Question

The two tests of U.S. tax residency are the: (Check all that apply.)

a. Green card test
b. Substantial presence test
c. Citizenship test
d. Domicile test

Answer 1

The Green card test relies on immigration status, considering green card holders as U.S. residents. The Substantial presence test evaluates the number of days an individual spends in the U.S. over a three-year period, determining tax residency. So, the correct options are:

a. Green card test

b. Substantial presence test

Step-by-step explanation:

The two tests for U.S. tax residency are the Green card test and the Substantial presence test. The Green card test is a straightforward assessment based on immigration status. Individuals holding a U.S. green card are deemed residents for tax purposes, regardless of the duration of their physical presence in the country. This test provides a clear criterion for tax residency, tying it directly to legal permanent residency.

On the other hand, the Substantial presence test takes into account the number of days an individual has been physically present in the United States over a three-year period. It uses a weighted formula, counting each day in the current year as a full day, one-third of the days in the preceding year, and one-sixth of the days in the second preceding year. If the total exceeds 183 days, the individual is considered a U.S. tax resident. This test is designed to capture individuals who may not have a green card but have a significant presence in the country over time.

Both tests play a crucial role in determining an individual's tax residency status, reflecting the intricate interplay between immigration status and physical presence. Understanding these tests is essential for individuals navigating the complexities of U.S. tax regulations.

Answer 2

The two tests of U.S. tax residency are the Green card test and the Substantial presence test. The Green card test is for green card holders, while the Substantial presence test is based on time spent in the U.S. Options A and B.

Step-by-step explanation:

The two tests of U.S. tax residency are: a. the Green Card test and b. the Substantial Presence Test.

The Green card test applies to those who possess a green card, indicating they are permanent residents with the right to live and work in the U.S. This grants them tax residency status automatically.

The Substantial presence test determines tax residency based on the amount of time spent in the U.S. over three years, requiring a significant physical presence in the country.

Hence, the right answer is options A and B.