TL;DR (Too Long; Didn't Read)
The 183-Day Rule: You don't need a Green Card to be considered a US tax resident. Spending 183 days or more in the US (based on a specific three-year calculation) triggers "Substantial Presence," making your entire global income subject to US taxes.
The Hidden Danger: Once triggered, the IRS expects a piece of your rental income in London, your dividends in Mumbai, and your capital gains in Dubai—even if that money never touched a US bank account.
The Escape Hatch: If you spent more than 31 days but fewer than 183 days in the US this year, you can file Form 8840 (Closer Connection Exception) to prove your tax home is elsewhere and protect your foreign assets.
The Symptoms: Does This Sound Like You?
You are a global citizen, a tech professional on a "work from anywhere" stint, or perhaps a retiree visiting family in the States. You entered on a B1/B2 visitor visa or perhaps a J1/H1B grace period. You haven't stayed long enough to get a Green Card, so you assume you are a "non-resident" for tax purposes.
You might be falling into the trap if:
You spent 4 months in the US this year, but also visited for several months in 2024 and 2023.
You own property, businesses, or investment portfolios in your home country.
You assume that because you aren't "working" for a US company, the IRS isn't interested in you.
You are currently at day 120 of your stay and planning to extend your visit to 190 days.
If you hit the "Substantial Presence" threshold, the IRS no longer sees you as a visitor. They see you as a Resident Alien, and that status comes with a massive administrative and financial burden.
The Technical Deep Dive: The Mechanics of the "Trap"
Most people believe the 183-day rule is a simple calendar year count. It isn't. The IRS uses a "look-back" formula called the Substantial Presence Test (SPT). To pass this test and be taxed as a US resident, you must be physically present in the US on at least:
31 days during the current year, and
183 days during the 3-year period that includes the current year and the 2 years immediately before that.
The Weighted Formula
The IRS counts your days using this weighted math:
Current Year (2025): Every day counts as 1 day.
First Preceding Year (2024): Every day counts as 1/3 of a day.
Second Preceding Year (2023): Every day counts as 1/6 of a day.
Example:
You stayed 130 days in 2025.
You stayed 120 days in 2024 (120 ÷ 3 = 40 days).
You stayed 120 days in 2023 (120 ÷ 6 = 20 days).
Total Count: 130 + 40 + 20 = 190 Days.
Even though you only spent ~4 months in the US this year, you have triggered Substantial Presence.
The Global Income Hammer
Once you are a Resident Alien, you are taxed on worldwide income.
Foreign Rental Income: That flat you rent out in London? The IRS wants their share.
Foreign Dividends: Your portfolio in India or Singapore is now reportable.
FATCA & FBAR: You are now legally required to disclose the existence of any foreign bank accounts exceeding $10,000 at any point in the year (FBAR) and potentially other foreign financial assets (Form 8938). Failure to file these "informational" forms carries penalties starting at $10,000 per violation.
The Expensive Mistake: Doing Nothing
Many immigrants and global travelers realize they stayed too long only when they go to file their taxes in April. By then, the damage is often done.
1. Double Taxation: While tax treaties might prevent you from paying full tax twice, you still have to file and claim credits. If your home country has a lower tax rate than the US, you will owe the IRS the difference. 2. The Exit Tax Risk: If you accidentally become a resident and stay too many years, you could eventually fall under "Long-Term Resident" rules, making it difficult and expensive to leave the US tax system later. 3. Compliance Nightmares: Reporting a foreign corporation or a complex foreign trust to the IRS can cost thousands of dollars in specialized accounting fees. If you trigger residency by accident, you are forced into this ecosystem. 4. Visa Implications: Filing as a resident when you are on a non-immigrant visa (or vice versa) can create inconsistencies in your record that USCIS may question during future Green Card or citizenship applications.
The Solution: Form 8840 (Closer Connection Exception)
If you have spent more than 31 days but fewer than 183 days in the current year, but the 3-year weighted formula puts you over 183, you can still save yourself.
You must file Form 8840, the "Closer Connection Exception Statement for Aliens."
To qualify, you must prove that you have a "closer connection" to a foreign country than to the US. The IRS looks at:
Where your permanent home is located.
Where your family lives.
Where your personal belongings (cars, furniture) are kept.
Where you conduct your routine banking.
Where you hold a driver’s license and are registered to vote.
By filing Form 8840, you maintain your "Non-Resident Alien" status for tax purposes. This means the IRS only taxes your US-sourced income (like a US salary or US rental property) and leaves your global assets alone.
The Rally Solution: Proactive Residency Planning
Calculating weighted days and keeping track of travel across three different calendar years is a recipe for human error. One extra weekend trip to New York can be the difference between a simple tax season and a $20,000 cross-border tax bill.
Rally was built specifically for the global citizen and the tech nomad to navigate these complexities with ease:
Get Your Free AI-Generated Tax Plan: Don't guess where you stand. Upload your travel history and financial documents to Rally to receive a comprehensive, free tax plan generated by our AI. We’ll identify if you’ve triggered the Substantial Presence Test and highlight your eligibility for the Form 8840 exception.
Expert CPA Consultation: Once you have your AI-generated plan, you don't have to go it alone. Schedule a consultation with a specialized CPA directly through Rally to review your strategy, ensure your global assets are protected, and get professional guidance on your filing requirements.
Don't let a gap year or an extended family visit turn into a lifelong relationship with the IRS.
Rally Tax is an Authorized IRS e-file Provider and SOC2 Compliant.
Frequently Asked Questions:
1. I’m on a B1/B2 visa. Does the 183-day limit apply to the calendar year or a rolling 12-month period?
The IRS uses a calendar year (January 1 to December 31) for the Substantial Presence Test. However, the test also looks back at the previous two calendar years using a weighted formula. Even if you stay under 183 days in a single year, your visits from the two prior years could still push you over the threshold for the current year.
2. If I spend exactly 182 days in the US, am I safe from being taxed on my global income?
Not necessarily. While you stayed under the "183-day" mark for the current year, the weighted look-back rule applies. If you visited the US at all in the previous two years, those days (divided by 3 for the first year and 6 for the second) are added to your current 182 days. This will almost certainly trigger "Substantial Presence" unless this is your first time in the US in three years.
3. Can I file Form 8840 if I stayed more than 183 days this year?
No. Form 8840 (the Closer Connection Exception) is only available if you were physically present in the US for fewer than 183 days in the current year. If you cross the 183-day mark in a single calendar year, you are automatically a tax resident unless you can claim a "Tax Treaty Tie-Breaker" (which is a much more complex process involving Form 8833).
4. Does filing Form 8840 affect my immigration status or future Green Card?
Filing Form 8840 is a tax declaration, not an immigration application. In fact, accurately reporting your non-resident status can show USCIS that you are respecting the terms of your non-immigrant visa. However, you cannot claim a "Closer Connection" if you have already taken steps to apply for a Green Card (such as filing Form I-485), as this indicates your "closer connection" is now to the United States.
