Non resident Alien vs Resident Alien: Which One Are You This Tax Season?

If you’re an NRI living or working in the U.S., your status as non resident alien vs resident alien decides everything about your taxes:

Are you a nonresident alien or a resident alien for tax purposes?

This isn’t about your visa label. It’s about how the Internal Revenue Service (IRS) classifies you.

Get this wrong and you could:

• File the wrong form (1040 vs 1040-NR)
• Lose deductions or treaty benefits
• Face penalties or IRS notices

Let’s break this down clearly so you can determine your tax residency status with confidence.

Talk to a US tax expert for FREE!

Why Your Tax Residency Status Matters

Your classification under non resident alien vs resident alien rules determines tax residency in the US:

1. What Income You’re Taxed On

• Resident aliens → Taxed on worldwide income
• Nonresident aliens → Taxed only on U.S.-source income

2. Which Form You File

• Resident alien → Form 1040
• Nonresident alien → Form 1040-NR

3. What Deductions & Credits You Get

Resident aliens qualify for:

• Standard deduction
• Child Tax Credit
• Education credits

Nonresident aliens generally cannot claim standard deduction (with limited treaty exceptions).

4. Immigration & Compliance Implications

Incorrect filing can affect:

• Future visa processing
• Green card applications
• IRS compliance history

Tax residency determines everything.

What Is a Nonresident Alien for Tax Purposes?

For U.S. federal tax purposes, an alien is anyone who is not a U.S. citizen.

You are a nonresident alien (NRA) if:

• You do not pass the Green Card Test
• You do not pass the Substantial Presence Test

Typically Includes:

• F-1 students (early years)
• J-1 researchers
• Short-term workers
• First-year arrivals

How You’re Taxed

• Only on U.S.-source income
• Must file Form 1040-NR if:
  • You are engaged in a U.S. trade or business
  • Or you have U.S. income with insufficient withholding

Filing Deadline

• April 15 (if wages were withheld)
• June 15 (if no wages were withheld)

What Is a Resident Alien for Tax Purposes?

You are a resident alien if you meet either:

• The Green Card Test
• The Substantial Presence Test

Resident aliens are taxed like U.S. citizens.

You Must:

• Report worldwide income
• File Form 1040 (or 1040-SR)

Benefits Include:

• Standard deduction
• Most tax credits
• Married filing jointly (if eligible)

This is the biggest nonresident alien vs resident alien tax difference.

The Green Card Test (Explained Simply)

You meet the Green Card Test if:

• You were a lawful permanent resident at any time during the year
• You were issued Form I-551 (Green Card)

If you have permanent residency status under immigration law, you are a resident alien for tax purposes.

Even if you moved mid-year, special dual-status rules may apply.

The Substantial Presence Test (Step-by-Step) 

This is where most NRIs get confused.

You pass the substantial presence test IRS rule if:

1. You were in the U.S. at least 31 days in the current year, AND
2. You meet the 183-day formula:

Calculation Formula:

• All days in current year
  
  • 1/3 of days in previous year
  • 1/6 of days two years prior
    = Must total 183 or more

Check yours:

If you were present:

• 150 days in 2025
• 120 days in 2024
• 120 days in 2023

Calculation:
150

• 40 (1/3 of 120)
• 20 (1/6 of 120)
  = 210 days → You pass.

You are a resident alien for tax purposes.

Real Life Example:

Priya came to the U.S. on an F-1 visa in 2019. For her first five calendar years, she was treated as an “exempt individual,” so her days did not count toward the substantial presence test.

In 2024, she switched to H-1B status. She assumed she was still a nonresident alien for tax purposes.

But here’s what happened:

In 2024, Priya was physically present in the U.S. for 200 days. Since her F-1 exemption period had ended, all her days now counted toward the substantial presence test IRS calculation.

She met:

• 31-day minimum requirement
• 183-day weighted formula

Result: Priya became a resident alien for tax purposes in 2024.

This means she must:

• File Form 1040 (not 1040-NR)
• Report worldwide income
• Review foreign bank accounts and foreign income reporting

This is a common mistake in non resident alien vs resident alien determination, especially during the F-1 to H-1B transition.

What Days Do NOT Count Toward SPT?

The IRS excludes certain days:

• Commuting from Canada/Mexico (75% rule)
• In transit for <24 hours between foreign countries
• Crew members of foreign vessels
• Medical emergency preventing departure
• NATO visa holders (not dependents)

State Tax Filing Requirements for Nonresident Aliens

Your nonresident alien tax filing status for federal purposes does not automatically determine your state tax obligations. Each U.S. state has its own residency rules. Some states tax based on physical presence, domicile, or income earned within the state — even if you are a nonresident alien federally.

