The Substantial Presence Test Explained: When F1 Students Become Resident Aliens

One of the most confusing aspects of F1 student taxes is the transition from "nonresident alien" to "resident alien" for tax purposes.

This has nothing to do with your immigration status - you're still on an F1 visa. But the IRS treats you differently once you've been in the U.S. long enough.

Two Types of "Resident" Status

First, understand that there are two completely separate definitions of "resident":

You can be:

A nonresident alien for immigration (F1 visa)

But a resident alien for tax purposes

This happens to many F1 students after year 5.

The Substantial Presence Test (SPT)

The IRS uses the Substantial Presence Test to determine if you're a "resident alien" for tax purposes. You pass the test (become a resident) if:

1. You were present in the U.S. for at least 31 days during the current year, AND

2. You were present for at least 183 days during the 3-year period including the current year, calculated as:

All days present in the current year, PLUS

1/3 of days present in the prior year, PLUS

1/6 of days present in the year before that

!Substantial Presence Test Formula

Example Calculation:

548 > 183, so you'd pass the test and be a resident alien.

But wait - F1 students have a special exemption.

The F1 "Exempt Individual" Rule

F1 students are considered "exempt individuals" for the first 5 calendar years of presence in the U.S. During this time:

Your days in the U.S. do NOT count toward the substantial presence test

You remain a nonresident alien for tax purposes

You file Form 1040-NR

What "5 Calendar Years" Means

The IRS uses calendar years, not months. If you arrived on December 31, 2020, that entire year counts as Year 1.

This is why the exact date matters - arriving in December vs. January can mean an extra year as a nonresident.

What Happens in Year 6 and Beyond?

Starting in your 6th calendar year, you're no longer an "exempt individual." Your days start counting toward the substantial presence test.

If you're in the U.S. full-time (365 days):

You'll pass the 183-day test by July 2nd

You become a resident alien for tax purposes as of January 1st of that year

Timeline Example:

2019: Arrived in August (Year 1 - exempt)

2020: Full year (Year 2 - exempt)

2021: Full year (Year 3 - exempt)

2022: Full year (Year 4 - exempt)

2023: Full year (Year 5 - exempt)

2024: Days now count. 365 days × 1 = 365 > 183

Result: Resident alien starting January 1, 2024

What Changes When You Become a Resident Alien?

Tax Form Changes

This is a major change. As a resident alien, you must report:

U.S. wages (same as before)

Foreign bank interest

Foreign investment gains

Income from your home country

Essentially ALL income, everywhere

Benefits You Gain

Being a resident alien isn't all bad. You gain access to:

1. Standard Deduction

2024: $14,600 (single)

2025: $15,000 (single)

2. Education Credits

American Opportunity Tax Credit (up to $2,500)

Lifetime Learning Credit (up to $2,000)

3. Filing Status Options

Can file as "Married Filing Jointly" if spouse is in U.S.

4. IRA Contributions

Can contribute to traditional and Roth IRAs

Benefits You Lose

1. FICA Exemption (Usually)

Even after becoming a resident alien for income tax purposes, you may still be exempt from FICA if you're still on F1 visa and enrolled at least half-time. But if you're on OPT working full-time (not enrolled), you'll typically owe FICA after year 5.

2. Some Treaty Benefits

Some treaty benefits continue (like China's $5,000 exemption), while others may not. Check your specific country's treaty.

Common Questions

Does OPT count toward the 5 years?

Yes. OPT is part of your F1 status. The 5-year exemption continues through OPT as long as you're still within the 5 calendar years.

What if I left the U.S. for a year?

Gaps in your presence don't restart the clock. The 5 years are cumulative.

What if I was a J-1 before becoming F1?

Previous time on J-1 student status counts toward your 5 years.

Form 8843 - do I still file it after year 5?

After your exempt period ends, you no longer file Form 8843. Instead, you file Form 1040 as a resident.