Note: This exercise is for educational purposes only and is not intended to be legal or tax advice. Your particular facts and circumstances must be considered when applying the U.S. tax law. You should always consult with a competent tax professional with respect to your particular situation.
Introduction: The United States taxes its citizens and residents on their "world-wide" income, regardless of where that income was earned. Two tests are used to determine whether a taxpayer is a U.S. resident for income tax purposes: (1) the substantial presence test; and (2) the closer connection test.
The substantial presence test requires a mechanical counting of days each year a you were present in the U.S. during the tax year in question (assume 1994) and during the prior 2 years. Excluded from the count are any days in which you an exempt individual under the following categories:
Even if you meet the substantial presence test, you are not considered a resident for U.S. income tax purposes if you have a closer connection to another country. To meet this test, you must have been present in the U.S. for less than 183 days during the year in question. Also, the focus of your personal and professional life must be in another country. This is determined subjectively by considering such factors as the location of your home, cars, businesses, family, religious and personal activities.
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**NOTE: The information contained at this site is for educational purposes only and is not intended for any particular person or circumstance. A competent tax professional should always be consulted before utilizing any of the information contained at this site.**