@DaveF1006
Thank you for that explanation. I am still unsure about the contradiction with how the end date of residency is determined https://www.irs.gov/individuals/international-taxpayers/residency-starting-and-ending-dates
I don't think I qualify for the exemption of the rule, which would only make me exempt in 2026.
In Example 10 from the IRS, this conclusion is made:
Under the general rule, the residency ending date under the substantial presence test is December 31st of the year in which one ceases to be present in the United States.
However, an exception is allowed for a residency ending date that is earlier than December 31st of a non-U.S. citizen’s last calendar year in the United States. Refer to Residency Starting and Ending Dates.
The exception allows M’s residency ending date to be the last day during the calendar year that M ceases to be present in the United States if, for the remainder of the calendar year:
- M’s tax home is in a foreign country (Rev. Rul. 93-86); and
- M maintains a closer connection to that foreign country than to the United States (Treas. Reg. § 301.7701(b)-2(d)).
If M had qualified for the exception, M’s residency ending date under the exception to the general rule would have been 08-09-2024 (the date M ceased to be considered present in the United States, since M became an exempt individual on that date).
However, M did not qualify for the exception to the general rule for determining one’s residency ending date because, after 08-09-2024, M did not have a tax home in a foreign country and did not maintain a closer connection to a foreign country than to the United States.
Since M did not qualify for the exception to the residency ending date general rule, M’s residency ending date was 12-31-2024.
What kind of federal income tax returns will M file for 2022 through 2025?
2022 and 2023:
M will file Form 1040-NR as a nonresident each year.
2024:
M will file Form 1040 as a U.S. resident.
2025:
M will file Form 1040-NR as a nonresident.
