F1 visa over 5 years with dependents

[Gce517]

I started OPT in June 2021 and have been on an F1 visa since 2016. My wife and children hold F2 visas and for 2016 through 2020 we filed form 8843 because we did not have any income during that time. For the time I did receive income in 2021, I understand I need to file a 1040NR. My wife and children do not have an SSN or ITIN. Should I file using Married Filing Separately and have my wife and children file 8843, or should I file using Married Filing Jointly and only file 8843 for my children?

[Gce517]

Also, my daughter turned 21 in 2021. Her change to F1 was completed in February 2020 (16 months after filing!). I assume I would have to file 8843 for her for 2021 while she was still an F2 dependent, correct? 

Thanks in advance!

[DaveF1006]

Since this involves filing a 1040NR, please contact sprintax on the correct filing of the 8843.

[Gce517]

Thank you, DaveF1006!

I did contact Sprintax, but they sent me to Turbotax because I am deemed a resident for income tax purposes (been here since August 2016).

So perhaps I DON'T have to file a 1040NR? 

I am still confused.

Thanks again!

[DaveF1006]

It depends how long you were an exempt individual or if you are still exempt. According to the IRS in their publication, you would file an 8843 if you are an alien individual and need to file Form 8843 to explain the basis of your claim that you can exclude days present in the United States for purposes of the substantial presence test because you:

• Were an exempt individual.
• Were unable to leave the United States because of a medical condition or medical problem.

In viewing this statement, if you file Married Filing jointly, you can include your wife in the filing but she will need to include all of her worldwide income. If your daughter qualifies to be your dependent, you will not need to file a 8843 for her but if she files on her own and is declared a exempt individual, then she will need to file a 8843.

In fact the IRS stares that  All F-1/J-1 foreign national (and their F-2/J-2 dependents) who are non-residents for tax purposes are required to file Form 8843. Also if your wife files a Married Filing Separately and is a 1040NR, she will need to file a 8843 for her and your daughter if claims her daughter as a dependent on her tax return. Here are some options for you to use in making your decision on whether or not to file jointly or single.

Option 1:

Treat your spouse as a resident alien for tax purposes.   If you make this election you are required to include your 100% of your spouse's worldwide income on your US tax return and it will be subject to US taxes.  

To Make this election do the following:

1. Attach a statement to your tax return (signed by both spouses) that states that one spouse is a nonresident alien and the other is a U.S. citizen or resident alien, and you are choosing to both be treated as US residents for the tax year. 

2. List the name, address and Social Security number (or Individual Taxpayer Identification number) of each spouse.  You will need to complete a Form W-7, Application for IRS Individual Taxpayer Identification Number (ITIN) Application for ITIN.  This form will be attached to your tax return.  Turbo Tax does not support the Form W-7.  You will have to complete it outside of Turbo Tax.  You will have to print, sign and mail your return if you file Form W-7.

3. For the first year you make the choice, you have to file a joint return. In later years you may file joint or separate returns. Married Filing Jointly will give you a higher standard deduction and has other benefits that are not available using a married filing separately status, but you do have to include your spouse’s worldwide income in joint income.

Treat your spouse as a resident alien for tax purposes.   If you make this election you are required to include your 100% of your spouse's worldwide income on your US tax return and it will be subject to US taxes.  

To Make this election do the following:

1. Attach a statement to your tax return (signed by both spouses) that states that one spouse is a nonresident alien and the other is a U.S. citizen or resident alien, and you are choosing to both be treated as US residents for the tax year. 

2. List the name, address and Social Security number (or Individual Taxpayer Identification number) of each spouse.  You will need to complete a Form W-7, Application for IRS Individual Taxpayer Identification Number (ITIN) Application for ITIN.  This form will be attached to your tax return.  Turbo Tax does not support the Form W-7.  You will have to complete it outside of Turbo Tax.  You will have to print, sign and mail your return if you file Form W-7.3. For the first year you make the choice, you have to file a joint return. In later years you may file joint or separate returns. Married Filing Jointly will give you a higher standard deduction and has other benefits that are not available using a married filing separately status, but you do have to include your spouse’s worldwide income in joint income.


