Am I a U.S. Tax Resident? Green Card & Visa Cases
미국 세법상 거주자 판정 — 영주권자 · 비자 소지자 · 이중신분

Overview — Why Tax Residency Matters 세법상 거주자 판정의 중요성

The U.S. tax system is based on residency, not citizenship. Once a person qualifies as a U.S. tax resident — through either the Green Card Test or the Substantial Presence Test — they must report worldwide income on Form 1040, including Korean salary, rental income, business income, and investment gains, regardless of where the income was earned or whether it was already taxed by Korea.

The IRS uses two independent tests to determine tax residency. Meeting either test makes a person a U.S. tax resident for that calendar year:

• Green Card Test 영주권 테스트: Any lawful permanent resident (LPR / green card holder) is a U.S. tax resident for the entire year in which the green card is held — even if living abroad, even if the green card is about to expire, even if the holder has never lived in the U.S.
• Substantial Presence Test (SPT) 실질적 체류 테스트: Non-immigrants who are physically present in the U.S. for sufficient days — based on a 3-year weighted formula — are treated as U.S. tax residents regardless of visa status.

Residency Decision Flow 거주자 판정 순서

Apply the following questions in order for each calendar year. Stop at the first "YES" — resident status is determined at that step.

Green Card Test 영주권 테스트

A lawful permanent resident (LPR) is automatically a U.S. tax resident for any calendar year in which the green card status is held at any point during the year. The test is binary and based on immigration status — physical presence, days in the U.S., and income source are irrelevant.

• Applies even when living in Korea full-time: A green card holder who has not set foot in the U.S. for 3 years is still a U.S. tax resident and must file Form 1040 reporting Korean salary, Korean rental income, Korean bank accounts (FBAR), and all other worldwide income.
• Applies for the entire calendar year: Receiving a green card in December 2026 makes the holder a U.S. tax resident for all of 2026 — not just from the card date. (The residency starting date rules under §7701(b) may modify this for the year of arrival.)
• Ends only through formal abandonment (Form I-407): The green card's tax residency effect continues until the status is formally abandoned by filing Form I-407 (Record of Abandonment of Lawful Permanent Resident Status) with USCIS, or until a final order of removal is issued by an immigration court.
• Treaty claim is not the same as abandonment: Claiming non-resident status under a tax treaty while holding a green card does not constitute formal abandonment — but it significantly raises immigration risk. U.S. Citizenship and Immigration Services may treat a treaty-based non-resident claim as evidence of intent to abandon LPR status, potentially triggering deportation proceedings.

Substantial Presence Test (SPT) 실질적 체류 테스트

The SPT applies to non-immigrants — H-1B, L-1, E-2, O-1, TN, and others whose visa category does not provide an SPT exemption. SPT is met when BOTH of the following are true:

• The person was physically present in the U.S. for at least 31 days during the current calendar year; AND
• The 3-year weighted day count is 183 or more(see formula below).

Day Counting Rules

• Any part of a day counts as a full day (arriving at 11:55 PM counts as 1 day; departing at 12:05 AM counts as 1 day).
• Days that do NOT count: Days commuting from Canada or Mexico if the person regularly commutes; days in transit between foreign countries with fewer than 24 hours in the U.S.; days present as a diplomat (A/G visa); days the person was unable to leave the U.S. due to a medical condition that arose while in the U.S. (must file Form 8843).
• Residency starting date: Once SPT is met, the residency starting date is the first day the person was present in the U.S. during the calendar year in which SPT is met.

Visa Category Exemptions 비자별 면제 규정

Certain visa holders are "exempt individuals" — their days in the U.S. are not counted toward the SPT calculation during the exemption period. "Exempt individual" does not mean exempt from U.S. tax — it means the presence days are excluded from the SPT formula only.

Closer Connection Exception 더 긴밀한 연결 예외

A person who meets the SPT may still be treated as a non-resident alien for U.S. tax purposes if they qualify for the "closer connection" exception under IRC §7701(b)(3)(B). This exception allows someone who technically meets the SPT to be treated as a non-resident by demonstrating that their primary life connections are to a foreign country.

Requirements

• The person was present in the U.S. for fewer than 183 days in the current year (if present 183+ days in the current year, the exception is not available).
• The person maintained a tax home in a foreign country during the year (a regular place of business or employment — or, if no fixed place of business, the place where the person regularly lives).
• The person had a closer connection to the foreign country than to the U.S., evidenced by: location of permanent home, family, personal belongings, and social/economic/professional ties.
• The person has not applied for, and does not have a pending application for, a green card.

File Form 8840(Closer Connection Exception Statement for Aliens) by the tax return due date (including extensions) to claim this exception. If Form 8840 is not timely filed, the exception is forfeited for that year.

Dual-Status Tax Year 이중신분 과세연도

A dual-status year occurs when a taxpayer's residency status changes during a calendar year — from non-resident to resident (arrival year) or from resident to non-resident (departure year). The taxpayer is subject to different tax rules for each portion of the year.

• Pre-residency period: Treated as a non-resident alien. Only U.S.-source income is taxable. Korean income, investments, and other foreign income during this period are generally not subject to U.S. tax.
• Post-residency period: Treated as a resident alien. Worldwide income — including Korean income — is fully taxable from the residency starting date.
• Cannot use the standard deduction: Dual-status taxpayers cannot take the standard deduction. Only itemized deductions are available, and only for the resident portion of the year.
• Cannot file Married Filing Jointly (with one exception): Dual-status filers generally cannot file a joint return with a U.S. citizen or resident spouse. The exception: if both spouses agree to be treated as U.S. residents for the entire year (§6013(g) or §6013(h) election), they can file jointly — but this means the non-resident spouse must report worldwide income for the full year, including the pre-arrival period.
• Filing requirement: Two forms are required. Form 1040 covers the resident portion; Form 1040-NR (or a statement attached to Form 1040) covers the non-resident portion. Instructions are complex — professional assistance is recommended for all dual-status filings.

