F1 to H1B tax filing (First year choice)

[nirajgoel]

Hi

I was on a F1 visa till Sep 30th, 2019. SInce Oct 1st 2019, my visa status is H1B. I had following doubts regarding tax filing for year 2019.

[Home Country: India. filing as Single individual.]

1. If I file tax as non resident, what deductions/advantages I get ?

2. In order to file tax as resident I will have to wait for sometime (since I don't yet pass the significant presence test). An option is to request an extension and file taxes when I qualify as resident for tax purposes (sometime in June 2020). If I file as a resident I can use the standard deduction of $12200. Are there any disadvantages associated with this approach ?

Thanks in advance.

[DavidS127]

No, filing an extension will not add "days of physical presence" in 2019.  Your "days of presence" started when you obtained the H1B visa.  As a result, you don't meet the Substantial Presence Test in 2019 and will need to file as a nonresident (Form 1040-NR) for 2019. 

When you meet the Substantial Presence Test in 2020, you'll qualify to be treated as a resident on the first day of 2020 you were present in the United States according to IRS Publication 519 at this link. Once you qualify to file Form 1040 as a U.S. resident for tax purposes, you use the same deductions, including the standard deduction for your filing status.

[nirajgoel]

Hi David

Thanks for the response.

What about the first years choice ? https://www.irs.gov/individuals/international-taxpayers/residency-starting-and-ending-dates [section:Residency Starting Date Under the First-Year Choice]

[KarenJ2]

If you choose to file using the first year choice, you will need to file a dual status return, part year nonresident and part year resident.

Dual status returns are complicated and would not end up as a better choice.  You are not allowed to take the standard deduction on the resident part of the year.

File a nonresident return for 2019, then for 2020 you can file a resident return with TurboTax.  See Sprintax for filing a nonresident return.

[nirajgoel]

Thanks fpor the 

[YYConsulting]

In this situation, if we choose to file federal as NR, how about the state tax return? If I worked in NY and lived in NJ, should i file both states as NR?

[rbh9982]

That’s a complicated tax return, as on H1B you can file as non resident but can not use tax treaty. You also don’t satisfy substantial present test on H1B, so you can not take standard deduction. 

I filled an extension, after that when I was able to satisfy substantial present test I used First year choice to file taxes and filled dual status tax returns. That way I was able to claim deduction using tax treaty for first part.

[rbh9982]

@DavidS127 His first day would be when he started on H1B not the first day of 2020. That would make him dual status alien and then he can not use standard deduction.  

[rbh9982]

@YYConsulting State residency is different and unrelated. 

[rbh9982]

@KarenJ2 One can not take standard deduction on dual status tax filing. 

[harmi]

Hello there @rbh9982 ,

I am in a similar situation and may need to amend my returns. Can you please tell me how much of the standard deduction did you claim for the first part (Jan-sept?)

I am guessing you separated your W-2 into 2 amounts. Did you apply the entire standard deduction to the first part when you filed as NR?