J1/J2 filing after leaving US

[FCarv]

Dear community,

I have been under a J1 visa since 2023. So, during the first two years, my wife (J2) and I filed as a non-residents. Next year (2026), we will be filing our 2025 tax return as residents married filing jointly (we never left US since we got here). 

However, my appointment ends by the end of March 2026. So, there are two scenarios for us:

a. we stay until March 31st;

b. we go to our home country earlier (e.g. in January) and I finish my work remotely (I talked to my supervisor and it seems to be a possibility)

I would like to ask about how we would be considered while filing our taxes in 2027. I am asking because in the IRS webpage it says:

To meet the substantial presence test, one must be physically present in the United States (U.S.) on at least:

1. 31 days during the current year, and

2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:

• All the days you were present in the current year, and
• 1/3 of the days you were present in the first year before the current year, and
• 1/6 of the days you were present in the second year before the current year.

So, if we stay 30 days in 2026, we would be considered non-residents? Even though the summing all three years (365 in 2024, 365 in 2025 and 30 in 2026) would be more than 183. I am not sure if not meeting requirement 1 is enough to be considered as non-resident.

I have seen someone else in a similar case, but they were leaving in November after three or four years in US, so they would meet both requirements 1 and 2.

I would appreciate if someone could give me some clarification regarding this.

Best regards,

Felipe

[pk]

@FCarv 

(a) please can you tell me when you entered the country with J visa ?   And for what ? ( student/ teacher/ trainee/research etc. )

(b) which country are you from ?

(c) was this entry your first in three years ?

I ask because  J exemption is two years from the day you enter.  And because your  home country may have  tax treaty  that could have some implications.

Please answer my questions and I will circle back --yes ?

pk

[FCarv]

Hello, @pk. Thank you for your message! The answers to your questions are below:

(a) I entered US on J1 visa in January 2023 as a Research Scholar.

(b) I am from Brazil (as far as I know, there is no tax treaty)

(c) Yes, I never left the US after I first came.

So, for the calendar year of 2025 I will be treated as a resident for tax purposes. But I am not sure about the calendar year of 2026, which I will be here only for a few months. I have read about dual tax status, but not sure how or if that would apply depending on when I will leave (January or end of March).

[pk]

@FCarv , thank you for your response to my questions.

From your answers  and the original post:

(a) for the calendar/ tax  years 2023 and 2024, you were exempt ( from counting days present in the US for purposes of  SPT) and considered NRA.  Thus you filed 1040-NR and was taxed ONLY on your US income.

(b) for the year 2025, you are no-longer exempt ( absent an extension requested and granted) and therefore you count your days present towards SPT.  Thus for the year 2025, you are a  tax resident and taxed on your world income. You indeed can file as MFJ, use standard deduction. To do this your spouse must have a tax id ( SSN or ITIN). If she is not eligible for  SSN, then you file a W-7 along with your  return ( it is best to go to a local IRS office with her passport and a copy to be certified and to be used as attachment to the W-7). This should result in retroactive issuance of ITIN and the processing of MFJ return.

(c)  If you choose to leave the USA at the end of 2025 and continue  your  work remotely ---- 1. you do not need to file a return for US; 2. your  US income ( whether deposited in an US  bank or not ) is  Brazil sourced and therefore taxed ONLY by Brazil.

(d) If you choose to stay in the USA till Mar 31st. then  you will have ;   90 days for 2026, 1/3 0f 365 = 121 days for 2025 and 0 days for 2024 for a total of 211 days . Thus you are a resident and a non-resident after leaving the country. Depending on what you do , the most likely scenario is a dual status -- form 1040 covering  01/01/2026 thru 03/31/2026 and taxed on world income, and  04/01/26 thru 12/31/2026  covered by form 1040-NR and taxed on  ONLY US sourced / connected income. Also you will have to use  itemized deduction.

Personally. being a believer in keeping things simple and if there is no chance of an extension, I would choose to leave by the end of 2025 and work remotely.   Of course  I am not privy to all the facts  and am not in your shoes -- only you can make that decision.

