Substantial Presence test

[lorenlaydiaz]

My newly husband enter to US as a asylum seeker in Feb. 7. He have stay in US for the rest of year 2022 and we married in January 7 of 2023 (current year) we open a company together in 2022 and we have to file taxes for that income. My question is; does he meet the substantial presence test if he was presence in US form feb 7 2022 and still residing in US for current year 2023. Can he filled a 1040 or he still need to filled a 1040RN?

[DMarkM1]

It depends.  A taxpayer is considered a resident for US tax purposes and files a US form 1040 if they meet the green card test or the substantial presence test.  The substantial presence test is: 

You must be physically present in the United States (U.S.) on at least:

1. 31 days during the current year, and
2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
   • All the days you were present in the current year, and
   • 1/3 of the days you were present in the first year before the current year, and
   • 1/6 of the days you were present in the second year before the current year.

Days counted as present in the US are generally days you are physically present in the US.  However you cannot count these days:

• Days you commute to work in the U.S. from a residence in Canada or Mexico if you regularly commute from Canada or Mexico.
• Days you are in the U.S. for less than 24 hours, when you are in transit between two places outside the United States.
• Days you are in the U.S. as a crew member of a foreign vessel.
• Days you are unable to leave the U.S. because of a medical condition that develops while you are in the United States.
• Days you are an exempt individual (see below).

Exempt individual

• An individual temporarily present in the U.S. as a foreign government-related individual under an “A” or “G” visa, other than individuals holding “A-3” or “G-5” class visas.
• A teacher or trainee temporarily present in the U.S. under a "J" or "Q" visa, who substantially complies with the requirements of the visa.
• A student temporarily present in the U.S. under an "F," "J," "M," or "Q" visa, who substantially complies with the requirements of the visa.
• A professional athlete temporarily in the U.S. to compete in a charitable sports event.

If he does not meet either of the tests then he files a 1040-NR for the US only income.

Click here for more information on the substantial presence test.

Click here for more information on nonresident filing.

An additional note.  If you haven't already you will need to file a business return.  It could be a partnership form 1065 or if you formed an S-Corporation, form 1120-S for the business entity.  There will be form K-1s generated from that business return that you each would use to file your personal tax returns.  

[AmeliesUncle]

Between the fact that your spouse is a Dual Status Alien and that you started a business with each other, I REALLY, REALLY suggest going to a good tax professional.  Go to one that is experienced with Nonresident Aliens (and Dual Status Aliens) *AND* experienced with Partnership tax returns.

[lorenlaydiaz]

Thanks for your answer. Yes we have the K1 and the 1065 for the LLC was filled already also my taxes to.  But it seems he doesn't qualify to filled a 1040 but I been trying to filled a 1040 NR and he doesn't qualify eather because he doesn't have a visa or neither is out of the country. I ask different profesionals and they all say different things. Even his inmigration lawyer doesn't know the answer on wich one he should filled. 

[lorenlaydiaz]

That's is so hard to find. I have contacted many expert on taxes even trough turbo tax and I still doesn't get a straight answer. One send me to his inmigration lawyer, the lawyer says she doesn't have the answer, that is a tax question. Talk to a few different tax experts and they all say differents things. He seems to doesn't qualify for eather form. He hasn't meet the substantial presence test, since he only have been for a year in US and he doesn't qualify for the 1040RN because he doesn't have a visa or workpermit. 

But lawyer says he have to filled and pay his taxes. 

[AmeliesUncle]

As I mentioned before, you need to find a tax professional that is experienced (or specializes) in Nonresident Aliens (your husband is a Dual Status Alien).  MOST tax professionals do NOT know much about it, so you need to find somebody that is well experienced with it.