Tax implications of failing to apply for a "sailing permit" (Dual-status alien)

[mezr]

After being on an H-1B visa for a year, I permanently moved out of the US in September 2020 (I am not American and have never held a green card). While preparing my 2020 taxes, which I intend to file as a dual-status alien where the last 3 months of the year I file as a nonresident alien and the rest of the year as a resident alien, I found out that I was supposed to apply for a "sailing permit" at least 2 weeks before my US departure. I was honestly never told this and finding out about it at this point got me a bit concerned.

So I was wondering what are the tax implications of not having applied for a sailing permit before departure? Does it mean I cannot file my return as a dual-status alien? I made some capital gains from selling stocks in November 2020 (after leaving the US) and I was planning on filing them only in my current country of residency rather than as taxable US income. Is this still possible?

Thanks a lot in advance for any help and/or advice!!

[pk]

@mezr , Having gone through your post , I still need a few more bits of info 

(a) when you left the USA , how did you show  your intent  of not returning  --- did you turn in your visa  or your visa expired or ?

(b) are you a citizen  of the country  you went back to or is this a third country where  you are now residing and working?

(c) did you own a home, bank account, kids in school  in the USA - what we need to determine is  the strength of your connection to USA after  your departure from the USA.

Assuming that  you can prove  that you have left the USA on XX/XX/2020 and did not plan to return then the lack of "sailing permit"  would really have  no tax impact --- it is way to ensure that  IRS has a way to collect axes due after your departure.

Dual Status returns can be mostly prepared  using  TurboTax  -- I say mostly because the  1040-NR ( required for Non-Resident filing )  is not supported by TurboTax.  Their partner SprinTax  covers  this area.   If using TubroTax, you would have to prepare the  Resident portion  as normal   ( note that because  you are dual status , you would have to use itemized  deduction - there is no way to apportion the standard deduction between  Resident form 1040 and Non-Resident form 1040-NR. It may be more tax advantageous to  file as a resident for the whole year ( this would mean that your foreign income during the rest of the year and the stock sales in Nov 2020 all come under the USA tax  and  you take  foreign tax credit/deduction for the  taxes paid  to your home country).

BTW-- which country  are you from and where are you working now?

You may also want to consider   using the services of a tax professional  familiar with international taxes  and  tax treaties.

If you need more on this, I would be happy to  help

stay safe

[mezr]

Thank you so much for answering this question @pk! To give you more information:

1. I was on an H1-B visa and quit my job when I left the US. This means my H1-B visa expired/became invalid after the given grace period one gets to change jobs between an H1-B (which I did not used as I had no intention of looking for other jobs).
2. I am currently in the UK and I am an Ecuadorian citizen. It is worth pointing out that I am not working in the UK but I am a student (and will be one here for the foreseeable future). Nevertheless, I spent more than 183 days physically in the UK during its 2020-2021 tax year which means I am both a resident here and liable for paying taxes here.
3. I don't own any property (I have only really owned a car that I sold before leaving) or have had any family in the US. The only thing I still have there is my bank account as it is very convenient to keep US dollars rather than pounds for me (as both Ecuador and the UK use US dollars).
4. One more thing: Although I was renting an apartment in the US all of  January-September, because of COVID I was physically in the US only for 143 days in 2020. This is something I can prove easily using my I-94 which shows days of entry and exit in the US. I believe this is important when claiming that capital gains are not taxable when I file my 1040-NR.

I see that it may be more beneficial to file as a full-year resident due to the standard deduction and tax treaties between the UK and the US. My only rationale for going this way is that I held the shares I sold in the US for less than a year and therefore the short-term tax I would have to pay makes it significantly worse.

As you mentioned, I did that and prepared my 1040 using TurboTax with itemized deductions and then I prepared a 1040-NR manually where I reported no taxable US sourced income as during those months my only income came from those capitals gains I mentioned. I will obviously be paying taxes for those gains here in the UK.

Please let me know if any more details would be needed to answer this question or if you believe there was some misunderstanding in the return I just described. Thanks so much for your time and help!