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by arcticbull 3585 days ago
That's not how substantial presence test works exactly. SPT only counts time spent on a qualifying visa type (TN, O1, H1B, L1, etc) and not time spent on F/J/M/Q/A/G, which is I think what OP was alluding to. It's also not >180 days, it's if:

QualifyingDaysThisYear > 31 AND

QualifyingDaysThisYear + 1/3(LastYear) + 1/6(YearBefore) > 183

For further information: https://www.irs.gov/individuals/international-taxpayers/subs...
1 comments
vmarsy 3585 days ago
you're right, I was making the assumption of a simple case: you're coming as an Entrepreneur, you spend the full year in the US, so 365 > 183 , there's no need to even count further 1/3 and 1/6 as you weren't in the US before this.

Running a start-up by spending only a few hundred days a year in the US could be challenging, but if the law allows you to, why not.

F/J (Idk anything about M/Q/A/G) are only exempt 5 years. I have friends who did their undergrad and are on their Phd on F-1 who are still on F-1 but are now considered "us resident for tax purposes" because the 5 exempt calendar years are now used up, so they fall back to the 183 days rule.

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beagle3 3585 days ago
Optimizing start day and end day could make a huge difference:

Starting on 1/jan and finishing on 31/dec would make you a taxpayer each of the 2..5 years.

Starting on 1/jul and finishing on 30/jun, taking strategically timed trips outside the US could easily make the first year, and in some cases the last year, fail the substantial presence test.

I always find it surprising that people rarely optimize tax when moving between countries (or for that matter, even when starting a business in their country). Some do, of course, but as a general rule most don't -- even though to a person in technology, taxes are by far the largest expense, often 30-50% of the take home.

Especially when being a business owner (much less so as a salaried employee), changing your tax jurisdiction is likely to result in much worse taxation than you'd expect unless you optimize for it. Even when there are tax treaties, you can easily get doubly taxed by differing classification -- e.g. something that is regarded as a capital gains in one jurisdiction but ordinary income in the other, or e.g. preferential treatment to 401K-equiv in one jurisdiction causes PFIC-equiv treatment in the other.

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