Hello, My wife and I are J1/2 visa holders and arrived in Aug 2020. Are we able to use TurboTax, or are we still within the 2-year exemption?

Please read the following explanation from the IRS regarding the three-year look back rule. Generally, a J-1 alien who spends 122 days in the United States in each year of the 3-year period will meet the Substantial Presence Test for the current calendar year and be considered a U.S. resident. 

If you entered the US anytime in August of 2020, you meet the substantial presence test to file as a resident alien for 2022 because you meet the provisions of the substantial presence test defined by the IRS in accordance with the three-year look back rule.

Per IRS: In general, an alien in J-1 status (hereafter referred to as a “J-1 alien”) will be treated as a U.S. resident for federal income tax purposes if he or she meets the Substantial Presence Test.

Per IRS PUB 591 the Substantial Presence Test:

You are a resident for tax purposes if you meet the substantial presence test for the calendar year
2022. To meet this test, you must be physically present in the United States on at least:

1. 31 days during 2022; and
2. 183 days during the 3-year period that includes 2022, 2021, and 2020, counting:
   a. All the days you were present in 2022,
   b. 1/3 of the days you were present in 2021, and
   c. 1/6 of the days you were present in 2020.

Example. You were physically present in the United States on 120 days in each of the years 2022, 2021, and 2020. To determine if you meet the substantial presence test for 2022, count the full 120 days of presence in 2022, 40 days in 2021 (1/3 of 120), and 20 days in 2020 (1/6 of 120). Because the total for the 3-year period is 180 and not 183 days, you are not considered a resident under the substantial presence test for 2022.