Option 2

Treat your spouse as a nonresident alien for tax purposes. You will not have to include your spouse's non-US income on your U.S. tax return. You will have to use the filing status of Married Filing Separately.

If you file as Married Filing Separately AND your spouse has no income from sources within the US AND is not claimed as a dependent of another US taxpayer, you CAN claim an exemption for your spouse. You will need either a social security number or an Individual Taxpayer Identification Number (ITIN) for your spouse in order to claim the exemption.

For information on, and instructions on how to obtain an ITIN see the IRS web page Individual Taxpayer Identification Number (ITIN).

Hope this helps!!

@Gce517 

[ Edited 03/09/22|10:23 AM PST]

[Gce517]

Thanks again, Dave, for the very thorough explanation of my available options.

There are a few things I may not have been clear about in my original post:

1. I am a non-resident alien with an F1 status since August 2016.
2. My wife and son are currently non-resident aliens with an F2 status.
3. Until August 2021, my daughter was my dependent with an F2 status.
4. On February 2022, my daughter's status effectively changed from F2 to F1.
5. Since August 2016, I have not had any income, US or worldwide (I have been tapping into my savings all this time).
6. Since August 2016, my wife and children have not had any income, US or worldwide.
7. I have an SSN.
8. My wife and children do not have SSN/ITIN.
9. My wife and children are not eligible to apply for SSN.
10. For FY 2016, 2017, 2018, 2019, and 2020, I filed 8843 for myself, my wife, and my children.
11. On June 30, 2021, I started working under Optional Practical Training (OPT) for F1 students. This means that starting June 2021, I began deriving US income. My wife and son continued in F2 status.
12. Because I have been in the US for more than five years, I understand that I am considered a resident alien for income tax purposes.

My specific questions are as follows:

1. Am I correct in my understanding that for FY 2021 I am considered a resident alien for income tax purposes?
2. If so, and based on the start date of my OPT, do I have to:
   (a) file 8843 for the period between 1/1/21 - 6/29/21 and 1040 for the period between 6/30/21 - 12/31/21, or
   (b) file 1040 for the entire FY 2021?
3. Am I correct in my understanding that for FY 2021 my wife and children are considered resident aliens for income tax purposes?
4. If so, and based on our date of entry to the US (8/1/2016), do I have to:
   (a) file 8843 for my wife and children for the period 1/1/21 - 7/31/21 and 1040 for the period between 8/1/21 - 12/31/21; or
   (b) file 8843 for the entire FY 2021; or,
   (c) file 1040 for the entire FY 2021?
5. Are my wife and children required to apply for ITIN because we have are now considered resident aliens for income tax purposes? 

Again, thanks in advance for your kind answers. They will help me better understand my current situation and help me make more sense of your previous response.

[DaveF1006]

To clarify, were you an exempt individual at any time during 2021? 

[Gce517]

Yes, from 1/1/2021 to 6/29/2021.

[DaveF1006 · Accepted solution]

Yes, you do meet the substantial presence test to file as a US resident for 2021 thus you can file as a 1040 resident for the entire year.  You do not need to file an 8843 for 2021 since you have no income to exclude while you were an exempt individual and are probably not eligible to be exempt in the reasons I have described in the following paragraph.

As far as your wife and children, according to the IRS, they cannot claim be exempt individuals if you filed an 8843 in any part of 5 calendar years. From your description above, it seems like you have already filed for them five years previous.  if this is the case, they are no longer exempt and you will not file a 8843 for them in 2021. They still would not be residents for income tax purposes because they do not have a SSN.

Your wife and children are not considered resident aliens but can be claimed on your tax return. Your children need to be qualifying children though to be claimed on your tax return.  Here are the Qualifying Child tests that are required by the IRS. In your return, you will need to follow the steps that I outlined in my previous post to obtain an ITIN for them, which is a necessary requirement. In the qualifying child test, it mentions they need a SSN but the ITIN application process will satisfy this requirement.