Which return to file? Can turbotax help?

[kim126]

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[Vanessa A]

What type of visa were you here on?  Did you file as a US Resident for tax purposes in 2022?  If so, then you would file as a US resident for tax purposes for the time you were here in this country.  Your residency termination date would be the date you left the US.  So, you would prorate your income for 2023 between the 1040 for the time you were here and the 1040NR for the time you were not here. 

So basically all of your income in Janaury and February would be on the 1040 form and the rest of it would go on the 1040NR that is from US sources.  

You would also include a statement with your 1040 form to establish your residency termination date.  See page 13 of pub 519 for details on what to include in the statement. 

[kim126]

Thank you for your help @Vanessa A.

[Vanessa A]

Should I prorate the salary and taxes in my W-2 so that 1040 has the amounts before I left the US and 1040 NR has the amounts after I left the US?  Yes, you would prorate the amount between before you left and after you left and enter it on the forms according to your residency status during the time you received the income.

As I cannot use standard deduction as a non resident, should I prorate the itemized deduction (state taxes in the W2) between the two returns? Yes, this again would be prorated based on your residency at the time you received the income.  However, be careful with taking an itemized deduction for the states during the time you did not live in the US as you may get a refund of the taxes withheld for the state.

Which tax rate will apply in each return if I am pro rating the salary/income? The 1040 NR return will have lower amounts so should a lower tax rate apply? Income tax rate will vary based on your income and your 2023 Tax bracket on that return. 

 
After reading IRS guidance and various tax forums, it appears interest on treasuries and CDs is not taxable for non residents (https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens-exclusions-from-income). I did receive 1099. Should I pro rate and include interest in the 1040 but exclude it from the 1040 NR? If it is not taxable on the 1040NR, then you would only include the amount you received while living here on your resident return.  The amount you received after leaving the country and becoming a nonresident would not be part of your US Resident return.  

[kim126]

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[Vanessa A]

1. Can I take the standard deduction for the time I was in the US on the 1040 and itemized deduction on the 1040NR or do I have to take itemized deduction on both returns when filing dual status return?  You will need to itemize your deductions for the year that you file as a dual status citizen. 

2. I have a realized long term loss (in 1099-B) after I left the US. Should I include this in the 1040 NR?  Any income when not a resident of the US would be included on your 1040NR. Any income earned/received while a US Resident regardless of source will be included on your 1040. 

3. I have brokerage interest (in 1099-DIV) after I left the US. Should I include this in the 1040 NR and at what rate will it be taxed?  Yes, you would include this on your 1040NR if it was earned/received after leaving the US.