For example, states like California and New York have strict residency rules and may require filing if you earned income there. Meanwhile, states like Texas and Florida have no state income tax.

Always review:

• Whether your state recognizes federal residency status
• Minimum income thresholds
• Part-year or nonresident state return requirements

Federal status =/= state status.

Special Rules for F-1, J-1 & Other Visa Holders

This is where many NRIs make mistakes.

Exempt Individuals (Days Don’t Count)

Under IRS rules, these visa holders are considered “exempt individuals” for SPT purposes:

• Foreign government officials (A or G visas)
• Teachers/trainees (J or Q visas) — exempt 2 of last 6 years
• Students (F, J, M, Q visas) — exempt up to 5 calendar years
• Professional athletes competing in charitable events

Important:
“Exempt” means exempt from counting days, not exempt from tax.

Common Question:

Do F1 students count as resident aliens?

Usually:

• First 5 calendar years → Nonresident
• After 5 years → Must test under SPT

This is often when an NRI becomes a resident alien in the U.S.

Overriding Residency & Special Elections

Sometimes you pass SPT but can still be treated as nonresident.

1. Closer Connection Exception

You may remain a nonresident if:

• Present <183 days in current year
• Maintain foreign tax home
• Stronger ties abroad
• File Form 8840

2. Tax Treaty Tie-Breaker

If dual-resident, treaty rules may override U.S. residency.
Requires filing Form 8833.

3. First-Year Election

You can elect a partial-year residency if you qualify next year.

4. Marriage Election

If married to a U.S. citizen or resident, you may elect full-year resident status.

5. Dual-Status Year

If your status changes mid-year (arrival or departure), you may file as dual-status.

1040 vs 1040-NR – Which Form Should You File?

Here’s a simplified comparison:

Read more: IRS Form 1040 Explained

What If You File the Wrong Form?

You may need to:

• File an amended return
• Respond to IRS notices
• Repay credits improperly claimed

This is why determining tax residency in the US correctly is critical.

Common Mistakes NRIs Make

1. Assuming visa type = tax status
2. Ignoring SPT day calculation
3. Filing jointly when not allowed
4. Missing treaty benefits
5. Forgetting worldwide income reporting after becoming resident

The biggest mistake? Not understanding the nonresident alien vs resident alien tax difference.

When Should You Speak to a US NRI Tax Expert?

You should strongly consider professional help if:

• First year H-1B transition
• Status changed mid-year
• Mixed U.S. + foreign income
• Dual residency issues
• Claiming treaty benefits

Borderline cases can cost thousands in mistakes.

Determine Before You File

Let’s recap:

• Pass Green Card Test → Resident Alien
• Pass Substantial Presence Test → Resident Alien
• Pass neither → Nonresident Alien

Your tax residency status determines:

• Which form (1040 or 1040-NR)
• What income you report
• What deductions you qualify for
• Whether you remain compliant

If you’re unsure how to determine tax residency in the U.S., don’t guess.

Before you file, make sure you truly understand where you stand under IRS rules.

Frequently Asked Questions (FAQs)

1. How do I know if I am a resident alien for tax purposes?

You are a resident alien if you pass either:

• The Green Card Test, or
• The Substantial Presence Test under rules set by the Internal Revenue Service

If you meet neither, you are a nonresident alien.

2. What is the substantial presence test for NRIs?

You must:

• Be present at least 31 days in the current year
• Have 183 weighted days over a 3-year period

Formula:
Current year days

• 1/3 of prior year
• 1/6 of second prior year

If total ≥ 183 → Resident alien.

3. Do F1 students count as resident aliens?

Usually no — for the first 5 calendar years, F-1 students are considered “exempt individuals,” meaning their days don’t count toward the Substantial Presence Test.

After 5 years, they must calculate SPT like everyone else.

4. What is the difference between 1040 and 1040-NR?

Resident aliens can claim the standard deduction. Nonresidents generally cannot.

5. When does an NRI become a resident alien in the US?

Typically:

• When they receive a Green Card
  OR
• When they pass the Substantial Presence Test

Many NRIs transition during H-1B years after student status.

6. Can I be a resident of two countries for tax purposes?

Yes. You may be dual-resident. In such cases, tax treaty “tie-breaker” rules may apply, and additional forms must be filed.

7. What happens if I file the wrong form?

You may:

• Lose deductions
• Receive IRS notices
• Owe penalties or interest
• Need to file an amended return

Correct classification is critical.

Talk to a US tax expert for free.