Hi, I just moved to California from the UK. Arrived end of July 2023. Green card holder. My is a US citizen and California resident (she was living here already, we didn't move together). She claims the standard deduction when she files taxes.
Now that I am here, I am planning ahead to understand how we are best to file our taxes once 2023 ends.
I know I will have the option to make a first year choice to be treated as either:
- dual status (so non-resident Jan-July 2023, then resident July-Dec 2023), or
- a resident alien for the full year.
The benefit of electing to be treated as a resident alien for the whole year is that it means we could file jointly and claim the standard deduction. (Dual status individuals cannot take the standard deduction, and if filing jointly then both parties have to either take standard deduction or else itemize. Doesn't make sense for us to go that way financially.)
However, I earned income in the UK prior to arriving in the US, and if I elect to be treated as a resident alien for the full year of 2023, then that UK income will be subject to US tax.
From a federal point of view, I know that I have options with foreign tax credit or foreign earned income exclusion, as the UK income was already taxed in the UK and will be more than US taxes.
However, California also taxes on worldwide income, and there is no foreign tax credit option there. So it appears that if I elect to be treated as a resident alien for the whole year, my UK income earned before I arrive in the US will be taxed again by California.
My question: is it permitted to
- make the first year choice to be treated as a resident alien from a federal perspective, and claim foreign tax credits etc. but also
- file as a part-resident for California state taxes?
Or does the first year choice apply to both federal and state levels?
If it is permitted, how do I set this up in TurboTax so that I can try both options?
