such as F-1 and J-1, days within a certain number of years may be excluded; ③ the year you get a green card or leave the United States is often a “dual-status” year, with filing rules that differ from ordinary years; ④ a green card holder who claims under the U.S.–China tax treaty to be a Chinese tax resident and files as a nonresident is following a formal tax-law procedure, but this may be treated by immigration authorities as evidence of abandoning permanent resident status, and for long-time green card holders it may also trigger the expatriation tax rules; ⑤ there are also reporting obligations on the China side, for which you should consult a Chinese tax professional. This page explains only principles; specific filings must be handled by a tax professional based on your individual circumstances.

“Resident” under U.S. tax law differs from the everyday meaning: someone who lives in China and returns to the U.S. once a year to “keep” the green card is still a resident for tax purposes, while an F-1 student who has studied in the U.S. for several years may remain a nonresident throughout. Tax residency determines which income you report and whether you must report foreign accounts, and it will be checked when you naturalize or give up a green card.

Based on section 7701(b) of the Internal Revenue Code (IRC) and related regulations, this page explains the tests, a few years in which mistakes are common, and where tax status and immigration status intersect. For reporting foreign accounts and assets, see FBAR and foreign asset reporting; for the tax consequences of giving up a green card, see Giving up a green card and the expatriation tax.

Two tests: the green card test and the substantial presence test

Under IRC section 7701(b)(1), an individual who is not a U.S. citizen is a U.S. tax resident (resident alien) for a calendar year if he or she meets either of the following tests for that year; an individual who meets neither is a nonresident (nonresident alien).

The green card test

If you are a lawful permanent resident of the United States at any time during a calendar year, you are a tax resident for that year. Conditional green card holders are also permanent residents under immigration law and the same test generally applies to them.

The key point is that this status continues for tax purposes until it is rescinded or is determined in an administrative or judicial proceeding to have been abandoned. Under 26 CFR 301.7701(b)-1(b), when the individual initiates the abandonment, it is established by filing Form I-407 (or a written statement of abandonment with the green card attached) with an immigration officer or consular officer; when the government initiates it, by a final order of abandonment or removal. In other words:

Someone who lives in China for a long time and has not returned to the U.S. for years is usually still treated as a resident for tax purposes, as long as no I-407 has been filed and there has been no formal finding of abandonment;
An expired green card does not mean the status has ended, and does not mean tax residency has ended;
“Feeling that you no longer count as a U.S. resident” has no effect under tax law.

The substantial presence test

For people without a green card, the test looks at days in the United States. You are a tax resident if you meet both of the following:

You were in the United States at least 31 days in the current year;
Over the three years ending with the current year, your days total at least 183 using these weights: each day in the current year counts as 1 day, each day in the prior year as 1/3 day, and each day in the year before that as 1/6 day.

Year	Days in U.S. (example)	Weight	Days counted
Current year	120	1	120
Prior year	120	1/3	40
Year before that	120	1/6	20
Total			180 (less than 183 days; the test is not met for the current year)

The table above is the example given on the IRS website. The following days are generally not counted: days you regularly commute to work in the U.S. from a residence in Canada or Mexico; days you are in the U.S. for less than 24 hours while in transit between two places outside the U.S.; days you are in the U.S. as a crew member of a foreign vessel; days you are unable to leave the U.S. because of a medical condition that arose while you were in the U.S.; and days you are in the U.S. as an “exempt individual” (see the next section).

The “closer connection” exception

A person who meets the substantial presence test may claim the closer connection exception on Form 8840 and still be treated as a nonresident if he or she was in the U.S. fewer than 183 days during the year, has a tax home in a foreign country, and has a closer connection to that foreign country than to the United States. However, according to the Form 8840 instructions, a person who has applied for, or taken other affirmative steps to apply for, a green card, or who has an application for adjustment of status pending, cannot claim this exception. This is especially important for people waiting for a priority date or who have already filed an I-485. The exception applies only to the substantial presence test, not to people who already hold a green card.

