U.S. tax residency for visa holders starts with day counts

Each tax season, a taxpayer sets a passport on your desk and asks, “I’m on an H-1B, so I’m a nonresident alien, right?” Not necessarily. A visa describes a person’s immigration status; federal tax residency depends on the green card test, the substantial presence test, and any applicable exceptions or treaty rules.

The right analysis starts with the taxpayer’s facts, not assumptions about their visa. Here’s what to look for, what to ask and where misclassification can lead to costly return errors.

Immigration status and tax status aren’t the same thing

U.S. Customs and Border Protection (CBP) decides who may enter the country and how long they may stay upon admission. The IRS decides how those people are taxed, using its own residency rules under §7701(b). As a result, someone may be a nonimmigrant under immigration law and a resident alien for tax purposes in the same year.

That makes classification your first job, not your last. Resident aliens report worldwide income on Form 1040, U.S. Individual Income Tax Return, much like citizens do. Nonresident aliens report only U.S. source income and income effectively connected with a U.S. trade or business on Form 1040-NR, U.S. Nonresident Alien Income Tax Return. Misclassification can affect the entire return, not just the form filed.

Count the days before you count the dollars

Unless the taxpayer holds a green card, the substantial presence test often drives the residency analysis, though elections, treaty rules and other exceptions may also matter. To meet the test, a taxpayer must be present in the United States for at least 31 days during the current year and have a weighted total of at least 183 days over the current year and the two preceding years. Count:

• Every day present in the current year
• One-third of the days present in the first preceding year
• One-sixth of the days present in the second preceding year

Here's the twist: Some days may be excluded. Students in F, J, M or Q status may exclude days for up to five calendar years if they meet the applicable requirements. Teachers and trainees in J or Q status generally may not exclude days if they were already treated as exempt individuals as a teacher, trainee or student during any part of two of the preceding six calendar years, subject to a special exception that can change the lookback period. So, a doctoral student in a fourth calendar year may still be a nonresident if the student’s days qualify for exclusion and no other residency rule applies. An H-1B engineer who arrives in March and remains in the United States may meet the substantial presence test by late summer or early fall, depending on prior-year days. If the test is met, U.S. residency usually begins on the first day the taxpayer was present in the country that year. Check the client’s I-94 history and other travel records rather than relying on memory; even short trips outside the U.S. can affect the day count.

Match the status to the paperwork

Once you've settled the classification, the forms fall into place:

• Exempt individuals: File Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition, for the client and each dependent who is also excluding days, even when there's no income to report.
• Nonresident aliens: File Form 1040-NR when required, and attach Form 8843 when days were excluded (or file Form 8843 separately if no return is required).
• Resident aliens: File Form 1040 and report income from every country.
• Dual-status taxpayers: In the year of arrival or departure, one form serves as the return and the other as an attached statement, based on status at year-end.

Schedule OI (Form 1040-NR), Other Information, asks nonresident filers for citizenship information and details about their visa and U.S. presence. The IRS's draft 2026 Form 1040 adds a question asking whether the taxpayer (and spouse on a joint return) is a U.S. citizen, U.S. national or alien lawfully authorized to work when the return is filed.

Because the Form 1040 question is still in draft, confirm the final form and instructions before filing season.

Spouses and dependents who aren't eligible for an SSN and have a qualifying federal tax purpose may need an individual taxpayer identification number (ITIN) through Form W-7, Application for IRS Individual Taxpayer Identification Number. If a client passes the test with fewer than 183 days this year but keeps a tax home and closer ties abroad, Form 8840, Closer Connection Exception Statement for Aliens, may preserve nonresident status. That door closes once the client has applied for a green card.

Where good returns go wrong

Even seasoned preparers trip over the same handful of issues. Keep these on your radar:

• FICA withheld in error. Nonresident F, J, M and Q students working within their visa purpose are exempt from Social Security and Medicare taxes under §3121(b)(19). Ask the employer for a refund first, then file Form 843, Claim for Refund and Request for Abatement, with Form 8316 when applicable, if the employer won't fix it.
• The standard deduction. Nonresident aliens can't claim it, apart from a treaty exception for students and business apprentices from India.
• Joint filing. Nonresidents can't file jointly unless the couple elects to be treated as U.S. residents for the full year under §6013(g) or, for qualifying dual-status situations, §6013(h).
• Treaty benefits. Many treaties exempt student, teacher or researcher income. Read the specific article, then disclose the position on Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), when required.
• Foreign accounts. New resident aliens often keep bank accounts back home. Check the FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), and Form 8938, Statement of Specified Foreign Financial Assets, thresholds before you file.

Build a visa intake checklist

The best visa returns start before you open your software. Add these items to your organizer for any taxpayer who isn't a citizen or green card holder:

• Visa type and the date of every status change
• I-94 travel history for the past three years
• Prior-year returns and any Form 8843 filings
• Country of citizenship and tax residence for treaty review
• Foreign bank and investment account balances

Visa holder returns are where careful preparers earn lasting trust, and where one missed question can cost a client real money. When a client's situation lands outside the routine, you don't have to sort it out alone. Join NATP and bring a sharper, more confident answer to every visa holder who sits across your desk.

Not sure you're ready to join? Try NATP free.

Want to learn more? Join us Dec. 10, 2026, for our webinar, Visa Status and U.S. Tax Reporting Requirements. The webinar is also available on demand after the live event.