SUBMITTING A LATE TAX RETURN FOR 2021

[ChrisZweigenthal]

My wife and I arrived in the USA in September 2021 and became Permanent Residents with immediate effect.  We earned no USA income for the rest of 2021 and was told there was no need to file a 2021 return. (it would have been a zero return)  However, when preparing my 2022 return, I found out we should have completed a 2021 return because we are permanent residents and because of our foreign financial accounts and assets.  I therefore am preparing to file the late 2021 return and to include documentation for the foreign accounts and assets.  Questions :

1.  I understand we cannot use Turbo Tax to file the 2021 return. Is this correct?
2.  As we were in the USA for only a portion of the 2021 tax year, I understand that we declare only the information relevant from the time we became permanent residents.   Is this correct?

3.  There is no place on the forms to indicate the shortened period for 2021 tax year.  Do I include a cover note to explain this?

4.  There is talk in the guidelines of non resident aliens.  I don't believe that is relevant for the time prior to our arrival in the USA.  Is this correct?

[marctu]

@ChrisZweigenthal thank you for the question.   So lets break this question down. 

First you can use Turbo Tax to complete your 2021 tax return.  You can use Turbo Tax Desktop.  Go here: https://turbotax.intuit.com/personal-taxes/past-years-products/

So, for the second part of your question lets look at this:   

 Introduction to Residency Under U.S. Tax Law

In general, the controlling principle is that U.S. residents are taxed in the same manner as U.S. citizens on their worldwide income, and nonresidents (with certain narrowly defined exceptions) are subject to federal income tax only on income derived from sources within the United States and/or income that is effectively connected with a U.S. trade or business.

The residency rules for tax purposes are found in Internal Revenue Code § 7701(b). If you are not a U.S. citizen, you are considered a U.S. resident, if you meet one of two tests for the calendar year (January 1 – December 31). 

1. You are admitted to the United States as, or change your status to, a lawful permanent resident under the immigration laws (the Green Card Test), or
2. You meet the Substantial Presence Test (which is a numerical formula which measures days of presence in the United States).

In general, when you initially obtain a green card, your residency starting date is the first day in the calendar year on which you are present in the United States as a lawful permanent resident (the date on which the United States Citizenship and Immigration Services (USCIS) officially approved your petition to become an immigrant)

Alsol, the controlling principle is that U.S. tax residents are taxed in the same manner as U.S. citizens on their worldwide income, while nonresidents are taxed according to special rules contained in certain parts of the Internal Revenue Code (hereinafter referred to as IRC or the Code). 

So, to answer the second part of your question, if you are a resident for tax purposes you must include all income earned regardless of where it was earned. 

For the third question, you would not include a note since you may be including all your income for the year 2021.

Lastly for the fourth question, if you are a resident for US tax then the nonresident alien part is not relevant for tax year 2021. 

All the best,

Marc T.

TurboTax Live Select Time Tax Expert

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[ChrisZweigenthal]

Hi Marc

Thanks for the clarification which I understand.  

The only area of further clarity I would appreciate is: I arrived in September 2021 and became a permanent resident at the beginning of September 2021.  In submitting my late 2021 return, I declare my US income from September 2021.  Do I declare my worldwide income only from September 2021 as well?  My income from January to end August was not related to the USA and I was not in the USA at the time.

Also, I would need to submit a late NY State Tax return.  Can I do that also via the Turbo Tax platform link you gave me or can I get a form off the NY State Tax website?
Thanks

Chris 

[marctu]

@ChrisZweigenthal  if you were a permanent resident as of September 2021, you are a US resident for tax purposes for the entirety of 2021.  You would report all the income that you received for 2021.  While you most likely paid taxes on this income in another country you would get a credit on US taxes for all of 2021 for this income, which would more than likely offset most of the potential liability.

Turbo Tax Desktop comes with one State included, so you would not need to get New York forms outside of Turbo Tax. 

All the best,

Marc T.

TurboTax Live Select Time Tax Expert

**Say "Thanks" by clicking the thumbs up icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"