Exempt individuals: F-1 and J-1 students and scholars

An “exempt individual” is someone whose days are not counted toward the substantial presence test; it does not mean the person does not pay tax. Under IRC section 7701(b)(5) and IRS guidance, exempt individuals mainly include:

Category	Common statuses	General time limits
Students	F, J, M or Q visa, substantially complying with the visa’s requirements	Generally no longer exempt once prior years as an exempt individual (student, teacher or trainee) total more than 5 calendar years (any part of a year counts as a year); exceptions may apply if conditions are met, such as showing no intent to reside permanently in the United States
Teachers, trainees	J or Q visa, substantially complying with the visa’s requirements	Generally no longer exempt if exempt as a teacher, trainee or student in any 2 of the prior 6 calendar years; limited exceptions apply
Foreign government–related individuals	A or G visa (other than A-3 and G-5)	As provided by the IRS
Professional athletes	Temporarily in the U.S. to compete in a charitable sports event	Only for the days of the event

Exempt individuals generally must file Form 8843 for each year, even if they had no income and are not required to file a tax return. A common scenario: an F-1 student who completes undergraduate and graduate studies and then does OPT has days excluded for the first five calendar years; days start counting from the sixth calendar year, the student soon meets the substantial presence test and becomes a tax resident, and from then on must report worldwide income. After a change to H-1B, days count from the date of the change of status.

The U.S.–China tax treaty provides additional benefits for students and scholars: Article 20 exempts certain payments to Chinese students and trainees, including up to $5,000 a year of income from personal services performed in the United States; Article 19 exempts compensation for teaching or research for a cumulative period of not more than 3 years for teachers and researchers (subject to conditions). Under the treaty protocol, these two articles are exceptions to the “saving clause,” and the IRS states that Article 20 can continue to apply after a Chinese student becomes a tax resident. Whether they apply and how to claim them must be verified based on your individual circumstances.

The first year, the last year and dual status

When residency begins

Under the green card test: From the first day in the year that you are present in the United States as a permanent resident. If you obtained an immigrant visa at a consulate abroad, from the day you enter the United States on the immigrant visa.
Under the substantial presence test: Generally from the first day in the year that you are present in the United States, excluding days not counted for exempt individuals; there are also rules allowing a small number of days to be disregarded (see IRS Publication 519).
If you meet both tests in the same year, the earlier date applies.

The “first-year choice”

A person who does not meet either test in the current year but will meet the substantial presence test the following year may, if eligible, choose to be treated as a resident for part of the current year (first-year choice, IRC section 7701(b)(4)). The conditions listed by the IRS include: you were not a resident in the prior year; you were present in the U.S. for at least 31 consecutive days in the current year; and you were present in the U.S. for at least 75% of the days from the start of that 31-day period through the end of the year (up to 5 days of absence may be treated as days of presence). The choice can be filed only after you meet the substantial presence test in the following year, and once made it cannot be revoked without IRS consent. Whether it is advantageous depends on your income profile and must be calculated by a tax professional.

When residency ends

Green card holders: The date status ends under immigration law, that is, the date of a written surrender such as filing I-407, or of a final order of abandonment or removal by the government;
Residents under the substantial presence test: Generally December 31 of the year you leave the United States; if you meet the conditions (for example, for the rest of the year you have a tax home in a foreign country and a closer connection to it, and you are not a U.S. resident in the following year) and file the required statement with the IRS, your last day in the United States can be the ending date;
For a person giving up a green card who held it in at least 8 of the last 15 years, the expatriation tax rules must also be considered; see Giving up a green card and the expatriation tax.

Dual-status years

A year that includes both a nonresident period and a resident period is called a dual-status year; this is common in the first year after getting a green card and the last year before leaving the United States. The IRS rules are: during the resident period you are taxed on worldwide income, and during the nonresident period generally only on U.S.-source income; a dual-status return cannot use the standard deduction or head of household rates, and generally cannot be filed jointly; if you are a resident at year end, Form 1040 is the main return with a statement for the nonresident period attached, and if you are a nonresident at year end, Form 1040-NR is the main return.

