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January 17, 2024
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How to choose tax residency status for outbound person

  • January 17, 2024
  • 1 reply
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Hi everyone, wondering if anyone has been in the same boat as me. I was a PhD student in the US from 2017-2023. I had filed the US income based tax returns for the first five tax years as non-resident alien and then for 2022 as resident alien. In early 2023 I returned to India and took up a job; I will file tax return in India for FY 2023. I would meet the substantial presence test in US for 2023 but I have been in India for more than 7months too. I am wondering what would be my tax status for 2023 when filing return in US? There is something called dual-status (https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-individuals) and IRS says to file 1040-NR and write “Dual-status return” on top but I am not too confident about this.
Thanks in advance for any help!

Best answer by DaveF1006

Yes, you would be able file as a resident or a dual status citizen. if you file as a resident, you will need to report your world-wide income thus it may be more beneficial to file as a Dual-Status Alien.

 

Dual-status aliens must file a Form 1040 (resident income tax return) and a Form 1040-NR (nonresident alien income tax return) in the same year. Turbo Tax does not support preparation of the 1040NR return but you can prepare it through our affiliate at Sprint tax

 

To prepare your1040 resident return, you will need to purchase and install the Turbo Tax Desktop software because you will need to record information on a form that is not available using Turbo Tax online.  Here are the steps to preapare your Dual Status return.

 

  1. If you’re a resident alien who gives up residence in the U.S. during the year and are not a U.S. resident on the last day of the tax year, Form 1040-NR is your main return . This is to be prepared first. Write Dual-Status Return across the top of the return. Attach an “informational statement” to your return to show the income for the part of the year you’re a resident. You can use Form 1040 as the statement, but be sure to write Dual-Status Statement across the top.
  2. Fill out your 1040-NR. Print it.
  3. Start filling out your 1040.
  4. Open the 1040/1040SR Worksheet in Forms mode when you have completed the interview section of the 1040.
  5. Scroll down to the Line 17z - Other Taxes Smart Worksheet on Schedule 2 Part II, Line 17(z) and enter the federal tax withheld from your 1040-NR.
  6. Finish filling out your 1040. Choose to file by mail.
  7. Print and sign your 1040. Write Dual-status return at the top of the form.
  8. Mail your 1040 and 1040-NR together

If you aren’t enclosing a payment, mail your return and statement to: 

Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215

 

If you’re enclosing a payment, mail your return and statement to: 

Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303

 

 

 

 

1 reply

DaveF1006
DaveF1006Answer
January 17, 2024

Yes, you would be able file as a resident or a dual status citizen. if you file as a resident, you will need to report your world-wide income thus it may be more beneficial to file as a Dual-Status Alien.

 

Dual-status aliens must file a Form 1040 (resident income tax return) and a Form 1040-NR (nonresident alien income tax return) in the same year. Turbo Tax does not support preparation of the 1040NR return but you can prepare it through our affiliate at Sprint tax

 

To prepare your1040 resident return, you will need to purchase and install the Turbo Tax Desktop software because you will need to record information on a form that is not available using Turbo Tax online.  Here are the steps to preapare your Dual Status return.

 

  1. If you’re a resident alien who gives up residence in the U.S. during the year and are not a U.S. resident on the last day of the tax year, Form 1040-NR is your main return . This is to be prepared first. Write Dual-Status Return across the top of the return. Attach an “informational statement” to your return to show the income for the part of the year you’re a resident. You can use Form 1040 as the statement, but be sure to write Dual-Status Statement across the top.
  2. Fill out your 1040-NR. Print it.
  3. Start filling out your 1040.
  4. Open the 1040/1040SR Worksheet in Forms mode when you have completed the interview section of the 1040.
  5. Scroll down to the Line 17z - Other Taxes Smart Worksheet on Schedule 2 Part II, Line 17(z) and enter the federal tax withheld from your 1040-NR.
  6. Finish filling out your 1040. Choose to file by mail.
  7. Print and sign your 1040. Write Dual-status return at the top of the form.
  8. Mail your 1040 and 1040-NR together

If you aren’t enclosing a payment, mail your return and statement to: 

Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215

 

If you’re enclosing a payment, mail your return and statement to: 

Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303

 

 

 

 

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January 17, 2024

Thank you @DaveF1006 , this is vey helpful. Just wondering because I had traded in stocks and crypto, the procedure would be exactly the same?

DaveF1006
January 17, 2024

Yes, because it is treated as income.

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