Substantial Presence Test Exception for Foreign Students

Even though a foreign student may pass the substantial presence test, an exception exists in the IRS code that allows foreign students to continue to be treated as nonresident aliens for US tax purposes.

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An Immigration law attorney helps to minimize the chances of an application getting rejected. Moreover, they understand every individual case on its merits. They understand how to make the best of your individual professional and financial profile to file a successful immigration application. The attorney would also know how to help you if your application does get rejected for any reason. You could even seek professional help if you had filed the application by yourself the first time.

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The Closer Connection Exception to the Substantial Presence Test for Foreign Students


Even though a foreign student may pass the substantial presence test, an exception exists in U.S. law which would allow the foreign student to continue to be treated as a nonresident alien. The Internal Revenue Code contains two exceptions to the substantial presence test which can be used by aliens to maintain nonresident status. First, there is the general exception to the substantial presence test available to all aliens under Internal Revenue Code section 7701(b)(3)(B) and (C) and Treas. Reg. § 301.7701(b)-2 (known as the closer connection exception). Most foreign students cannot use this exception, however, because of the requirement that the alien cannot have been physically present in the United States during the current year for more than 183 days, and the requirement that the alien’s tax home be located outside the United States. Most foreign students fail both of these tests.

The second exception to the substantial presence test for aliens is set forth in Internal Revenue Code section 7701(b)(5)(D) and (E) and in Treas. Reg. § 301.7701(b)-3(b)(7)(iii). The exception is available only to alien students (not teachers/researchers, etc.), and contains four requirements for its application. The student –

1. does not intend to reside permanently in the United States;

2. has substantially complied with the immigration laws

3. has not taken any steps to change his nonimmigrant status in the United States toward becoming a permanent resident of the United States; and

4. has a closer connection to a foreign country than to the United States as evidenced by the factors listed in Treasury Regulation 301.7701(b)-2(d)(1).


The burden of proof is on the student to prove these four factors. To claim the exception for students on an income tax return, a student should attach Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition to the student’s Form 1040NR or 1040NR-EZ.