If one spouse is a U.S. citizen or resident and the other is a nonresident, the couple may jointly choose to treat the nonresident spouse as a resident and file jointly (IRC section 6013(g) and (h)). The cost is that both spouses must report their worldwide income for the full year, and the choice continues into later years until it is suspended or terminated; once terminated, it cannot be made again. This has a large impact on families where a spouse is still in China and has income and assets in China, and should be evaluated with a tax professional before it is made.

Worldwide income: what residents report

Once you are a U.S. tax resident, in principle you report your worldwide income to the United States just like a U.S. citizen, whether or not the money is brought into the United States. Common examples include:

Wages, compensation for services and business income in China;
Rent from real estate in China, and gains from selling real estate, stocks and funds;
Interest on deposits in Chinese banks, income from wealth management products, and dividends;
Profits distributed by foreign companies or partnerships (in some cases, reportable even if not distributed).

To avoid double taxation, the tax law provides some tools, such as the foreign tax credit (Form 1116) and, where eligible, the foreign earned income exclusion (Form 2555). According to the IRS, a resident green card holder can generally qualify for the exclusion under the “physical presence test” (at least 330 full days in a foreign country within a 12-month period); the exclusion amount is adjusted for inflation each year, so check the amount the IRS publishes for the current year. It applies only to earned income, not to rent, interest or capital gains. Whether you qualify, and which method is more favorable, must be calculated case by case.

Note that reporting income and reporting accounts and assets are two different things. Even in a year with no taxable income, a resident who holds foreign accounts and certain financial assets may still have FBAR, Form 8938, Form 3520 or other reporting obligations; see FBAR and foreign asset reporting. States also have their own residency standards, which are not necessarily the same as the federal standard. There are also reporting obligations on the China side, for which you should consult a Chinese tax professional.

Tax treaties and residency determinations

A person may be treated as a tax resident by both the United States and China at the same time. Article 4, paragraph 2 of the income tax treaty between the United States and the People’s Republic of China (signed in 1984; it does not apply to Hong Kong) provides that where an individual is a resident of both countries under paragraph 1, the competent authorities of the two countries shall determine by mutual agreement of which country the individual is deemed a resident for purposes of the treaty. The U.S. Treasury Department’s technical explanation of the treaty states that in their consultations the competent authorities consider, in order, a permanent home, the country with which personal and economic relations are closer (center of vital interests), habitual abode, and nationality. Compared with many treaties that set out the order of tie-breakers directly, this arrangement in the U.S.–China treaty is more complicated in practice.

Under 26 CFR 301.7701(b)-7, an individual determined under a treaty to be a resident of the foreign country is treated as a nonresident for purposes of computing U.S. income tax, must file Form 1040-NR, and must attach Form 8833 (treaty-based return position disclosure). But the regulation also provides that:

For tax purposes other than computing income tax, the individual is generally still treated as a U.S. resident;
Filing Form 1040-NR may affect the determination by the immigration authorities of the individual’s eligibility to retain permanent resident status (the regulation’s own words).

In addition, the “saving clause” in the treaty protocol preserves the right of the United States to tax its residents under domestic law, with exceptions only for the listed articles. Whether the treaty can give you an actual tax benefit, and whether it is worth the immigration cost, must be assessed case by case.

Where it intersects with immigration: green card holders claiming nonresident status under a treaty

This is the most important point on this page. For a green card holder living long-term in China, “filing as a nonresident under the treaty” may sound like a way to pay less tax, but it leaves a record under both immigration law and tax law.

