J-1 visa trainee paid by a foreign company (in case of a 3rd J1 visa)

[MlyneDSB]

Hello,

I am currently working in the U.S. with a J1 Trainee visa, and I am paid by a foreign company on a foreign bank account.

This is my third J1 visa: 

- 2016 - from June 19th to August 11th - J1 Summer work and travel visa. I was working for a U.S. company and paid in the U.S. on a U.S. bank account. I did my tax return and get a tax credit. I do not remember exactly which form I completed.

- 2018-2019 - from Augst 18th, 2018 to May 27th, 2019, I was a student in the U.S., and I completed the form 8843.

Now, I am a J1 Trainee in the U.S., I arrived February 28th, 2022, and my visa is expiring on August 31st, 2023. I am completely lost about what I should do for my tax and which form(s) to complete as I am apparently considered as a U.S. Citizen for tax purposes, but I am not paid in the U.S.

Can someone help me?

[DaveF1006]

First of all, your five year calendar year exemption expired in 2021.  You may qualify for an exception to this five-year rule if you can claim you have a closer connection to your foreign country as stipulated by this IRS source. All four of these requirements must be met to qualify for the exception.

1. The student does not intend to reside permanently in the United States.
2. The student has substantially complied with the immigration laws and requirements relating to his student nonimmigrant status.
3. The student has not taken any steps to change their nonimmigrant status in the United States toward becoming a lawful permanent resident of the United States.
4. The student has a closer connection to a foreign country than to the United States as evidenced by the factors listed in Treas. Reg. § 301.7701(b)-2(d)(1).

If you qualify for this exception, you will need to file a 8843 and include this with your return to claim an exception and still be considered a non-resident for US tax reporting purposes. You will need to file a 8843 again to apply for the exception for the reasons mentioned above. 

[MlyneDSB]

Thank you for your answer @DaveF1006.

I do not understand the five year calendar year rule. I thought it was for student only. In 2016 I was not in the U.S. as a student but as a J1 Summer work and travel. Then I went back to my home country (France). I was only a student in 2018-2019, but on May 27th, 2019, I went back to France. Now I am back in the U.S. with a J1 Trainee visa. 

I thought that the rule that would apply to my case would be the « 2 of the 6 prior years ».

Here is what I can read on form 8843:

“If you were exempt as a teacher, trainee, or student for any part of 2 of the 6 prior calendar years, you can exclude days of presence in 2022 as a teacher or trainee only if all four of the following apply.

1. You were exempt as a teacher, trainee, or student for any part of 3 (or fewer) of the 6 prior calendar years.
2. A foreign employer paid all your compensation during 2022.
3. You were present in the United States as a teacher or trainee in any of the 6 prior years.
4. A foreign employer paid all of your compensation during each of those prior 6 years you were present in the United States as a teacher or trainee.”

I meet the first condition as I was a student in 2019. I meet the second condition as well. But, I do not meet the third condition and so neither the fourth. That is why I do not know what to do.

I do not know if I was considered exempted in 2016 while I had a J1 summer work and travel visa.

So, do you think I can still claim an exception using the closer connection?

thank you again for your help!

[DaveF1006]

I must confess that i didn't read the instructions for 8843.  if i did, i would have realized you did not qualify for the exemption because of the reasons you gave. 

Since you spent more than 183 days in the US in 2022, you would not qualify for having a closer connection to your foreign home. I read this in the instructions for Form 8840, which is mentioned in the instructions for Form 8843 under the Substantial Presence Test. 

Now, for the most important part. You will need to report your income paid by the foreign government to report on your your US 1040 tax return. To report:

1. Federal Taxes -> Wages & Income>
2. Less Common Income>Miscellaneous Income> Other reportable income.
3. When it asks, "Any other reportable income?" say yes 
4. Then type in a description and the amount to report it on your tax return. Here type in Foreign income earned and then the amount.

@MlyneDSB 

[eirkats]

Hi, 

I saw this discussion and I think it is similar to my case. I would be glad to have your opinion regarding my topic. 

- I was J1 visa holder in 2022 - visited the US for a few months as a student. I didn't receive a US salary. I was paid by my university outside the USA.

- In 2023 I am J1 visa holder (nonstudent) and again I do not receive a US salary. I get a fellowship from a private nonprofit organization (foundation) outside the USA to conduct research at a US university.

- In 2024 and 2025 I will be J1 visa holder (same visa as 2023) and I will not receive any US income. I will receive the fellowship from the non-USA private nonprofit organization. 

In my case I never receive payment from the US, would you think that the exception mentioned above can be applied in my case? Can the foundation be considered a foreign employer? I give the definition of foreign employer below as I found it in Pub 519.

Thanks!

Foreign employer. A foreign employer is:

• A nonresident alien individual, foreign partnership, or foreign corporation; or
• An office or place of business maintained in a foreign country or in a U.S. possession by a U.S. corporation, a U.S. partnership, or an individual who is a U.S. citizen or res-ident.

The term “foreign employer” does not include a foreign government. Pay from a foreign government that is exempt from U.S. income tax is discussed in chapter 10.

Exception. If you were exempt as a teacher, trainee, or student for any part of 2 of the 6 prior calendar years, you can exclude days of presence in 2022 as a teacher or trainee only if all four of the following apply.

1. You were exempt as a teacher, trainee, or student for any part of 3 (or fewer) of the 6 prior calendar years.

2. A foreign employer paid all your compensation during 2022.

3. You were present in the United States as a teacher or trainee in any of the 6 prior years.

4. A foreign employer paid all of your compensation during each of those prior 6 years you were present in the United States as a teacher or trainee.