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I was recently asked about the number of days my client, a non-U.S. person, could be present in the United States without creating U.S. tax residency. I knew from previous conversations that the figure was roughly 180 days, but looking into it further reminded me of the specific mechanics behind the "Substantial Presence Test" (SPT) and the recommended 'Safe Limit' that I wanted to share.
A Weighted Formula: the SPT
The SPT isn't a simple day count; it is a weighted formula that takes into account the number of days a person spends in the United States over the current year and the previous two years. To trigger tax residency, a person must generally be present in the U.S. for at least 31 days in the current year and have a total count of 183 days or more based on the following calculation:
Counted Days = Current Year Days Present + 1/3 (Prior Year's Days Present) + 1/6 (2 Years' Prior Days Present)
Why 120 Days Are Considered the “Safe Limit”
The weighted SPT formula is exactly why many advisors suggest a 120-day annual limit. If a non-U.S. person spends exactly 120 days in the U.S. for three consecutive years, the math works out perfectly to keep them under the threshold:
- Current Year: 120 days
- Last Year: 40 days (1/3 of 120)
- Year Before Last: 20 days (1/6 of 120)
- Total: 180 days
Because 180 days is just under the 183-day trigger, limiting stays to 120 days annually acts as a "safe harbor" to help avoid inadvertently creating U.S. tax residency.