Naturalization: the presumption of abandonment

Under 8 CFR 316.5(c)(2), a permanent resident who voluntarily claims “nonresident alien” status to qualify for a special exemption from income tax, or who fails to file federal or state income tax returns because he or she considers himself or herself a nonresident, raises a rebuttable presumption of having abandoned permanent resident status. The USCIS Policy Manual explains that an applicant who has claimed a nonresident tax exemption can rebut this presumption with acceptable evidence, but the burden of proof is on the applicant.

The N-400 naturalization application asks about taxes, for example whether, since becoming a permanent resident, you have failed to file a required federal, state or local tax return, and whether you have overdue taxes; you will also usually need to prepare IRS tax records (tax transcripts) when you apply. For the specific questions and wording, check the current USCIS version; see N-400 naturalization application.

Expatriation tax: the treaty claim itself may be an “abandonment”

Under IRC section 7701(b)(6), a permanent resident who begins to be treated as a resident of a foreign country under a tax treaty, does not waive treaty benefits, and notifies the IRS is no longer treated as a permanent resident for tax purposes. For a “long-term resident” (someone who held a green card in at least 8 of the last 15 years), the Form 8854 instructions list “the date you began to be treated as a resident of a foreign country under a treaty” as one of the possible expatriation dates, which may bring in the expatriation tax (IRC section 877A) and the Form 8854 filing requirement. On the other hand, in counting the 8 years, years in which you were treated as a resident of a foreign country under a treaty and did not waive treaty benefits are not counted. The relationship among these rules is complex, and the IRS and the courts do not entirely agree on certain issues (for example, the effect on foreign account reporting obligations).

Immigration status does not change automatically based on how you file

Conversely, filing as a nonresident for tax purposes does not mean you have given up your green card under immigration law; whether a green card has been abandoned is decided by the immigration authorities or an immigration judge based on all the facts. The result can be the worst of both worlds: under tax law you may already have triggered the expatriation rules, while under immigration law you are still expected to meet a permanent resident’s obligations, or you are questioned when entering the U.S. or applying to naturalize. For the risks of living abroad long-term, see Long absences for green card holders.

Tax planning before immigrating: principles only

The day you become a U.S. tax resident (the residency starting date) is an important point in time. The same event can have completely different U.S. tax consequences depending on whether it happens before or after that date. The following are general principles; specific arrangements must be designed by a tax professional based on your individual circumstances:

Confirm the starting date first: The date you get your green card, the date you first enter the U.S., and your days under the substantial presence test determine the date from which you must report worldwide income;
Asset basis is not automatically reset: When you become a U.S. resident, the tax basis of your assets is generally not automatically adjusted to their market value at that time, so appreciation that occurred before you immigrated may be included in U.S. taxable income when you sell after becoming a resident. Whether to dispose of assets before immigrating, and how to hold them, needs to be calculated in advance;
Chinese funds and wealth management products: Some foreign fund-type investments may be treated as passive foreign investment companies (PFICs) under U.S. tax law, with unfavorable tax treatment and complex reporting; see FBAR and foreign asset reporting;
Foreign trusts: Under IRC section 679(a)(4), if a nonresident transfers property to a foreign trust and becomes a U.S. resident within 5 years, the transfer is treated as made on the residency starting date, and the trust’s income may be taxed to that person;
Companies and equity: A person holding equity in a foreign company may have Form 5471 and other reporting obligations after becoming a U.S. resident;
Keep immigration filings consistent with tax records: See The role of tax records in immigration filings.

Tax planning must be based on lawful, accurate reporting. Our firm does not give any advice on concealing income or assets.

