Dual Status Alien F1 OPT to H1B SINGLE file

[sbbyl29]

Hi,
Please read the situation below and advise how to file 2020 tax return. In 2020 my visa status got changed from F-1 OPT to H1B. 

• F1 Visa - 08/03/2018-09/30/2020 (789 Calendar Days / 2 yrs+1 month+ 27days)
• H1B Visa - 10/01/2020-12/31/2020 (91 Calendar Days)

IRS Official Link: Publication 519 Link: https://www.irs.gov/pub/irs-pdf/p519.pdf 

Step 1: Substantial Presence Test Calculation: Refer Page 4 of Publication 519
For TAX Year 2020:
1/6*0 days (2018) + 1/3*0 days (2019) + 91 days (2020) = 91 days
Thus, I will fail the test and I will be treated as non-resident.

For Year 2021:

1/6*0 days (2018) + 1/3*90 days (2020) + 153 days (2021) = 183 days

Result: I'll pass the test on June 3rd, 2021.  Correct? 

Step 2: DUAL STATUS ALIEN - Refer Page 7 of  Publication 519

Step 3: FIRST YEAR CHOICE - Refer Page 8 of  Publication 519

As I'll be able to pass the substantial test in 2021 and not in 2020, I'll have to opt in for "FIRST YEAR CHOICE" in a way to consider myself as resident alien for a part of 2020 year. Correct?

Step 4: For the Part of NON RESIDENT ALIEN ( Jan - Sept 2020). 
I have to consider all my US income forJan - Sept part only. Correct?

As I'm from India I can claim the Tax treaty for Student and take the standard deduction.Refer Page 28 of  Publication 519 (under Students and business apprentices from India).

As, I am NON RESIDENT ALIEN for only a part of year (Jan-Sept),  I can claim full standard deduction (due to treaty) for my US income (for part of year (Jan-Sept))  in my 1040 NR EZ form.  Correct?

Step 5: For the Part of RESIDENT ALIEN ( Oct - Dec 2020). 

I have to consider all my income for Oct - Dec part only.  Correct?

I am aware that I cannot claim standard deduction, but I can still claim itemized deduction. 

Step 6: How to File? Refer Page 34 of  Publication 519 

I will have to request extension to satisfy substantial presence test for year 2021. 

As I was a Resident at end of year, I will have to file 1040 and attach 1040-NR. 

Here is what I am confused about. 
As I have a single W-2 for the entire year. I have to split my income for part I was Resident Alien and part I was non resident alien and I will be taxed accordingly.  Correct?

Example: Say my Income on W2 for whole year is 100K ( This is my only income, no other income, no other w2, no outside US income). If I look at Payslips and do some math.

Pay for period Jan - Sept 2020 is 80K. (On F1 OPT, NON RESIDENT ALIEN) 
Pay for period Oct - Dec 2020 is 20K.  (On H1B, RESIDENT ALIEN) 

Step 6(a)
When filing my 1040-NR (as a statement to show my income for part of non resident alien) , I have to take only my 80K income and I will be taxed according to the US Tax brackets rate for my this income (80K) only. I can claim my deduction here as in Step 4.   Correct?

Step 6(b)
When filing my 1040, I have to take only my 20K income and I will be taxed according to the US Tax brackets rate for my this income (20K) only.  Correct?

Combining both, I can file my return for year 2020. Correct?

Conclusion - I'll be able to do single filing return using 1040 form by making the choice for - Dual Status Alien+First Year Choice.  Filing 1040 form  for my income for Oct- Dec and attaching 1040-NR (with deductions) for my income for Jan- Sept. Correct? 

Please advise. Thank you and really appreciate you for taking time.

[sbbyl29]

Hi,
Please read the situation below and advise how to file 2020 tax return. In 2020 my visa status got changed from F-1 OPT to H1B. 

• F1 Visa - 08/03/2018-09/30/2020 (789 Calendar Days / 2 yrs+1 month+ 27days)
• H1B Visa - 10/01/2020-12/31/2020 (91 Calendar Days)

IRS Official Link: Publication 519 Link: https://www.irs.gov/pub/irs-pdf/p519.pdf 

Step 1: Substantial Presence Test Calculation: Refer Page 4 of Publication 519
For TAX Year 2020:
1/6*0 days (2018) + 1/3*0 days (2019) + 91 days (2020) = 91 days
Thus, I will fail the test and I will be treated as non-resident.

