Hi,
I would be grateful if any of you expert please help me with my tax situation for 2022.
I am Indian citizen. I moved out of U.S on 10th Sept 2022, and then joined a job in India in Sept. 2022. Now, since, I have been staying in U.S from January 1st to Sept. 10th in 2022 and also 2020-2021 (I was on J1 visa), I pass the substantial presence test, and therefore I am resident alien for tax purpose. As per the information in Publication 519, it seems that I can qualify for a residency termination on Sept. 10th, 2022. However, based on my understanding, this is not mandatory to terminate residency on Sept. 10th, 2022, and I am not providing statement required to terminate residency (on Sept 10th) with my 2022 U.S tax return. I can see more tax benefits by not doing so and claiming as resident alien for the entire year.
In my situation as given below it seems that I am qualified for foreign earned income exclusion (FEIE). The reason is I am residing in India from 10th Sept 2022 to until now. Therefore, I qualify in physical presence test for FEIE on Sept 9th 2023. My main place of business since 10th Sept 2022 is India and before it was U.S. Also, my tax home since 10th Sept 2022 is India and I do not have a residency in U.S.
I have three question:
1. Is my understanding that terminating residency alien status on Sept. 10th, 2022 as optional is correct?
2. Can I claim FEIE? My doubt for this is because my residence alien status in U.S by default ended in Dec. 31st 2022 and therefore I am not resident alien in 2023, although I am considering days from 2023 to meet the physical presence test for FEIE.
3. Is this more appropriate in my case to claim foreign tax credit instead of FEIE? I would prefer to take FEIE if that is not causing any tax complication.