Self-check list

I know whether this year I meet the green card test, the substantial presence test, or neither
For the year I got a green card or left the United States, I have confirmed whether it is a dual-status year and my residency starting or ending date
During my F-1 or J-1 years I filed Form 8843 every year, and I know the year from which my days start counting
Every year while holding a green card, I have reported worldwide income as a resident, including rent, interest and investment income from China
While holding a green card, I have not switched on my own to filing as a nonresident, or stopped filing because “I am in China”
If I am considering claiming nonresident status under the U.S.–China tax treaty, I have also assessed the effect on naturalization, my green card status and the expatriation tax
If my spouse is a nonresident, I have assessed with a tax professional whether to choose to file jointly and the long-term consequences
Before immigrating, I reviewed my assets, funds, companies and trusts in China and discussed them with a tax professional
I have confirmed my reporting obligations on the China side (by consulting a Chinese tax professional)

Common misconceptions

“I spend most of the year in China, so I am not a U.S. tax resident.” For green card holders, days do not matter; as long as the status has not formally ended, you are generally a resident.
“My green card expired, so my status is gone.” An expired card does not mean the status has ended; tax law looks at whether the status has been rescinded or formally determined to have been abandoned.
“F-1 students are always nonresidents.” The student exemption generally lasts only about 5 calendar years; after that, days are counted, and students often become residents during OPT or H-1B.
“Filing as a nonresident under the treaty is legal, so there is no risk.” There is a formal procedure under tax law, but it may be used as evidence of abandoning a green card and may trigger the expatriation tax rules.

What we can do

Based on your immigration status and entry and exit records, map out your tax residency for each year and the effects of changes in status (getting a green card, changing status, long absences, giving up a green card);
Before you consider claiming nonresident status under a treaty, leaving the U.S. for a long time or giving up your green card, assess the risks from an immigration-law perspective and discuss the tax consequences together with a tax professional;
In naturalization, I-864 sponsorship, EB-5 and other filings, coordinate the immigration materials with your tax records and address inconsistencies in advance;
Work with your accountant to catch up on past unreported years through lawful procedures, with eligibility assessed case by case.

The preparation and signing of specific tax returns must be handled by the tax professional you engage, based on your individual circumstances.

Frequently asked questions

I have a green card but have always lived in China. Do I still have to file U.S. taxes?

Generally, yes. A green card holder is in principle a U.S. tax resident until the status formally ends and must report worldwide income. Taxes already paid in China may avoid double taxation through the foreign tax credit and similar mechanisms; the specifics must be calculated by a tax professional. Living abroad long-term also raises the question of whether the green card itself can be maintained.

I entered on an immigrant visa in July this year. How do I file for this year?

This year is likely a dual-status year for you: before entry you are generally treated as a nonresident, and after entry you report worldwide income as a resident. The situation is different if your spouse is a U.S. citizen or resident, or if you were also in the U.S. during the first half of the year. There are several filing options in the first year, so we recommend having a tax professional handle it based on your income profile.

When does an F-1 student become a tax resident?

Generally, once the student’s years as an exempt individual total more than 5 calendar years, days begin counting toward the substantial presence test; the student becomes a resident upon meeting the 31-day and 183-day weighted requirements. Any part of a year in the U.S. counts as a year. After a change to H-1B, days count from the date of the change. The specifics must be calculated from your entry and status records.

I am waiting for my priority date and do not have a green card yet. Can I claim the closer connection exception on Form 8840?

According to the Form 8840 instructions, a person who has applied for, or taken affirmative steps to apply for, a green card, or who has an application for adjustment of status pending, cannot claim this exception. Whether you have “taken affirmative steps” depends on the progress of your application.

Can a green card holder file as a nonresident under the U.S.–China tax treaty?

Tax law provides this procedure (Form 1040-NR with Form 8833), and the U.S.–China treaty provides that dual residence is determined by mutual agreement of the competent authorities of the two countries. But doing so may be treated as evidence of abandoning permanent resident status, affecting naturalization, and for a person who has held a green card for 8 years or more it may also trigger the expatriation tax rules. Before doing so, you must assess both the immigration and the tax consequences.

I filed as a nonresident in the past. What should I do now that I want to naturalize?

This will raise a rebuttable presumption in the naturalization review that you have abandoned permanent resident status, but you can use evidence to show that you did not abandon it. Whether and when to file, what evidence is needed, and whether past years’ returns need to be addressed first should be assessed together by an attorney and a tax professional before you file the N-400.