U.S.–Korea Tax Treaty Tie-Breaker 미한 조세조약 충돌 해결

When a person qualifies as a tax resident of both the United States and South Korea simultaneously — a "dual resident" situation — the U.S.–Korea Tax Treaty provides a tie-breaker mechanism to determine a single country of residence for treaty purposes.

Tie-Breaker Tests (Applied in Order)

Claiming Treaty Non-Residency — Form 8833

• To claim treaty non-resident status under the tie-breaker, the taxpayer must file Form 8833(Treaty-Based Return Position Disclosure under §6114 or §7701(b)) with their U.S. tax return, disclosing the treaty position and the factual basis for the claim.
• A $1,000 penalty applies for failure to file Form 8833 when required. The treaty claim is also factually reviewed by IRS — it is not self-executing.

First-Year Election 첫해 거주자 선택

A person who does not meet the SPT in their arrival year may elect to be treated as a U.S. tax resident for part of that year under IRC §7701(b)(4) — the "First-Year Election." This election is used when resident status in the arrival year is beneficial (e.g., to claim the standard deduction, file jointly with a U.S. citizen spouse, or claim the Child Tax Credit from arrival).

Requirements

• The person was not a U.S. tax resident in the prior calendar year.
• The person is a U.S. tax resident in the following calendar year (under SPT or green card).
• The person was present in the U.S. for at least 31 consecutive days during the election year.
• The person was present in the U.S. for at least 75% of the days from the first day of the chosen 31-consecutive-day period through December 31 of the election year.

How to Make the Election

• Attach a statement to Form 1040 for the election year specifying: the chosen residency start date; the number of days present in the U.S. during each period; and a declaration of election under §7701(b)(4).
• The election can be combined with the §6013(h) election to file jointly with a U.S. citizen or resident spouse — allowing both spouses to file Form 1040 jointly as if both were U.S. residents for the full year. This maximizes credits and bracket advantages but requires worldwide income reporting from both spouses for the full year.

Foreign Reporting Obligations 해외 자산 보고 의무

Once a person becomes a U.S. tax resident, they are subject to extensive foreign reporting requirements that apply independently of income tax obligations. These requirements apply to Korean bank accounts, Korean brokerage accounts, Korean business interests, and other foreign assets.

Case Examples

Common Mistakes 자주 발생하는 오류

• 1 Green card holders not filing U.S. taxes because they live in Korea. Physical location is irrelevant to green card tax residency. Any year a green card is held, Form 1040 is required reporting worldwide income. Delinquent FBAR penalties alone can dwarf the unpaid tax — and the IRS Streamlined procedures are available only while the non-filing remains non-willful.
• 2 F-1 students miscounting their 5 exempt calendar years. The 5 calendar years are a lifetime limit — not 5 years per degree or per visa. Partial years count as full years. A student who arrived in December 2020 used 2020 as year 1 — their exemption expires after 2024, and all 2025 days count toward SPT. Arriving in December 2020 and spending only 2 weeks in the U.S. in that calendar year still uses one of the five exempt years.
• 3 Not filing Form 8843 during exempt years. Exempt individuals must file Form 8843 each year the exemption is claimed — even with no income and no Form 1040-NR requirement. Failure to file Form 8843 means the exemption is forfeited for that year and those days count toward SPT.
• 4 Claiming treaty non-resident status as a green card holder without immigration counsel. A green card holder who claims treaty non-resident status on Form 8833 may obtain a U.S. tax benefit — but creates a record that can be used by USCIS to argue intent to abandon LPR status. Immigration consequences (denial of re-entry, removal proceedings) can be irreversible. Never file Form 8833 as a green card holder without an immigration attorney's review.
• 5 H-1B workers in their first year not realizing SPT may already be met. An H-1B worker arriving July 1 with 184 U.S. days meets SPT in the first year — creating a dual-status year, worldwide income reporting obligation, and FBAR requirement for that year. Many first-year H-1B workers assume they are non-residents for the entire first year.
• 6 Not reporting Korean bank accounts on the FBAR. The $10,000 FBAR threshold is based on the aggregate of all foreign accounts, not each account individually. Three accounts each averaging $4,000 — combined $12,000 — require FBAR filing. The FBAR is filed separately from the tax return through FinCEN, by April 15 (automatic extension to October 15).
• 7 Korean mutual funds and ETFs creating unexpected PFIC issues. Korean domestic mutual funds and many foreign ETFs are Passive Foreign Investment Companies (PFICs). The PFIC tax regime is among the most punitive in the U.S. tax code — excess distributions and gains are taxed at the highest ordinary income rate plus an interest charge for prior years. PFICs must be reported on Form 8621 annually. U.S. tax residents should generally avoid holding Korean mutual funds.
• 8 Assuming the First-Year Election is always beneficial. The First-Year Election with a §6013(h) MFJ election requires the non-resident spouse to report worldwide income for the entire year — including income earned in Korea before arrival. For couples where one spouse had significant Korean income before the move date, this can increase overall U.S. tax liability significantly. Model the full-year tax outcome of both scenarios before making the election.

Hanmi CPA Insight