Exempted from Substantial Presence Test for 5 years if I entered on F1 even if I Changed my Visa to H1B?

[mhaseebmlk]

Hi all,

I first entered the US on 31 July, 2017 on an F1 visa. I started working on an OPT on July 15, 2019. My H1B was approved in 2019 but I did not make the switch from F1 to H1B until 16th February 2020, when I reentered the country on an H1B visa.

Based on the above dates and my current understanding of the calculations for the Substantial Presence Test (SPT), I can be considered a resident alien for tax purposes. This is based on the following calculations:

  - Number of days spent in US in 2020 on H1B visa: These are the number of days from Feb 16th 2020 to November 25th 2020 which end up being 283 days. I was out of the country between January 1 2020 and February 15 2020, and November 26 2020 and December 31 2020.

  - Number of days spent in US in 2019 on H1B visa: 0 days.

Therefore, the total number of days spent on H1B according to the rules set out by IRS are 283 days, which is greater than the 183 days threshold and so I qualify as a resident alien for tax purposes. Note that I did not count the days I was on F1. This is my current understanding.

However, this is where the confusion is: I was told by a tax consultant that I am exempt from counting all of the above days towards my SPT because I first entered the US on an F1 visa. According to them, my exempted days would finish after the F1's 5-year exemption period ends. This applies to me for all tax years between 2017-2022 (ignoring the exact dates for now) even if I made the switch from an F1 visa to an H1B visa during that time. Is this really the case? Or should I be using the days on H1B towards the SBT and file as a resident?

[DanaB27]

Yes, you should be using the days on H1B towards Substantial Presence Test  and you are a resident because you met the Substantial Presence Test in 2020. You are no longer exempt because you switched to the H1B visa.

[mhaseebmlk]

Thank you for the response @DanaB27!

1. Even though I was a resident for most part of the year, I was still on F1 from January 1st, 2020 to February 15, 2020. Do you happen to know what is IRS's recommendation for such a case where you have dual status in the same year?
2. Because I qualify as a resident, does that mean that I can use TurboTax to file my returns?

[DanaB27]

You are a dual-status alien since you were a U.S. resident alien and a nonresident alien in the same tax year.

Since you are a resident alien at the end of the tax year, you will need to do the following:

• Prepare form 1040 for your period of residency - TurboTax can do this for you. 
• Prepare form 1040NR for your period of non-residency. 
• Print Form 1040 to be filed by mail.
• Attach form 1040NR to your form 1040 and write "Dual-Status Return" on the top of page one of Form 1040.
• Mail your tax return to the IRS.

[mhaseebmlk]

@DanaB27 thanks, that makes sense. Since I received just one W2 for the whole of 2020, would I have to pro-rate the income for the time I was a non-resident? Or would I report the exact income mentioned in W2 for both my non-resident and resident returns? Wouldn't that result in getting taxes twice on it?

[DanaB27]

Your W-2 income would be pro-rated between the returns.

[taxnoob45]

I am in a similar situation. What did you end up doing? Any advice?

[DaveF1006]

To clarify, could you give some specific details about your issue?

@taxnoob45 

[taxnoob95sm]

I would like to know for my case too.

I moved to the US in August 2018 on F1 visa and moved to Canada in first week of June 2023.
While on OPT, I worked full time in the US (OPT-compliant) from February 2021 until I left.
For my entire time in the US, I was on F1.

I was told by a couple of tax consultants that I could have been a non-resident for 2023, considering the 5 exempt years (2018-2022) and less than 183 days in 2023.

I would like to confirm if this is right, so that I might consider amending the 2023 US tax return.

[DaveF1006]

Yes, you could have filed as a US non-resident in 2023 since you did not meet the 183 day requirement. Turbo tax does not prepare 1040 NR returns but our affiliate at Sprint Tax does.  Contact them here to find out how you can amend your1040 return to a 1040 NR return, if possible.