J1 Scholar lived in US for more than 3 years, do we need to report foreign financial accounts and income

[Wils85]

Hi, I am a Canadian citizen and have been living in the USA as a J1 visa scholar for more than 3 years since Aug 2016. Am I required to file 1040 Resident and report my foreign financial accounts and foreign income? My wife and I are filing jointly and she is currently a student who does not make any income in the USA. Is she also required to report her foreign financial accounts and income? We both also make some rental income and my wife also has some investment income in Canada. 

[DavidS127]

You are still a nonresident in 2019 and must file a Form 1040NR to report any U.S. income.  Your "J" visa requires that you be present in the U.S. for a portion of 5 calendar years before you can qualify as a U.S. resident under the Substantial Presence Test.  See IRS Publication 519 at this link for more information.

TurboTax does not support Form 1040NR, but SprintTax is a software that can file a Form 1040-NR.

[Wils85]

Hi David, thank you for your reply! I just want to clarify that my J1 is for researcher and I work as a post-doctoral researcher. Does the 5-year rule still apply to me? The reason why I ask is that I read on the IRS that it said the 5-year rule is for trainees, students or teachers (https://www.irs.gov/individuals/international-taxpayers/taxation-of-nonresident-aliens). And this is also where I got confused, whether the 5-year rule applies to J1 researchers as well? I appreciate your help!  

[KarenJ2]

As a J1 researcher, you can only be exempt from tax for 2 years or part years.  As you arrived in 2016, you were considered a nonresident exempt taxpayer for 2016 and 2017.  Starting January 1, 2018, you had to start counting your US days of presence for the substantial presence test.  So you would have been a US tax resident in 2018.,  

As a US tax resident, you need to file a US tax return and you can file with TurboTax.  You need to report your worldwide income and file the FBAR and Form 8938 if they apply to you.

Comparison of Form 8938 and FBAR

You mentioned that your wife is a student.  Is she on a J1 visa? If she has been in the US on a J1 visa for less than 5 years or part years, you will need to create the manual statement requesting to file married filing jointly for a nonresident alien to file a joint return. You will need to attach your statement to your return.  You can find the information on the statement on page 9 of IRS  Publication 519 . You will have to attach the statement to your printed return and mail your return to your tax authorities.

If your wife is not on a J1 or F1 visa and is a US resident, then you do not need to request to file married filing jointly.

If you filed a nonresident return for 2018, you need to amend the return and instead file a US resident return. 

Please see the following instructions to amend your return.

You can use the steps here below to amend from a 2018 1040NR return and file a correct 1040,  You will need to have your correct tax return prepared as a 2018 1040. See the following link  File your 2018 taxes

Per IRS Form 1040X instructions,  page 8: 

Resident and nonresident aliens.

Use Form 1040-X to amend Form 1040NR or Form 1040NR-EZ. Also, use Form 1040-X if you should have filed Form 1040 (or, for years before 2018, Form 1040, 1040A, or 1040EZ) instead of Form 1040NR or 1040NR-EZ, or vice versa. To amend Form 1040NR or 1040NR-EZ, or to file the correct return, do the following

• Enter your name, current address, and social security number (SSN) or individual taxpayer identification number (ITIN) on the front of Form 1040-X

.• Don’t enter any other information on page 1. Also, don’t complete Parts I or II on page 2 of Form 1040-X.

• Enter in Part III the reason why you are filing Form 1040-X.

• Complete a new or corrected return (Form 1040, 1040-SR for amended 2019 and later returns, Form 1040NR, etc.)

• Across the top of the new or corrected return, write “Amended.”

• Attach the new or corrected return to the back of Form 1040-X.

For more information, see Pub. 519, U.S. Tax Guide for Aliens. 

**Make sure you check the box to show the tax year that you are amending on Form 1040X.   

You will need to attach your 2018 1040 resident return to your 1040X amended return and mail to address on your 2018 1040 return.

You will also need to file an FBAR or Form 8938 for 2018 if needed.

IRS taxation of J1 individuals

[Wils85]

Hi Karen, thank you for your very detailed answer. My wife is on a J2 visa as my dependent. In that case, we can just file jointly without the aforementioned extra steps? 

[KarenJ2]

Yes, you do not need to add a statement requesting to file a married filing jointly return as she is a US resident.

You did not say whether your filed a nonresident return last year.  If you did, you need to amend your 2018 return.