Is there more I can do for you ?

Obrigado  Sr.

[FCarv]

@pk . Thank you for your detailed answer! (and for the “obrigado Sr.”!)

I will address each one of your points below and add any questions I have:

(a) Yes, this is how I have done.

(b) I only have the US income (I even closed my bank accounts in Brazil before moving, since I knew I would not be using them and that I would stay here for a few years). My wife got her SSN in the first year, so I think that filing MFJ will be straightforward.

(c) Would this be the case even if my income being due to my J1 program associated to a US university? I would have to talk to my supervisor about leaving by the end of December, because I am not sure I would be able to get a permission to work remotely starting in January, since I will still have my lease contract valid (and preparing to move by the end of December may be too tight and expensive). But I will talk about this with him and my wife.

(d) What if I stay in US, lets say for 25 days in January 2026? Would I be considered a non-resident for the full year and need to file the US taxes? Maybe this would be the most probable scenario (if I get permission to work remotely).

(d.1) One additional question: If I stay here until March, I will not have US income from April to December. In this case I would file the 1040 with all the income information for the first three months and the 1040-NR having $0 of income?

Best regards,

Felipe

[pk]

@FCarv , the December end date was just for clean cut.  By staying  say 20 days in 2026, you are under the "at least 31 days in the current year -- for 2026 filing.  All you are trying to do is not have to have dual status and its filing requirements.  But if that is not possible then so be it.

IRS generally follows  the principle of "sourcing " of income is where the work is actually performed.  So if you do remote work  , then the income is usually  sourced to the country where the actual work was performed.

Yes , in case of zero US sourced income as an NRA for the  latter part of the year, you will have to file by mail,  1040 showing the US world income as a resident, 1040-NR showing  any US sourced income ( even if zero), Write across the top of 1040 and 1040-NR   " DUAL STATUS FILER", cannot use  standard deduction. Also because of NRA  status ( your spouse is on a dependent visa ), you each have to file a separate return attached to the original MFJ 1040.  This is just to cover all the bases , especially since you are not going to be here to respond to any queries  promptly.

I lived in alphaville in Sao Paulo  for three years working for Autolatina.

Is there more I can do for you ?

chao

[FCarv]

@pk , Thank you for your reply. There is just a few things I want to clarify.

1) You said:

"By staying say 20 days in 2026, you are under the 'at least 31 days in the current year' -- for 2026 filing. All you are trying to do is not have to have dual status and its filing requirements."

Just to clarify, in this case I would not have dual status. Correct? Sorry, I just want to be 100% sure about these things.

2) About the "sourcing", you said:

"IRS generally follows the principle of 'sourcing' of income is where the work is actually performed. So if you do remote work , then the income is usually sourced to the country where the actual work was performed."

But the university will generate the W2 form informing the total amount they paid me during the three months, even if I go and work remotely February and March. Right? So, how would I inform that part of this income is sourced to Brazil?

3) About the last thing you said:

"Also because of NRA status ( your spouse is on a dependent visa ), you each have to file a separate return attached to the original MFJ 1040."

The original MFJ 1040 you mentioned is the one we will be filing in 2026 (for the calendar year of 2025)? I am asking because for the calendar year of 2026, either having dual status or only non-resident status, I have read that it is not possible to file as MFJ and thus I will have to file as married filing separately and my wife would file the 8843 form, since she does not have any income. So, you are saying she would need to attache our 1040 referent to the calendar year of 2025? I could not understand this part of your explanation very well, sorry.

Nice to know you lived in Brazil. I hope you enjoyed your stay there!

Best regards,

Felipe

[pk]

@FCarv , 

answers to your comments :

1.  by being in the country less than 31 days in 2026 and only 123 days applicable for 2024 ( 1/3 of 365 ), you effectively fail SPT and therefore an NRA for the year 2026 --- Dual status implies you are  a Resident for tax purposes and an NRA in the same calendar year.

