How to claim refund for US-Japan Tax treaty benefit on J1

[Samiyaila]

I was a J-1 holder from January to August 2019 then became permanent resident afterwards. Failed (forgot) to request for tax treaty benefit through my university so I had deductions (Federal tax and State tax) on my earning during those period when I was on J-1 visa. 

I am going to file tax jointly with my husband (who is US citizen) for 2019. How can I claim refund for the tax treaty benefit with Turbotax deluxe? Thanks.

[SusanY1]

You can do this by filing Form 8833- Treaty Based Return Position Disclosure.  TurboTax does not directly support this form, but you can use TurboTax to prepare your tax return to print and mail with Form 8833 attached.  (You can access the form HERE.)

You will need to make an adjustment to income in TurboTax by following these steps:

1. Login to TurboTax.com.
2. Click on Tax Home on the left side of the screen.
3. If prompted, click on Continue where I left off or Take me to my return.
4. Expand the section Income and Wages and click Review/Edit.
5. Scroll down to Less Common Income.
6. Click Start beside Miscellaneous Income, 1099-A, 1099-C.
7. Scroll to Other reportable income and click Start.
8. Answer yes to the question, "Did you receive any other taxable income?"
9. Enter the amount of income to be excluded under the treaty as a negative number and provide a description.

[Samiyaila]

Thank you for your answer.

Do I have to send form 8833 to state as well?

[LinaJ2020]

Which state are you referring to?

[Samiyaila]

Illinois.

[LinaJ2020]

Yes, you would need to submit the Form 8833 to the state of Illinois as well. 

According to the Department Revenue of Illinois, the State honors the provisions of U.S. Tax treaties.

[Samiyaila]

Let me clarify this. In my case, I should prepare Form 1040 (filing jointly), attach Form 8833 and send it to IRS and the state of Illinois, is that correct?

Out of my curiosity, since I'm considered as dual-resident in 2019, and asking for treating as a non-resident alien in order to have the tax treaty benefit, shouldn't I prepare 1040NR instead?

[AmyC]

Turbo Tax does not support the 1040NR.  The IRS says:

Nonresident aliens who are required to file an income tax return must 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, if qualified. Refer to the Instructions for Form 1040NR-EZ to determine if you qualify.

Here is the link to the instructions for 1040NR.

Here is a link to software for filing the 1040NR

[Samiyaila]

I'm little confused here..

Tried Sprintax but it says "Based on the information you provided, you are deemed a US resident for tax purposes, which means Sprintax software isn’t suitable for you. Sprintax facilitates non-resident tax return preparation only." 

How can I prepare f1040NR instead?

[KurtL1]

During the period you held a J-1 Visa you were unable to count the days toward the Substantial Presence Test to determine if you are a resident alien. 

Not being on a J-1 Visa you would have met the 183 days to qualify as a resident alien. Sprintax might not have understood you we present in the United States for the first part of the year under a F-1 Visa.

Contact them again and let them know what dates you held a J-1 Visa.

[Samiyaila]

Here is my entry records and visa status;

 April 2017 to August 2019 - J1

 August 2019 to current - green card 

What is my filing status for 2019 going to be? Resident alien or dual-status? 

(I have W-2 and 1042-S (exemption code 04)  for 2019)

[LinaJ2020]

@Samiyaila

Besides filing as a dual-status alien, you have another option.  Since you are filing jointly with your spouse who is a US citizen, you can make an election to claim yourself as a resident and file together on the Form 1040.   See the image below.  To see how to make the election, click on this link https://www.irs.gov/individuals/international-taxpayers/nonresident-alien-spouse

Per IRS, the tax treaty benefit applies to both non-residents and residents who have their status changed after meeting different tests and making choices.  You can claim the tax treaty benefit on Form 8833 along with Form 1040 if you meet the tax treaty requirements. You can simply use TurboTax to file without visiting Sprintax.

[Samiyaila]

@SusanY1 

Do I put the amount of gross income shows in 1042-S as "other portable income" in form 1040?

Also, by filing form 8833, do I get those taxes that I paid back as a refund or it just will be excluded from my income that is taxed?

[SusanY1]

If you are filing as a resident (Form 1040), you will list the income that should not have been taxed because of the treaty as "Other Taxable Income" using a negative number.  In TurboTax here is how to do that:

1. Login to TurboTax.com.
2. Click on Wages & Income.
3. Scroll to the bottom of the page and click on Less Common Income. (you may need to first click on show all income.)
4. Click on Show More and then on Miscellaneous Income, 1099-A, 1099-C 
5. Click on Other Reportable Income.
6. Enter a description (such as Income Subject to Tax Treaty) in Description box and the amount as a negative number in the box beside your name. 

TurboTax will subtract the amount from your taxable income and that should cause an increase in your tax refund.  

Remember that you must complete form 8833 and mail your return with this form attached, you cannot e-File the return.