rental income reporting question

[Sdy2023]

Hi, 

I am a new immigrant and just came to USA in November 2022. I got my greencard and social security card in November 2022 as well. I only had rental income whole year in 2022. I am not sure if I need to report the whole rental income on 2022 Form 1040 or just report November - December rental income on 2022 Form 1040 because I am not US resident from January - October 2022.

I read something on IRS website about green card test and presence test, but I am not sure about it very well.

Can someone please advise me how to do? Thank you!

[DaveF1006]

You do not meet the requirements to be a resident alien for 2022. If your rental income is earned in another country, you won't be required to file a US tax return. However, if your rental is in the US, you will be required to file a 1040 NR return reporting the income.

If this is the case, Turbo Tax does not file 1040 Non-Resident returns but our affiliate Sprint tax does. Contact Sprintax for further information.

[Sdy2023]

Thanks Dave for your quick response.

Since now I become US Resident, I have foreign assets more than the threshold required to report, I think I will need to file FBAR and FORM 8938, is that mean I need to file form 8938 on 2022 1040NR as well?

[DaveF1006]

According to the IRS, you file a 8938 if you are:

• A U.S. citizen
• A resident alien of the United States for any part of the tax year (see Publication 519 for more information)
• A nonresident alien who makes an election to be treated as resident alien for purposes of filing a joint income tax return
• A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico (See Publication 570 for definition of a bona fide resident)

If you do not fall in any of those categories, you do not need to file the 8938 for 2022.

[Sdy2023]

Sorry about not making it clear, I just read the presence test once again, it said

To meet this test, you must be physically present in the United States (U.S.) on at least:

1. 31 days during the current year, and
2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
   • All the days you were present in the current year, and
   • 1/3 of the days you were present in the first year before the current year, and
   • 1/6 of the days you were present in the second year before the current year.

I forgot I visited US for 8 months in 2020 but I left US and did not return to US in 2021. I arrived US on 11/21/22.

It seems that I met the presence test and green card test. Isn't it? I think I am US resident in 2022.

[DaveF1006]

Yes, you do meet the Green Card test since you have been issued a green card. This proves you intend to be a lawful, permanent resident in the US and may file as resident alien because you qualify from this test alone.

As far as the substantial presence test. it is determined by that formula that you mentioned.  

1. You been in the US for 31 days in 2022. You passed this, now lets see if you were here for 183 days during the three year period.
2. You mentioned you were here 8 months in 2020 so that is 240 days, give or take factoring in those 30 day months and the month of February. Since this is the second year before the current year, you would multiply this by 1/6. This would be 40 days.
3. if you add 31 + 40= 71, this would not qualify under the substantial presence test, which requires you to be present 183 days during a three year period determined by the formula established by the IRS.  

This is a moot point though because we have already established you are a resident through the Green Card Test. I just added all this in just just to illustrate how the substantial presence test works. 

You are a permanent resident and citizen. As a good lawful, permanent resident, file that 8938 !!

@Sdy2023  

[Sdy2023]

Thank you very much for your detailed explanation. I really appreciate your help on this.

The reason I am so concerned about FBAR and Form 8938 filing on time is because the fine for not filing that is $10,000 if I remembered it correctly. Now I need to file 1040 in stead of 1040NR.

However, back to the rental income reporting, I will report the whole year rental income amount on Schedule E on form 1040 as well, no matter I was not a US resident yet in January - October 2022. is this correct.

Thank you again for your time on my case!

[GeorgeM777]

You should report your rental income for the period beginning after you obtained your green card.  The IRS says the following about when you became a U.S. tax resident:

An individual who obtains a green card is treated as a lawful permanent resident and is considered a U.S. tax resident for U.S. income tax purposes. For assistance in determining whether you are a U.S. tax resident or nonresident please refer to Determining Alien Tax Status.

In general, when you initially obtain a green card, your residency starting date is the first day in the calendar year on which you are present in the United States as a lawful permanent resident (the date on which the United States Citizenship and Immigration Services (USCIS) officially approved your petition to become an immigrant).

Based on the above, you would report your rental income for the period November 2022 through the end of 2022. 

@Sdy2023

[AmeliesUncle]

The short answer is that you really should go to a local tax professional that specialized in Nonresident Aliens.

TurboTax is NOT set up property for a Dual Status Alien like yourself.  For this year, you really should go to a good tax professional that specializes in Nonresident Aliens.  In future years, you may consider doing your tax returns with a Do-It-Yourself program like TurboTax, but I strongly advise against that for 2022.