Germany/US tax treaty J1 researcher resident alien

[mz1040]

Dear Team,

Dear Team,
I am a German citizen who is a cancer researcher (trainee) in the US (Boston). I arrived in the US in November '22 under a J1 visa.  The tax treaty between the US and Germany article 20 claims I can file for the exemption of income for tax purposes for 2 years. I was considered a resident alien in 2024 due to the substantial presence test (I spent 52 days in the US in 2022, 348 in 2023 and 342 in 2024). I do have a permanent home in Germany available to me and want to go back as soon as my studies are finished as my family still lives there. Am I still eligible for the treaty by filing 8833 with my 1040- at least for Jan-october (as the 2 years are over by then)? or is this only applicable to NR aliens?
Thanks so much for your help and have a lovely day
Maria

[DaveF1006]

 As a J-1 Scholar, you have  two year exemption period, which is based on calendar years and not fiscal years. This means even though you spent a short period of time in the US in 2022, the exemption period will apply for the entire year and not part of the year.

You were exempt in 2023 by filing the 8833 but in 2024, you are a resident alien because you were in the US for the entire year and satisfied the conditions of the substantial presence test,

As a result, you cannot claim treaty benefits and not eligible to file form 8833. 

[Edited 02/11/24|10:15 am PST]

[mz1040]

Thank you so much for your response Dave. This is really helping me a lot.

Since I am a researcher I didn't file as resident in 2023 because I'm an exempt individual for the first two calendar years and my days in the US only count from 2024 onward. I did file my 1040-NR with a 8833 for 2022 (2months) and 2023 (12 months). Sorry for the confusion I should've mentioned that. so I'm a bit confused as to whether I'm eligible for the remaining 10 months of the treaty based exemption (max 2 years for researchers according to treaty article 20(1)) even though I'm considered a resident alien according to the substantial presence test.  I do have closer ties to Germany (home, bank accounts, family etc.) so I was wondering whether to file as 1040-NR and claim a closer connection exception to the substantial presence test might make sense. 

Unfortunately, Sprintax refuses to let me file because I pass the substantial presence test for 2024 and I cannot proceed with my return.

Thanks again for your detailed help above

Warm regards

Maria

[DaveF1006]

Yes, Sprint Tax is correct and I must revise my last answer I gave to you. The exemption periods cover calendar years and not twelve-month periods. This means you were exempt in years 2022-2023. Since you spent the entire year in the US in 2024, you must file as a US resident.

I apologize for my previous answer but this is the correct answer based on IRS guidelines which states, "In general, an alien in J-1 status (hereafter referred to as a “J-1 alien”) will be treated as a U.S. resident for federal income tax purposes if he or she meets the substantial presence test. The test is applied on a calendar year-by-calendar year basis (January 1 – December 31)". 

J-1 Taxation