substantial presence test calculator

Substantial Presence Test Calculator for Tax Year 2023

Feb 11, 2024

The 2024 Tax season in the US is already underway. The filing season for individual tax returns started on the 29th of January, with the due date for filing them or requesting an extension being the 15th of April for the majority of the US states. This means that, right about now, there are a lot of foreigners with US-sourced income trying to figure out whether or not the IRS will consider them as resident or nonresident aliens for tax purposes. They are looking at their 1040-NR forms and are trying to figure out their score on the Substantial Presence Test

If you are one of them and want to calculate your days of presence in the US, you’re in luck. Just check out our free Substantial Presence Test calculator below. Continue reading the article to find out how the Substantial Presence Test calculator works and some tips that will aid you in this process.

What Is the Substantial Presence Test?

If you’re a foreigner and don’t have a US green card but still earn an income in the States, you should probably be aware of the Substantial Presence Test ( or SPT). 

The substantial presence test is a simple calculation that establishes whether or not the IRS considers you to be a resident or nonresident alien for tax purposes. Why does that matter? Because your status (i.e., how the IRS views your status) will determine what type of income you’re taxed on and what kind of deductions you can claim. 

The SPT is simple, and it focuses on the number of days you spent in the US during a 3-year period. The test also looks at what type of US Visa you had for that period. 

If all of that sounds complicated, as most of the tax-related things do, don’t worry! We’ve made a Substantial Presence Test calculator that you can freely use to help you determine your legal status.

Substantial Presence Test Calculator

To meet the SPT requirements and get the status of a resident alien, you should be present on US soil for a minimum of:

  • 31 days in the current year
  • 183 days during the previous 3 years (the current year is included in the 3-year period)

However, it’s important to note that the days of each of those 3 years are calculated differently. 

For the first year, the number of days for SPT calculation is equal to the actual number of days you’ve spent/were present in the US. For the second year, you should divide the actual number of days by 3 to get the number you should use for the SPT calculator. For the third year, you should divide the actual number of days by 6. 

  • Current year — 1 day equals 1 day
  • The year before — 1 day equals ⅓ day
  • Two years before — 1 day equals ⅙ day

If, after the calculation, the number of days of presence is less than 183, then the IRS will consider you as a nonresident alien, and you will only have to pay taxes on your US-based income. If the number is greater than 183, then you’ll move into an entirely new tax bracket in which your worldwide income will be taxed according to US law, and you will have to fill out the 1040 instead of the 1040-NR tax form.

Now, let’s give you a couple of examples to make the US Substantial Presence Test calculator even easier to understand.

Substantial Presence Test Calculator: Example 1

It’s the beginning of the 2024 tax season, and in the US, that means that the income from the previous year, or 2023, is going to be taxed by the IRS. In the US, taxes are paid for the year before. Michael is a real estate investor from Canada who got a mortgage from the US and bought a couple of rental properties in the US. He often visits the States to check on his properties and now needs to fill out the 1040-NR form for the 2023 tax season. But, to do that successfully, Michael needs to do the Substantial Presence Test and see what his score is. 

If he passes the test, he will be taxed on his worldwide income; if he fails (get a score under 183), he will only be taxed on his US-based income. 

With that bit of information out of the way, let’s assume the following:

  • The current year is 2023; Michael’s days of presence in the US is 29 (Y1)
  • The previous year is 2022; Michael’s days of presence in the US was 60 (Y2)
  • The third year is 2021; Michael’s days of presence in the US was 72 (Y3)

To see what status the IRS will give Michael and if he passes the substantial presence test, we’ll have to do the following equation:

SPT = Y1 + Y2 + Y3 

Y1 = 29

Y2 = 60 / 3 = 20

Y3 = 72 / 6 = 12

SPT = 29 + 20 + 12 = 63

Because the SPT is lower than 183, Michael will be considered a nonresident alien for tax purposes and will have to file the 1040-NR tax form. This means that he only has to pay taxes on his US-based income. If he has a business elsewhere in the world (outside of the US), that income won’t be taxed by the IRS. 

Need help filing the 1040-NR tax form? Book a call and see how we can help you.

Substantial Presence Test Calculator: Example 2 

Michelle is a Canadian citizen who bought property in Florida and likes to visit it for months on end, every year. Because she is from Canada, she doesn’t need a visa to go to the US and can legally spend six months in the US with just her passport.  Every time a Canadian leaves and re-enter the US, the timer on those six months is reset.