For Year 2021:

1/6*0 days (2018) + 1/3*90 days (2020) + 153 days (2021) = 183 days

Result: I'll pass the test on June 3rd, 2021.  Correct? 

Step 2: DUAL STATUS ALIEN - Refer Page 7 of  Publication 519

Step 3: FIRST YEAR CHOICE - Refer Page 8 of  Publication 519

As I'll be able to pass the substantial test in 2021 and not in 2020, I'll have to opt in for "FIRST YEAR CHOICE" in a way to consider myself as resident alien for a part of 2020 year. Correct?

Step 4: For the Part of NON RESIDENT ALIEN ( Jan - Sept 2020). 
I have to consider all my US income forJan - Sept part only. Correct?

As I'm from India I can claim the Tax treaty for Student and take the standard deduction.Refer Page 28 of  Publication 519 (under Students and business apprentices from India).

As, I am NON RESIDENT ALIEN for only a part of year (Jan-Sept),  I can claim full standard deduction (due to treaty) for my US income (for part of year (Jan-Sept))  in my 1040 NR EZ form.  Correct?

Step 5: For the Part of RESIDENT ALIEN ( Oct - Dec 2020). 

I have to consider all my income for Oct - Dec part only.  Correct?

I am aware that I cannot claim standard deduction, but I can still claim itemized deduction. 

Step 6: How to File? Refer Page 34 of  Publication 519 

I will have to request extension to satisfy substantial presence test for year 2021. 

As I was a Resident at end of year, I will have to file 1040 and attach 1040-NR. 

Here is what I am confused about. 
As I have a single W-2 for the entire year. I have to split my income for part I was Resident Alien and part I was non resident alien and I will be taxed accordingly.  Correct?

Example: Say my Income on W2 for whole year is 100K ( This is my only income, no other income, no other w2, no outside US income). If I look at Payslips and do some math.

Pay for period Jan - Sept 2020 is 80K. (On F1 OPT, NON RESIDENT ALIEN) 
Pay for period Oct - Dec 2020 is 20K.  (On H1B, RESIDENT ALIEN) 

Step 6(a)
When filing my 1040-NR (as a statement to show my income for part of non resident alien) , I have to take only my 80K income and I will be taxed according to the US Tax brackets rate for my this income (80K) only. I can claim my deduction here as in Step 4.   Correct?

Step 6(b)
When filing my 1040, I have to take only my 20K income and I will be taxed according to the US Tax brackets rate for my this income (20K) only.  Correct?

Combining both, I can file my return for year 2020. Correct?

Conclusion - I'll be able to do single filing return using 1040 form by making the choice for - Dual Status Alien+First Year Choice.  Filing 1040 form  for my income for Oct- Dec and attaching 1040-NR (with deductions) for my income for Jan- Sept. Correct? 

Please advise. Thank you and really appreciate you for taking time.

[sbbyl29]

Hi,
Please read the situation below and advise how to file 2020 tax return. In 2020 my visa status got changed from F-1 OPT to H1B. 

• F1 Visa - 08/03/2018-09/30/2020 (789 Calendar Days / 2 yrs+1 month+ 27days)
• H1B Visa - 10/01/2020-12/31/2020 (91 Calendar Days)

IRS Official Link: Publication 519 Link: https://www.irs.gov/pub/irs-pdf/p519.pdf 

Step 1: Substantial Presence Test Calculation: Refer Page 4 of Publication 519
For TAX Year 2020:
1/6*0 days (2018) + 1/3*0 days (2019) + 91 days (2020) = 91 days
Thus, I will fail the test and I will be treated as non-resident.

For Year 2021:

1/6*0 days (2018) + 1/3*90 days (2020) + 153 days (2021) = 183 days

Result: I'll pass the test on June 3rd, 2021.  Correct? 

Step 2: DUAL STATUS ALIEN - Refer Page 7 of  Publication 519

Step 3: FIRST YEAR CHOICE - Refer Page 8 of  Publication 519

As I'll be able to pass the substantial test in 2021 and not in 2020, I'll have to opt in for "FIRST YEAR CHOICE" in a way to consider myself as resident alien for a part of 2020 year. Correct?

Step 4: For the Part of NON RESIDENT ALIEN ( Jan - Sept 2020). 
I have to consider all my US income forJan - Sept part only. Correct?

As I'm from India I can claim the Tax treaty for Student and take the standard deduction.Refer Page 28 of  Publication 519 (under Students and business apprentices from India).

