Different status during tax year and Income between two visas

[Anonymous]

Hello,

I was in J1 Trainee in the US receiving my income in France from October 2017 to March 2019. Then, I changed company, worked in France from April to July and prepared an E2 work visa with this company. Then, in August I moved back to the US with an E2 visa and I am here since. I am wondering how I should fill out my tax return for 2019. I don't know if my days in J1 count toward the presence test for example. And if I fill as resident, should I declare the French income since it's before I got the E2 visa? 

Thanks 

[LinaJ2020]

If you have stayed more than 183 days within the US in 2019 ( January-March, August - December), you are considered as a US resident for tax purposes.  You are required to report worldwide income including that income you made in France before re-entering the US.

You are exempt from counting days for 2017 and 2018.  You are a non-resident.  Starting from January 1st, 2019, you will count how many days you stay in the US to decide your residency.  ( even though you are on J visa for three months)

@Anonymous

[Anonymous]

Thank you @LinaJ2020  this is super helpful! Is this because of the 2 years exemption for J1 that has been already applied for 2017 and 2018 that my J1 days are counting in 2019? 

So it's more than 183 days, I will declare as resident as you suggested. 

According to this page https://www.irs.gov/individuals/international-taxpayers/totalization-agreements I know I can put the French CDG and CRDS as tax credit in my declaration, but I understand I can't put other social security I already paid on my income as tax credit, is that correct? 

Thank you

[DianeC958]

Yes, that is correct, you are allowed a credit for the Foreign Tax you paid on your income, not Social Security.

What Foreign Taxes Qualify for the Foreign Tax Credit?

@Anonymous

[Anonymous]

Thank you @DianeC958, understood, this is all helpful.

Last question. Wouldn't it be correct also, to declare with dual status? Non-resident from January to end of July, then resident with my E2 visa, using the first year choice? 

Thank you. 

[KarenJ2]

You do not need to use the First Year Choice if you have more than 183 days of presence in 2019.  Filing a full year resident return using foreign tax credit would have a more favorable outcome for you than dual status.

You could file a dual status return, part year nonresident and part year resident.  You would need to prepare a nonresident return with Sprintax (if that is the firm you have been using) and declare your US source income during your nonresident portion of calendar year 2019 and then a resident 1040 for the remainder of the year.  You would not be able to use the standard deduction on your 1040 nor can you file married filing jointly if you are married.

I do not know if the US/French Treaty article applies to you.

STUDENTS AND TRAINEES : article 21 of the treaty

A French resident, who is not a US citizen or resident, who comes to the United States to study at a University or other recognized educational institution, to secure training, or to study or do research as a recipient of a grant from a non profit organization under the conditions provided in article 21 of the treaty is not taxable in the United States on :

•  gifts received from France; 
•  grants, allowances or awards from a non-profit organization; 
•  income from personal services rendered in the United States not exceeding $5000.

In addition, a resident of France who is temporarily in the United States , as an employee of a resident of France, to acquire a professional experience or to study in a University, is exempt on his income from personal services rendered in the United States not exceeding $8000.

A tax return (Form) 1040 NR has to be filed as well as form 8833 to request the exemptions provided by the treaty.

The benefits granted by articles 20 and 21 cannot exceed five years.

For more on the US - France tax treaty, please refer this link:

US/France Tax treaty