Retirement tax questions

For your last year of residency in the US, according to the IRS, if you were a U.S. resident in 2019 but are not a U.S. resident during any part of 2020, you cease to be a U.S. resident on your residency termination date. Your residency termination date is December 31, 2019, unless you qualify for an earlier date.

You need to file a full year resident return declaring your worldwide income for calendar year 2019.  You can use foreign tax credit to help offset any double taxation on the income your earned in India.

Your other choice is to file a dual status tax return.  

Earlier residency termination date. You may qualify for a residency termination date that is earlier than December 31. This date is: 1. The last day in 2019 that you are physically present in the United States, if you met the substantial presence test; 2. The first day in 2019 that you are no longer a lawful permanent resident of the United States, if you met the green card test; or 3. The later of (1) or (2), if you met both tests. You can use this date only if, for the remainder of 2019, your tax home was in a foreign country and you had a closer connection to that foreign country. 

Filing a dual status tax return is complicated.  I suggest you file a resident return and use foreign tax credit.

If you file a dual status return, you will need to file married filing separately or single and cannot take the standard deduction for either the 1040 resident return or the 1040NR. 
 

In order to prepare a dual status return in TurboTax, you will need to print a copy of the nonresident return (Form 1040NR from the IRS website) for your tax on US income after April  There will most likely be no US source income to enter for that time.  So your income on this form will probably be zero unless you received US income after moving out of the US.. Write on the top of the 1st page of the 1040NR, Dual Return. You will need to write in your name and address and input zero as your US source income (if that is the case).  Enter that you are married filing separately. 2019 1040NR

Then for the resident part of the return you prepare in TurboTax, you are not allowed to use the standard deduction, only itemized deductions if you are filing a dual status return.  Also, you can either file single (if you are single) or married filing separately. 

You must suppress the standard deduction.  Instructions for this are below. 

When your resident part of the return is finished in TurboTax, print the return and write on top of the return, Dual Statement.  

Put the 1040NR on top of 1040 resident return and staple and mail to the IRS.  You must sign the 1040NR before mailing.  You do not need to sign the 1040 statement. 

Mail to the following addrss:

If you  are not enclosing a payment then use this address... 

Department of the Treasury 

Internal Revenue Service 

Austin, TX  73301-0215 

USA 

If you are enclosing a payment then use this address... 

Internal Revenue Service 

P. O. Box 1303 

Charlotte, NC 28201-1303 

USA 

Please see more help on dual status returns see page 7 of Pub 519. 

Publication 519 

You must choose itemized deductions.  Please follow the below instructions to switch to itemized deductions. 

TurboTax Online instructions for changing to itemized deductions. 
 

First, sign in and make sure your return is open. You should see 2018 TAXES in your left-hand menu as pictured below (if not, tap or click the upper-left corner to expand the menu or select Take me to my return). 

Once your return is open: 

1. From the left-hand menu, select Federal (on mobile devices, you might need to scroll down) 

2. Now select Deductions & Credits near the top of your screen. 

3. When you get to Now it's time for the fun part... Your tax breaks, scroll all the way to the bottom and select Wrap up tax breaks (if you don't see this button, select Skip to see all tax breaks, then scroll down again). 

4. Continue through the interview until you see The Standard [or Itemized] Deduction is Right for You, pictured below. 

5. On that screen, check the box Change my deduction to see the dollar amount for each deduction. 

6. Select Continue if you want to save any changes. If you're switching to the itemized deduction, you may be prompted to upgrade. 

There is a residency termination statement that you should attach to your dual status return.  See page 9 of Publication 519 above. 

Statement required to establish your residency termination date. You must file a statement with the IRS to establish your residency termination date. You must sign and date this statement and include a declaration that it is made under penalties of perjury.