Green Card vs. Substantial Presence: Which Comes First and Why It Matters

📌 Understanding the Residency Rules

The IRS recognizes two main ways for a foreign national to become a U.S. tax resident:

• Green Card Test: If you are a lawful permanent resident (green card holder), you are considered a resident from the date you enter the U.S. as a permanent resident.
• Substantial Presence Test (SPT): If you meet the day-count rules (31 days in the current year and 183 days over the current year plus the prior two years using the weighted formula), you are treated as a resident starting from your first day of presence in that year.

But what if you satisfy both tests in the same year? This is where the rules of which test comes first become crucial.

🗓️ Residency Start Date: Which Test Controls?

According to IRS regulations, the Green Card Test takes precedence if you meet both in the same year. Your residency start date will be the earlier of:

• The date you first entered the U.S. as a lawful permanent resident (green card holder).
• The date you meet the Substantial Presence Test (if earlier).

In practice, if you receive a green card but also meet SPT, the IRS will use the date that makes you a resident sooner.

📊 Example Scenarios

• Scenario 1: You receive your green card on September 1, 2025, but you already met the Substantial Presence Test on June 15, 2025. Your residency start date is June 15, because it came earlier.
• Scenario 2: You receive a green card on February 1, 2025, and you meet SPT only by October. Your residency start date is February 1, because your green card date came earlier.
• Scenario 3: You enter the U.S. on December 15, 2025, with a green card, and you don’t meet SPT for that year. Your residency begins December 15, 2025, under the green card rule.

💡 Why This Matters

Your residency start date has major implications for:

• Tax Withholding: Employers must know whether to treat your wages under resident alien rules or nonresident alien rules.
• Filing Status: Determines whether you file as a resident alien (Form 1040) or nonresident alien (Form 1040-NR) for part of the year.
• Dual-Status Returns: You may be a dual-status taxpayer in your first year of residency, which affects deductions and credits.
• Worldwide Income: From your residency start date, you must report global income, not just U.S.-source income.

🚫 Common Pitfalls

• Assuming the green card date always applies — the IRS uses whichever date makes you a resident earlier.
• Failing to adjust tax withholding when residency begins mid-year.
• Ignoring dual-status filing requirements and incorrectly reporting worldwide income.

✅ Key Takeaways

• The earlier date
• This date impacts withholding, reporting, and global income inclusion.
• Dual-status returns often apply, requiring careful filing strategy.
• Consult a qualified tax professional to avoid errors and double taxation.