Foreign Income earned before moving to the US

[KarenJ2]

Re: Foreign income US resident, filing jointly.Yes, you need to include her income from calendar year 2019.  You will have to allocate her P60 document by 3 months / 12 months (unless there is a bonus in there) and then add to it the monthly gross income she received from April 5 to August 2019.

In TurboTax, you will need to enter this income in the foreign earned income exclusion section. (Enter foreign income in the Search box at the top of the page). When you get to the screen where it asks if you want to see if you qualify for the foreign earned income exclusion, say NO as she does not qualify.
 
Then you need to enter her foreign tax in the foreign tax credit section of TurboTax to help offset any US taxes. (Enter foreign tax credit in the Search bar at the top of the page)
 
If you choose to file married filing jointly, you will need to attach a statement to your tax return advising the IRS that you are making the choice to file jointly. You will both need to declare your worldwide income for calendar year 2019. Since you need to add the statement attached to your return, you will need to print and mail your return. You cannot e-file.
 
You can find a copy of the statement you need to sign on page 9 of Publication 519 under the heading, How to Make the Choice.   Publication 519
 
Please see the following link for an acceptable currency converter.
 Yearly Average Currency Exchange Rates

[Anais]

Hello,

I too am in a very similar situation, I moved to the US in January 2019 and worked only in the US for the entire year. Before that I lived in Norway and in France (and have money in both countries). Do I need to declare the money I earned before moving to the US?

Also I earned a little bit of interest in Norway during 2019, should I declare it? I am paying taxes on it in Norway already.

I am a non resident aliens for 2019 (I am changing status in 2020), my visa with a J1 research scholar. I filled by federal taxes through the university website but I am stuck for the state ones (California).

Thank you for your help!

[DavidD66]

If you are filing a 1040-NR you only have to report income you earned in the United States, so you would not have to report interest earned in Norway, nor would you have to report income earned in Norway or France.  If you are filing a Form 1040 as a resident alien, you have to report your worldwide income for the period you are filing for,

[Anais]

Thank you David it is very helpful, I did fill a 1040-NR-EZ, does that work too?

One last question, as my status change to resident for 2020 then I will have to declare everything next year, right? 

[DavidD66]

Yes, 1040-NR-EZ is the same as filing 1040-NR.  And Yes again to 2020 - if you file as a resident (Form 1040) you are required to report and pay tax on your worldwide income.

[Anais]

Hello David,

From what I see I am actually a resident for the state taxes of California even tough I am not for the federal ones..  So I have to report and pay tax on your worldwide income for the state taxes, right? 

[KurtL1]

Yes, you are correct. California does not conform to federal law relating to income protected by U.S. tax treaties. California income is taxable and subject to withholding. 

Nonresident aliens are required to report income from California sources on FTB Form 540NR, California Nonresident or Part‑Year Resident Income Tax Return.

[dr-krenya]

Hello,

I have a similar situation. I lived and worked in Canada in 2019 till July 31st.

Then moved to US as a permanent resident. As started working from August 1st.

Do i need to report canadian income on my taxes?

Do i need to select "Worked outside the U.S" option when doing my taxes?

Thanks,
Tamas

[MaryK4]

If you file a 1040NR for 2019, you would only report your U.S. income.  If you can elect to be treated as resident full year, you would have to report all income but should get the foreign tax credit. @dr-krenya

[stopover]

I have similar case as Tamas (dr-krenya) from above. After I moved to US in May 2019 from foreign country, I got green card (and therefore became a resident) and started working in US company.

Since 1040-NR is for non-residents, does it mean the only option for me is regular 1040 form and I have to declare foreign income (that I got before moving to US) in "Did You Make Any Money Outside the United States?" section?

Or I need file both 1040 (including US income from date of entering) and 1040-NR (from beginning of year till date of moving)? But since my foreign income is not related to US sources, does it mean 1040-NR would be empty?

[KarenJ2]

You will need to file a dual status return, part year nonresident and part year resident.  Your residency start date will be the first day in the calendar year on which you are present in the United States as a lawful permanent resident.

Yes, your 1040NR will have zero income and zero tax.  You can print it from the IRS website and complete it with your name and address and enter zero for wages and tax.

Write on the top of the 1st page of the 1040NR, Dual Statement.  If you are married you enter your filing status as married filing separately.  If not, then enter single.

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 Return.  

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

Mail to the following address: 

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. 

1040NR Instructions

Welcome and stay safe!

[fkouroshnezhad]

I would appreciate if you could answer my question as well. I am a Canadian citizen and came to US on a TN visa and in 2019 year I was here for 197 days. Do I need to pay taxes on my Canadian earning prior moving to US or even do I need to report (file) them. I am filing those with Canada Revenue Agency already. Thanks in advance.

[LinaJ2020]

You are considered as a US resident for year 2019 and required to report worldwide income including that Canadian income prior to your arrival in the US. 

if you pay taxes to both US and Canada, to avoid double taxation, IRS allows you to claim a foreign tax credit on your US tax return.  To claim this foreign tax credit, you would need to file a Form 1116 Foreign Tax Credit. 

To enter this information in the TurboTax program, here are the steps: 

• Open up your TurboTax account and select Pick up where you left off
• At the right upper corner, in the search box, type in "foreign tax credit" and Enter
• Select Jump to foreign tax credit
• Follow prompts

@fkouroshnezhad

[fkouroshnezhad]

Thanks Lina, in that case do I still need to report my US income to Canada and file my Canadian tax?

[KarenJ2]

You will need to contact TurboTax Canada to see if you need to report your US income to Canada.

If 2019 was your first year in the US, you need to file a dual status tax return, part year nonresident and part year resident.  Your US residency would start the first day you came to the US

Residency Starting Date

However, if you are married you can make an election to file a full year, married filing jointly tax return with TurboTax. You can find the information for this in Publication 519 page 8.