2. If the work is performed abroad ( thus sourced " foreign"), ideally your employer should issue a 1099-NEC or 1042-S and withhold  no FICA, Federal and State taxes. If they issue a  W-2  ( and thus withhold  taxes), then you have to file a 1040-NR and reclaim those taxes  -- you show the income and then exclude  the same  with legend " Income Source Foreign -- work performed in home country "  or similar.  Please consider discussing this with your HR -- surely they have had similar situations with J visa holders.

The general reference for this position is  26 USC861(a)(3). --->  26 U.S. Code § 861 - Income from sources within the United States | U.S. Code | US Law | LII / Legal...

And this from the IRS:

"All wages and any other compensation for services performed in the United States are generally considered to be from sources in the United States. The place, where the personal services are performed, generally determines the source of the personal service income, regardless of where the contract was made, or the place of payment, or the residence of the payer."  

See --->   Source of income – Personal service income | Internal Revenue Service

3.  If you chose to  have dual status --- the first part of the year you are resident  -- so I suggested federal 1040 , MFJ, Itemized deduction and  for the NRA part of the year -- you file separate  1040-NR with zero income ( i.e. US sourced  income only).

Does this now make sense ?   Is there more I can do for you ?

 Yes, while lived in Sao Paulo, life was good except for the slow drive along the  Tiete bank.  Learned a lot from my stay there.

pk

[FCarv]

@pk ,

Thank you for your answers and sorry about my delay to reply you. Things are much clearer now and I will discuss these details with HR (they may not give me permission to work remotely, but I wanted to have some things clarified before discussing this with them).

In your point 2, you answered a follow up question I had: about how should I proceed if they withheld tax and reported to IRS. Thanks for that!

About point 3: I saw in the IRS webpage (https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-individuals) that

"The following restrictions apply if you are filing a tax return for a dual-status tax year:

[...]

You cannot file a joint return. However, a dual-status individual who is married to a U.S. citizen or resident may elect to file a joint return with their spouse. Refer to Nonresident Spouse Treated as a Resident for more information."

Since my wife is not a US citizen nor resident, I believe we would need to file as married filing separately (MFS). Regarding this, as she does not have any income, I think she is not required to file. I saw here (https://www.irs.gov/individuals/check-if-you-need-to-file-a-tax-return) that MFS is not required to file if the income is less than $5. I believe this threshold applied to each spouse separately. Correct? So, she would not need to file any taxes because she will have no worldwide income for the first part of the year nor US sourced income during the second part. Or would she need to file some other form? During our first two years, she had to file form 8843.

São Paulo is well known for its slow traffic, but I am glad you liked it 🙂 Just out of curiosity, was filing taxes in Brazil as a nonresident complicated (e.g. could you use the electronic system or had to mail it)?

Best regards,

Felipe 

[pk]

@FCarv 

Generally agreeing with your comments, just note that since your spouse is on a  dependent visa, her tax  ( Resident/ NRA) status  is same as yours--- thus  if you are a dual status, then she is also same .

I was in Brazil during 91 through 94 and the tax filings were on paper ( plus we had a local tax professional taking care of our filings-- did not have to stand in line).  What impressed me then was the speed with which  the ATMs and Bank transactions  were completed -- inflation was skyrocketing, US$ to Br Cr was daily updated, people made huge purchases  on first of the month, paid utilities bills in the middle of the month -- all because of inflation.  It was an eye opening experience  ( how people navigated super high inflation rate ).

Till next year

pk

[FCarv]

@pk ,

Yes, I’m aware that she will also be considered dual-status. However, since she doesn’t have any income at all, and we will be filing as MFS for the first part of the year and as NR for the second part, I was wondering whether she would need to file at all. My understanding is that I would file as MFS and NR, while she wouldn’t need to file a return. Could you please confirm if that’s correct?

I thought you was there more recently. I heard people talking about this crazy inflation time in Brazil: my father in law said it was common, at least where he lived, to buy dollars when receiving the salary so the money would not lose its value throughout the month. 

Best regards,

Felipe