Residency Determination

Residency Determination:

Determining your tax residency status is crucial in understanding your tax obligations both in the US and your home country. Our team will assess your residency status based on various factors, including the substantial presence test or residency tiebreaker rules, providing clarity on your tax filing requirements.

United States

Residency is primarily determined by the substantial presence test or through certain visa classifications such as the Green Card test.

The substantial presence test considers the number of days an individual spends physically present in the US over a three-year period. If the total exceeds a certain threshold, typically 183 days in a given year, the individual is considered a US tax resident.

Residency Tie-breaker Rules

You may also qualify for treaty-based tie-breaker rules if you are considered residents of both the U.S. and another country under each country's tax laws. In such cases, tax treaties between the U.S. and the your home country may provide guidance on resolving conflicts regarding residency status.

These rules typically consider factors such as the individual's permanent home, center of vital interests, habitual abode, and nationality to determine residency for treaty purposes.

By carefully analyzing tax treaties and residency rules, you can often mitigate the impact of double taxation and ensure that your income is taxed fairly and in accordance with applicable tax laws. This may involve planning strategies such as timing the recognition of income, claiming tax credits or deductions, utilizing tax-efficient investment structures, and seeking Sunstone CPA's professional tax advice to optimize your tax position.