J1 to F1 (Tax Residency Status)

[arasquin]

Hi,

I first entered the States on a J1 (Research Scholar) in 2018 and was on that status until 2021 (March).
I then transitioned to an F1 status - 2021 (April) and maintain F1 since.

As per J1 - I am exempt for the first 2 years. (I filed NR for 2018, 2019, Never Claimed for Tax Treaty).
For 2020 - I filed an R.
For 2021, 2022 - NR (Claimed Tax Treaties as an F1).

This is because for 2021 - I am exempt for 5 years.

Here is a history of my travel dates.



I am curious to know what do I file for 2023? If my exempt years begin in 2018 - then 2022 is my last year of NR (even though I filed R for 2020 due to my status at the time). But as per my F1 status, I have claimed exemption only 4 times in my lifetime.

SprintTax says I'm Non-Resident but I believe for 2023, I should be a Resident for Tax Purposes. Can someone please confirm this to me?

[DaveF1006 · Accepted solution]

I think you are trying to apply a 6-year lookback rule that would include years 2018-2020. The year 2020 will not count since this was the year you were non exempt because of the two-year exemption rule for J1 research scholars.

Now you became a F1 student so your exemption period is 5 calendar years starting in year 2021.  Since you have already been exempt two years, you will be exempt in years 2021,2022, and 2023. Next year however, your exemption period will have ended and if you qualify to be a resident under the substantial presence test, you may file a resident return.

Please read the following IRS guideline and look at Example 10.  This explains perfectly what i just mentioned.

[arasquin]

Thanks for this update @DaveF1006, However what is odd to me is this part within that Example 10

"Since M has already been an exempt individual during 2020 and 2021, M’s status as a student exempt individual can only continue through 2022, 2023, and 2024. As a student in F-1 status, M is an exempt individual for 5 calendar years, 2020 through 2024."

It oddly calculates the exemption years from the date M entered as a J1 (not F1). I want to point out that I exited and re-entered for my Status Change. The Example mentions M was within the States for it. I am not sure if the latter argument matters.

[DaveF1006 · Accepted solution]

The exemption period for your F1 student visa should have expired in 2022 but you did not claim the exemption in 2020.  This would mean that you can file with the exemption for year 2023. This is the manner that I would interpret this.

Since Sprint Tax agrees with me in principal in the respect that you should be exempt this year and file a 1040 NR, I would proceed to file your 1040NR return with them.  

@arasquin