How U.S. Tax Residency Is Determined скачать в хорошем качестве

How U.S. Tax Residency Is Determined

In “How U.S. Tax Residency Is Determined,” John McCord, Senior Private Wealth and Portfolio Manager at Cardinal Point, explains that U.S. tax residency is determined by IRS rules (not simply where you live), and it dictates whether you must report your worldwide income. He outlines three primary tests used by the IRS: the green card test, the substantial presence test, and the closer connection exception. Under the green card test, lawful permanent residents are automatically considered U.S. tax residents and must report global income. The substantial presence test applies to non–green card holders and uses a three-year formula to calculate days spent in the U.S., requiring at least 31 days in the current year and a weighted total of 183 days over three years. Certain days may be excluded. Even if this threshold is met, individuals may still avoid U.S. tax residency through the closer connection exception by demonstrating stronger residential, familial, and economic ties to another country and filing IRS Form 8840. If classified as a U.S. tax resident, individuals must report worldwide income and may also need to file additional forms such as the FBAR (FinCEN Form 114) and IRS Form 8938 for foreign accounts, with significant penalties for noncompliance. For those with cross-border ties, particularly between Canada and the U.S., the rules can be complex. Learn more about Cardinal Point’s cross-border tax planning services at https://cardinalpointwealth.com/cross....