As, I am NON RESIDENT ALIEN for only a part of year (Jan-Sept),  I can claim full standard deduction (due to treaty) for my US income (for part of year (Jan-Sept))  in my 1040 NR EZ form.  Correct?

Step 5: For the Part of RESIDENT ALIEN ( Oct - Dec 2020). 

I have to consider all my income for Oct - Dec part only.  Correct?

I am aware that I cannot claim standard deduction, but I can still claim itemized deduction. 

Step 6: How to File? Refer Page 34 of  Publication 519 

I will have to request extension to satisfy substantial presence test for year 2021. 

As I was a Resident at end of year, I will have to file 1040 and attach 1040-NR. 

Here is what I am confused about. 
As I have a single W-2 for the entire year. I have to split my income for part I was Resident Alien and part I was non resident alien and I will be taxed accordingly.  Correct?

Example: Say my Income on W2 for whole year is 100K ( This is my only income, no other income, no other w2, no outside US income). If I look at Payslips and do some math.

Pay for period Jan - Sept 2020 is 80K. (On F1 OPT, NON RESIDENT ALIEN) 
Pay for period Oct - Dec 2020 is 20K.  (On H1B, RESIDENT ALIEN) 

Step 6(a)
When filing my 1040-NR (as a statement to show my income for part of non resident alien) , I have to take only my 80K income and I will be taxed according to the US Tax brackets rate for my this income (80K) only. I can claim my deduction here as in Step 4.   Correct?

Step 6(b)
When filing my 1040, I have to take only my 20K income and I will be taxed according to the US Tax brackets rate for my this income (20K) only.  Correct?

Combining both, I can file my return for year 2020. Correct?

Conclusion - I'll be able to do single filing return using 1040 form by making the choice for - Dual Status Alien+First Year Choice.  Filing 1040 form  for my income for Oct- Dec and attaching 1040-NR (with deductions) for my income for Jan- Sept. Correct? 

Please advise. Thank you and really appreciate you for taking time.

[LinaJ2020]

Yes, you qualify for the First Year Choice and be able to file as dual status. 

Students or business apprentices may be able to take the standard deduction on Form 1040-NR, line 12, instead of their itemized deductions if they are eligible for benefits under Article 21(2) of the United States-India Income Tax Treaty. You will enter the standard deduction amount found for their filing status on Form 1040 or 1040-SR. For details, click here :  https://www.irs.gov/instructions/i1040nr#idm139824531961040  ( Under Standard Deduction)   Note that we tax treaty is out of scope for our service, you need to consult a professional for verification. Information about standard deductions only applies to students and business apprentices eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty.

For the nonresident portion, you only need to report US source income and be taxed at the same graduated rates as for a US person.

As a dual status taxpayer, you will file a Form 1040-NR from January to September only report US-sourced income.  From October to December, you will file a Form 1040 reporting worldwide income. As TurboTax does not support nonresident tax forms, you are suggested to visit  Sprintax for the Form 1040NR portion.  You will then use TurboTax to complete the resident portion.  You cannot e-file.  Print out all the tax forms and paper file to the IRS.

To read more about the pros and cons on dual status, click here: Dual status

For instructions how to file Dual status, see DualStatus under "What and Where To File for a Dual-Status Year" and 1040NR.

If you decide to file as a non-resident for the whole year, as TurboTax does not support any nonresident tax forms, you are advised to contact Sprintax to file your 2020 taxes.

[sbbyl29]

Thanks for the answer @LinaJ2020.

however, some part of my question still remains unanswered.

What income should I report in each case? Do I have to split my income on two parts and I have to pay taxes on 80K for 1040 NR part and pay taxes on 20K for 1040 part? Considering the example I gave in the question 

[LinaJ2020]

If all your income of the year is US source, you will report the 80K on Form 1040NR and 20K on Form 1040.  Because this is a wage income, you will be taxed at the same tax rate on both forms.  

[sbbyl29]

Thanks for quick reply @LinaJ2020.

To get it clear, for example, if my total taxable income (non-resident + resident) is $100,000, and the taxable income of resident part is $20,000. I should use 12% as the tax rate, not the 24% shown below?
My 100K income is from a single

employer and I have one W2 from

the employer. So, I should manually split my W2 for two parts?

10%	Up to $9,875
12%	$9,876 to $40,125
22%	$40,126 to $85,525
24%	$85,526 to $163,300

[LinaJ2020]

Yes, that is correct. 

[sambbbbbbbbbbbb]

Hey @sbbyl29, why are you calculating for 2021? We file 2020, right?