@dgdyif94 , the issue as I see it stems from two separate / disparate time definition.
Generally when a J-1 teacher/researcher enter the country , he/she is exempt from counting days present ( towards Substantial Presence Test) for a period of two CALENDAR years. Thus is your case, you entered in 2021 and therefore you will start counting days present from Jan 1st, 2023. And therefore you would meet the SPT and be a resident for tax purposes sometime around end of June or early Jul ( depending on whether you stayed here everyday or were abroad for a few days ) of 2023. Also generally you would be treated as a resident for tax purposes for the whole year ( with all its benefits like standard deduction etc. )
On the other hand the US-Italy treaty , like most tax treaties, provide tax holiday ( i.e. zero tax rate ) on income of a teacher/researcher ) for two years from the date of entry. Thus in your case ( and assuming that you entered the country on Sept.1 2021 ), your salaries/ remuneration will be excludable ( from US tax ) till Aug. 30th 2023. You do this by using form, 8233. However form 8233 tells you right at the top " If you are a Non-Resident Alien who is ....." This is the quandary.
In my view therefore
(a)I will use the treaty primacy, use the generic definition ( immigration Services' def ) of "Non-Resident Alien" ( i.e. one whom is in the USA temporarily, a resident of a treaty country, closely connected to that other country), and take advantage of the treaty benefits by using form 8233, treaty article 20 of US-Italy tax treaty. I will still use form 1040 for filing my return and pay taxes for income beyond the two year mark.
OR
(b) use the safer and probably more literally correct path of declaring myself as dual status taxpayer-->
(1) file form, 1040-NR covering the Jan1st through the day passing the SPT and include 8233 along with 1040-NR ( excluding that portion of income from US taxation) --- note that TurboTax does not support form 1040-NR ( SprinTax does support this );
(2) file 1040 covering the residual months of the year ( post passing the SPT and not recognized on form 1040-NR) and pay taxes on that portion of the income.
Note that this may mean you have to file by mail. Do not have any experience with SprinTax but I thought that they do support dual status filing.
Does this make sense ? Is there more I can do for you ?
pk
