How a green card holder with earning in the US and overseas in a single tax year file a tax return?

[jakekei1]

Hi all,

Background of my case:

I am a green card holder, and worked as a postdoc at Harvard in MA since year 2020. I used to file Federal and MA state tax electronically, using the free version of turbox tax online, and the returned money was deposited directly to my US bank account.

Then I got a job to work in Hong Kong (My hometown, I am a Hong Kong citizen). I officially quitted working at Harvard on May 31, 2023, and started my job in Hong Kong on July 3, 2023.

So in summary:

- For the tax year 2023, I lived in and earned for 5 months at Harvard Medical School, MA, U.S, and then 6 months of earning in Hong Kong.

I understand that I need to pay US tax for the earning at Harvard and my earning in Hong Kong.

Questions:
1) Now I am in Hong Kong. Can I do Federal and MA state tax return with Turbox tax online and file electronically? If yes, which version is suitable for me?

2) For my income in Hong Kong, will I able to use Foreign Earned Income Exclusion, possibly also housing exclusion and foreign tax credit with Turbox tax online?

3) I am paying housing mortgage for an apartment in Hong Kong, and also supporting >50% of the living fee of my mother and father in Hong Kong, will I have tax deduction because of them?

4) My wife is a Hong Kong citizen only, she has no ITIN, and has been working in Hong Kong for over 15 years. Her salary income is about 100 000 USD/year. Can I file a joint tax return with her using turbox online, and if yes, will that likely lower my tax payment?

Best,

Jake

[Vanessa A]

You may need to file as a Dual Status Alien if you had any income from US Sources after you left the country.  Otherwise, you may only need to file a 1040 form (for which you could use TurboTax) on the income you received while a resident of the US.  

Since 2023 was your last year of residency, and you were a Green card holder, the first day that you were no longer a lawful permanent resident would be the date your US residency filing requirements would have terminated.   

So basically all of your income in January thru May would be on the 1040 form and if you were no longer a US resident the rest of the income you earned in Hong Kong would not be taxable to the US.  Your wife's income also would not be included on your return.

You would not be able to claim any of your expenses in Hong Kong as those expenses were not incurred while a US resident.

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. 

As for which version of TurboTax to use.  You will need to print and mail your return to include the termination statement, but you would be able to use the free version if you have been using that in the past.  

If you do have income from US sources that you received AFTER you terminated your residency, you would need to file a 1040NR to claim that income.  You can use Sprintax.com to do this or print and mail it from the IRS website.

[jakekei1]

Thank you very much for your reply.

I am sorry that I might have not explained my case clearly.

I still keep my green card and I am not abandoning it because my job in Hong Kong is only a contract offer for 3 years. I plan to come back to the US with a valid green card after the contract .

I believe that as a green card holder, I am required to file tax return the same as a US citizen, which requires to report world-wide income, and may qualify to exclude my foreign earnings (e.g. $120,000 for 2023) [1].

I have done some homework and asked others too, and based on my understanding, your suggestion sounds like I am giving up my green card status after May 31, 2023, to become a dual status Individual so I only need to file the 5 month US income

May I confirm with you that for my case, I don't need to file as a US citizen and no need to report my overseas income, in order to keep my green card valid?

Thank you very much.

Best,

Jake

Ref

[1]: https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

[Vanessa A]

I was assuming you were giving up your Green Card and staying in Hong Kong, in that situation then you would file as I stated above using Dual Status and not have to report your foreign income.  

If you are keeping your Green Card, then you would need to file taxes as a US Resident and claim all the income you earned world wide.  Yes, you would be eligible to claim the foreign income exclusion.  

Yes, you would be able to file a joint return with your wife.  You would need to include all of her earnings, however, if she earned $100,000, you would likely end up paying more taxes filing a joint return with her than you would a separate return.  The primary difference when filing joint versus separate (when you do not qualify for most credits) is the standard deduction.  It is $13,850 for someone filing separate versus $27,700 for married filing jointly. 

 In both situations, your spouses SSN or ITIN must be included on the return in order to e-file. 

If they do not have an SSN or ITIN and you choose to file Married Filing Separate, you can try typing NRA in as your spouses last name.  Make sure you put a check mark in the box that says My spouse is a Non-Resident alien in the My info section. When you get to the end and try to transmit the return, ignore the e-file errors regarding your NRA spouse and select transmit your return. If that does not work you will need to print and mail your return and write NRA (Non Resident Alien) in the space for her SSN. 

To report foreign earned income and taxes paid on that income using TurboTax Deluxe or higher click the following

• Federal
• Income and Expenses
• Scroll down and click Show More next to Less Common Income
• Click Start next to Foreign Earned Income and Exclusions
• Enter your foreign Earned Income
• Continue through the questions until you get to "Would You Like to Try and Exclude Your Foreign Earned Income?" and click Yes then continue
• If you lived and worked in a foreign country click Yes to the next question.
• Continue through the questions.  If you qualify for this deduction

Please note, TurboTax will determine if you qualify for this deduction.  If you did not work and live in a foreign country 

[jakekei1]

Dear Vanessa,

Thank you very much for the detailed explanation.

So if I get you correctly, I can use Turbotax deluxe to file my tax return: I only do it in one-go for both the 5 month income at Harvard University and 6 month income in Hong Kong, together with all valid tax deduction.

It maybe okay to file electronically if Turbotax can do it, otherwise I need to print out the form and mail it back to IRS according to the instruction.

Is it correct?

Best,

Jake

[Vanessa A · Accepted solution]

That is correct.  Since you are keeping your green card, you will file one tax return, which can be done in TurboTax, including all of your income from Harvard and HongKong on that tax return.  You should be able to file electronically, but if not, then yes, you will just need to print and mail your return.