Even though a foreign student may meet 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. The Internal Revenue Code (IRC) contains two exceptions to the substantial presence test which can be used to maintain nonresident status. First, there is the general exception to the substantial presence test under IRC section 7701(b)(3)(B) and (C) and Treasury Regulation section 301.7701(b)-2 (known as the closer connection exception). Most foreign students cannot use this exception, however, because of the requirement that the individual not have been physically present in the United States during the current year on more than 182 days, and the requirement that their tax home be located outside the United States. The second exception to the substantial presence test is set forth in IRC section 7701(b)(5)(D) and (E) and Treasury Regulation section 301.7701(b)-3(b)(7)(iii). The exception is available only to students (not teachers/researchers, etc.), and contains four requirements, all of which must be met: The student does not intend to reside permanently in the United States. The student has substantially complied with the immigration laws and requirements relating to their student nonimmigrant status. The student has not taken any steps to change their nonimmigrant status in the United States toward becoming a lawful permanent resident of the United States. The student has a closer connection to a foreign country than to the United States as evidenced by the factors listed in Treasury Regulation section 301.7701(b)-2(d)(1). The burden is on the student to prove they met the four requirements. 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 their Form 1040NR. Related Foreign Students and Scholars Green Card Test Substantial Presence Test Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court cases filed on or after May 1, 1986, visit the Opinions Search page of the United States Tax Court.
