How to file dual status tax return? (The year from F1 visa to H1B)

[wwangrock]

I was on F1 visa from Jan to Sep 2020 and on H1B visa from Oct to Dec 2020. I did some research and would like to file a dual-status tax return this year.

My question is if I file 1040 NR for Jan to Sep, and 1040 for Oct to Dec, how do I determine the taxable rate? Since my taxable income in either status would be much lower than my actual annual income.

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

Thanks

[DaveF1006]

It depends. One of the perks in filing a non-resident or resident return in a tax software program, you don't need to determine a taxable rate. The program will determine that for you based on the information you put into the return.  

[wwangrock]

Thanks a lot for the reply.

To get it clear, the answer is I do need to consider the tax rate, but the tax software may handle this with some information I input?

I'm using Sprintax for 1040NR for Jan to Sep, and Turbotax for 1040 for Oct to Dec. Do you happen to know how I should fill in the information for both? Do I split the income into two parts? or fill all the income and there may be an option to choose the percentage of the income belongs to 1040NR or 1040?

[wwangrock]

Another question is that I only have one W2 from the employer. Can I just split the total number into two parts myself? Is that legal?

Thanks,

[ErnieS0]

You will have to split your income manually. There is no percentage option.

You must file Form 1040, U.S. Individual Income Tax Return, if you are a dual-status taxpayer who becomes a resident during the year and who is a U.S. resident on the last day of the tax year. Write "Dual-Status Return" across the top of the return.

Attach a statement to your return to show the income for the part of the year you are a nonresident. You can use Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents as the statement, but be sure to write "Dual-Status Statement" across the top.

Related Resource:

Taxation of Dual-Status Aliens

[wwangrock]

Thank you very much for the reply. Two more questions, please!

1. Do I have to show the total of my income somewhere in the two forms for the tax rate reason? For example, I fill Oct to Dec income into TurboTax for the 1040 form and may have a result of a lower tax rate from TurboTax, compared with the rate of the whole year income. Is this a problem?

2. Is it legal to split W2 manually?

Thanks,

[ReneeM7122]

Yes, you have to show the total of your  income on the form.

You must file Form 1040, U.S. Individual Income Tax Return, if you are a dual-status taxpayer who becomes a resident during the year and who is a U.S. resident on the last day of the tax year. Write "Dual-Status Return" across the top of the return. Attach a statement to your return to show the income for the part of the year you are a nonresident. You can use Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents as the statement, but be sure to write "Dual-Status Statement" across the top.

Please see this IRS article about dual-status aliens.

[wwangrock]

Thank you so much.

My concern about the dual-status tax return is how to decide the taxable income after deduction for the two parts? Each part should be much less than the actual annual income and may have a lower tax rate. 

Thanks,

[LinaJ2020]

As a dual status taxpayer, you only need to report US source income on Form 1040-NR and worldwide income on your Form 1040.  Yes, each part of the income should be less than the total actual annual income.  

Nonresident aliens are generally subject to U.S. income tax only on their U.S. source income. They are subject to two different tax rates, one for effectively connected income, and one for fixed or determinable, annual, or periodic (FDAP) income.

Effectively connected income (ECI) is earned in the U.S. from the operation of a business in the U.S. or is personal service income earned in the U.S. (such as wages or self-employment income). It is taxed for a nonresident at the same graduated rates as for a U.S. person.

FDAP income is passive income such as interest, dividends, rents or royalties. This income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate.  To learn more, click here: Form 1040-NR

For your resident portion, review Form 1040 instructions here:

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf  ( Page 107 ) 

[wwangrock]

Thank you, @LinaJ2020 that's really helpful.

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? And the same thing goes for Effectively connected income (ECI) of the non-resident part?

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

[LinaJ2020 · Accepted solution]

Let me clarify:

From Jan-Sept, you file as a nonresident. You only report US source income during that nine months.  If you have US source income, it will be taxed at the same graduated rates as for a U.S. person.

From Oct-Dec, you file as a resident.  You must report all income from US and your foreign country for that three months.  If your total income for that period is $20,000, your tax rate will be at 12%.

Hope it helps.

[wwangrock]

@LinaJ2020 

Hello, may I ask one more question about this paragraph I copied from IRS website:

" Resident at end of year. You must file Form1040 or 1040-SR if you are a dual-status taxpayer who becomes a resident during the year and who is a U.S. resident on the last day of the tax year. Write “Dual-Status Return” across the top of the return. Attach a statement to your return to show the income for the part of the year you are a nonresident. You can use Form 1040-NR as the statement, but be sure to write “Dual-Status Statement” across the top."

If I file 1040 for Oct to Dec and attach a 1040NR as an attachment for Jan to Sep, will I get the non-resident part of the tax refund from the "ATTACHMENT"

[LinaJ2020]

You should be if you are entitled to it.  As TurboTax does not cover non-residency portion, you can use Sprintax to prepare your Form 1040-NR.  As a nonresident, you only need to report US source income.  If your withholding and other payment are greater than your tax due, you will get a refund.  

[wwangrock]

@LinaJ2020 

Thank you again, really appreciated.

I only have one W2, is it allowed to split the W2 into two parts by manual? I've gotten the Details of every month's earnings, just want to make sure it is okay to split by myself.

[LinaJ2020]

Normally you do not.  It will not allow you to e-file.  However, since you are paper-filing, I will suggest you to provide explanation why and how the wages is split between nonresident and resident.