Providing insights that make an impact.

Private Client Services Co-Chair Stefanie Lipson authored an article titled “An Unplanned, or Unwittingly Prolonged, Stay at ‘Hotel California’?” published in Tolley, where she discusses U.S. income tax residency rules and how they apply to individuals and trusts.

Excerpts:

Outside the United States, “American tax” most often is thought of in relation to federal US tax. The US domestic tests for whether an individual or a trust is a US income tax resident sit within the federal statutes of the Internal Revenue Code (IRC).

In brief, a US citizen or lawful permanent resident (green card holder) is by default a US income taxpayer on his or her worldwide income without regard to presence in the US. Others can become US income tax residents under the substantial presence test, commonly termed the day-counting test.