tax residency after changing from F1 to J1

[malhotra]

I am an Indian national. I was a J1 research scholar for 2 months in the summers of 2009 and 2010. Then I came back on F1 status in Aug 2011. In Sep 2018, I changed my status to J1 research scholar. What is my tax residency in the years 2019 and 2020?

[pk]

@malhotra , using the dates i.e. F-1 admission in 2011 and IF the Calendar year exempt status were allowed, you would be a Resident for tax purposes anytime after 12/31/2015.  Thus for 2019 and 2020 you would still be a Resident Alien for Tax Purposes.

Is this what you meant?

Namaste ji

pk

[malhotra]

Thanks for your reply. I recently transferred from to a new institute where they used the Sprintax system which determined that I am a non-resident for tax purposes (this is contrary to my previous institute's GLACIER system which determined that I am a resident). The Sprintax system gives the following explanation which I don't completely understand:

2009 J1 Scholar –Exempt 1st year

2010 J1 Scholar – Exempt 2nd year

Re-entry on F1 visa 2011-2018 ( 5 year lifetime rule applies) =>  Starting 2011 F1 Status, the individual exempts 5 years 2009,2010 inclusive. (Exempt years: 2009,2010,2011,2012,2013)

Years on until F1 Status expires -  2014,2015,2016,2017 and 2018 are therefore non-exempt years.

Entry 2018 J1 Scholar (non-exempt year, meets the SPT for 2018 and for the previous years which would not affect future residency as TDS performs SPT for each single year).

2019 Entirely J1 Scholar, 2 out of 6 years rule applies (J holder other than a Student has right to exempt 2 out of 6 prior years for the purpose of determining tax residency)

To determine tax residency for 2019 we look at the 6 prior years to 2019 as follows:

Determining 2019 J1 Scholar residency –

Prior year 1: 2018 – non –Exempt year as described above

Prior year 2: 2017 – non – exempt year as described above

Prior year 3: 2016 – non-exempt year as described above

Prior year 4: 2015 – non-exempt year as described above

Prior year 5: 2014 – non-exempt year as described above

Prior year 6: 2013 - exempt 5th year on F1 status

=>  2019 qualifies as 2nd exempt year as in the preceding 6 prior years, only a single year was exempt (2013)

Determining 2020 as follows:

Prior Year 1: 2019 – Exempt year Number 1

Prior Year 2: 2018 – Non-exempt year

Prior Year 3: 2017 – Non-exempt year

Prior Year 4: 2016 – Non-exempt year

Prior Year 5: 2015 – Non-exempt year

Prior Year 6: 2014 – Non-exempt year

=>  2020 is Exempt year Number 2.

In any exempt year, the days are not counted for the SPT and the individual qualifies as a non-resident

[pk · Accepted solution]

@malhotra , The  six year rule which applies to J-1  ( trainees-teachers , non-student , etc. persons ), generally allows  exemption if and only if during the previous six calendar years one is NOT an exempt person for during any part of two years i.e. 2 out of six.  SprinTax has applied the rule including the first two years  ( 2009 and 2010 ) when you were J-1 -- Non-Student for a few months each year.  By this correct analysis,  you are Exempt for the Calendar year 2019 and for the Calendar year 2020 ( absent any status change).   If you were not to apply the  six year rule for J-1 Non-Student  persons, then your original J-1  X 2 plus F-1 x5 would suggest  that 2014 on wards  you would be Resident for Tax purposes.   It may be to your advantage to follow SprinTax path.

The details of this rule -->  https://www.irs.gov/individuals/international-taxpayers/exempt-individuals-teachers-and-trainees 

Namaste

pk

[malhotra]

Many thanks for your reply.

I have already filed taxes this year using form 1040 instead of 1040NR. Can you please advise me on how to fix this?

I also received the stimulus payment based on my resident status. I believe I will need to return this payment since I am a non-resident. Can you tell me how to do this?