Thank you @pk for the fantastic explanation.
I have a couple of simple questions related to your comments and it would be great if you can help me clarify them.
1) do I have to fill form 1040-NR fully as well, or just write 0 in income, as I didn't earn any income or US-connect income during there part Im NR?
2) Can I claim personal exemption for myself and my wife (NR alien, no income, but she has no SSN nor ITIN)? if yes, how much would that be?
- "Subject to the general rules for qualification, you are allowed exemptions for your spouse and dependents in figuring taxable income for the part of the year you were a resident alien." from IRS website.
3) If I don't make the 1st year choice and choose instead to be non-resident alien for the 2109 tax year - the 30% flat rate apply only for passive income (in the US, I assume??) - but it doesn't apply for my direct income/salary.
This (below) is from the IRS website -please correct me if I misunderstood it.
Nonresident aliens are generally subject to U.S. income tax only on their U.S. source income. They are subject to two different tax rates, one for effectively connected income, and one for fixed or determinable, annual, or periodic (FDAP) income.
Effectively connected income (ECI) is earned in the U.S. from the operation of a business in the U.S. or is personal service income earned in the U.S. (such as wages or self-employment income). It is taxed for a nonresident at the same graduated rates as for a U.S. person.
FDAP income is passive income such as interest, dividends, rents or royalties. This income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate.
thank you very much!