For the second example of Substantial Presence Test calculation, let’s assume that: 

  • The current year is 2023; Michelle’s days of presence in the US is 140 (Y1)
  • The previous year is 2022; Michelle’s days of presence in the US was 180 (Y2)
  • The third year is 2021; Michelle’s days of presence in the US was 120 (Y3) 

SPT = Y1 + Y2 + Y3

Y1 = 112

Y2 = 180 / 3 = 60

Y3 = 120 / 6 = 20

SPT = 112 + 60 + 20 = 192

Michelle’s final score on the Substantial Presence Test calculator is 192. Because the number of days of presence for Y1 (or current year) is greater than 31 and because the SPT is greater than 183, she will be considered a resident alien. 

Let’s say she has a remote job in Canada. In that case, she will have to pay taxes on the money she makes from that job or risk facing legal consequences in the US (and possibly in Canada). Her entire income will be taxed by the IRS, and she will have to file a 1040 instead of the 1040-NR form. She will also have to inform the IRS about any foreign bank accounts she holds. In this situation, we can safely say that getting an SPT score higher than 183 was not in Michelle’s best interest.

What Is a US Tax Resident?

In the US, and for tax purposes, you can be considered a tax resident by the IRS if you meet one of the two criteria:

  • You pass the Substantial Presence Test (number of days is more than 183 for a 3-year period)
  • You have a Green Card

When you are a US tax resident, you are subject to US tax laws on your worldwide income. This means that it doesn’t matter if the money you make is not from a US source. Because of that, it’s important to figure out your residency status and check if the IRS views you as a US resident or nonresident for tax purposes. The category you fall into, will determine your taxes and deductions you can claim.

a women on a business trip after passing her substantial presence test

Days of Presence: Exceptions and What Are They

Days of presence are the total number of days you were present in the US. But it’s important to note that there are some exceptions to how these days are counted/not counted. They include:

  • The days you commute to work in the US from a primary residence in either Canada or Mexico
  • The days you are in the US for a period that’s less than 24 hours.
  • The days when you are in transit between locations that are not a part of the US
  • The days in the US where you work as a crew member on a vessel of non-US origin 
  • The days in the US where you can’t leave due to an ailment 
  • The days when you have the status of an exempt individual 

Substantial Presence Test: Who Are Exempt Individuals?

Exempt individuals can spend time in the US without it being counted as days of presence by the IRS. Exemptions to the rules are given to the following groups of people:

  • Anyone who works for a foreign government and holds an A or G-type visa (A-3 and G-5 holders are not included)
  • Educators or trainees who are temporary in the US and hold J or Q-type visas.
  • Foreign students who hold F, J, M, or Q-type visas
  • Athletes that came to the US to participate in a charity event

Substantial Presence Test Calculator: Tips to Check the Days of Presence 

If you’re about to do the Substantial Presence Test but are unsure about the exact number of days of presence in the US, here are a couple of tips that can help you figure that out:

US Substantial Presence Test Tip No.1: Check Your Passport

Every foreigner who enters the US legally will have their passport stamped with the exact day of arrival. The same will happen when they leave the States and fly to another country (i.e., they will get a stamp when they enter that country). Check those dates and count the number of days between them to get the accurate number of days of presence. 

US Substantial Presence Test Tip No.2: Check Your Plane Tickets

Plane tickets can be a treasure trove of information for those who are looking to figure out their days of presence for the Substantial Presence Test. Check your plane tickets, write down the dates from them, and use that information to determine your days of presence. Afterward, you can simply input the number of days into our Substantial Presence Test Calculator to calculate your SPT score accurately. 

US Substantial Presence Test Tip No.3: Get the I-94 Form

Another great way to ensure you get the accurate number for your Substantial Presence Test is to visit the official site of the US government and get an I-94 form. This form is issued to nonresident aliens who come to the US. The travel history I-94 form holds all the information about arrivals and departures from the US. With it, you’ll be able to see exactly when you came and left the US soil easily. Use that information along with the Substantial Presence Test calculator to determine your SPT score accurately.  

FAQ

What is the 183 days rule?

The 183-day rule, a part of the Substantial Presence Test, is the main criteria used to determine whether or not a person qualifies as a tax resident in the US. According to this rule, if an individual spends 31 days in the current year and more than 183 days for three consecutive years, the IRS will consider them a tax resident, and they will be taxed on their worldwide income.

One thing to note here is that the days of presence for each of the three years are calculated differently. 

Need Help Filing 1040-NR Forms? Check Out NRI

If you are a foreigner generating income in the US, you should be aware of the current 2024 tax season. Here at NRI, we have our very own CPA (Certified Public Accountant) who specializes in filing tax forms for foreigners who have US-based income. In this tax season, we’ll be with you every step of the way. From helping you with the SPT and figuring out your legal status to making sure you file the correct forms the right way. NRI is here to help. Book a free call to learn more.

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