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tsat
Level 1

Tax Year 2022 - Moved out of the USA, missed filing for the Sailing Permit

Hi Experts,

 

- I worked in the USA on H1B, being resident alien for tax purposes for Jan and Feb 2022.

- I quit my job and moved home where I hold the citizenship.

- Physically I was present in the USA for 47 days.

- Through 2022, I continued to hold following accounts -

i) USA bank ii) brokerage/ESPP (no sale made) iii) 401K (no withdrawals) automated investment account (with capital gains and losses) iv) HSA account v) Bank account in the home country with the balance of > $10K

- I unfortunately failed to submit the 1040-C and could not obtain the sailing permit before leaving the USA

- I did not return back to the USA and still continuing to reside in my home country.

 

Questions:

1. Since I missed obtaining the Sailing Permit - does it mean that I need to file the USA tax return for the entire year of 2022, with my whatever income in home currency as a "foreign income"?

Since I qualify for the resident status for tax purposes in my home country in 2022, I would be filling tax returns at home as well. 

==> Would I be double taxed in that case? 

If YES - I need to file the FBAR as I would do while being a resident in the USA - correct?

 

2. If answer to 1. is NO

Since I pass the resident test in my home country, can I skip filing the 2022 USA tax returns completely? OR I can only mention USA income as a foreign income in my home taxation system and pay taxes on the same.

 

3. For all the future years (2023 and onwards), any gains from the automated investment account  in the USA would be taxed only in the home country as a foreign income, correct?

 

Thank you so much in advance

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4 Replies
MaryK4
Expert Alumni

Tax Year 2022 - Moved out of the USA, missed filing for the Sailing Permit

You still must file an annual U.S. income tax return even if you had filed the 1040-C.

 

You will have to determine if you still  must file a U.S. return, it depends on if you want to keep your residnt alien status.  If you were a U.S. resident in 2022 but are not a U.S. resident during any part of 2023, you cease to be a U.S. resident on your residency termination date. Your residency termination date is December 31, 2022, unless you qualify for an earlier date. You may qualify for a residency termination date that is earlier than December 31. This date is:
 

  • The last day in 2022 that you are physically present in the United States, if you met the substantial presence test;
  • The first day in 2022 that you are no longer a lawful permanent resident of the United States, if you met the green card test; or
  • The later of (1) or (2), if you met both tests.
     

You can use this date only if, for the remainder of 2022, your tax home was in a foreign country and you had a closer connection to that foreign country. 

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tsat
Level 1

Tax Year 2022 - Moved out of the USA, missed filing for the Sailing Permit

Thanks @MaryK4 for your detailed reply!

Kindly let me know if my understanding is correct below.

 

I) "The last day in 2022 that you are physically present in the United States, if you met the substantial presence test;"

--> My last date of being physically present in the USA was during Feb 16, 2022; if I count back :

1. The days I was physically present in the USA during 2022 : 47

2. 1/3rd of the same during 2021 : 110

3. 1/6th of the same during 2020 : 60

 

II) "The first day in 2022 that you are no longer a lawful permanent resident of the United States, if you met the green card test;"

--> N/A for me as I do not meet this one

 

III) "You can use this date only if, for the remainder of 2022, your tax home was in a foreign country and you had a closer connection to that foreign country."

--> The country I moved to is my home country where I hold the citizenship.

 

Considering all of the above, here's my conclusion : --- Can I request to please correct as needed?

 

1. It means that my residency termination date for tax purposes would be during Feb 2022.

2. Being a resident for 2 months - I do need to file the USA FY 2022 tax return; ONLY for the 2 months of income (January and February 2022)

3. I still need to file the FBAR - since I had foreign account with a balance of > $10K during FY 2022

4. For all the income for the rest of 2022 (March through Dec 2022) including the USA non-salary income (stocks, dividends etc.), income in my home country - I need to file as a part of local tax return as show as a foreign income.

5. Even though I missed filing 1040-C - through the FY 2022 tax return, it would be communicated to the IRS about my residential status. As such, I do NOT need to submit any other document.

 

Really appreciate your inputs on these in advance.

Thanks

tsat
Level 1

Tax Year 2022 - Moved out of the USA, missed filing for the Sailing Permit

Thanks @MaryK4

Based on the substantial presence test - I was a resident for tax purposes in FY 2022; which also makes me qualify for earlier termination date based on clause 1 shared earlier.

 

I moved to home country where I already held a citizenship.

 

Few follow up Qns - 

1. It means that I need to file the US tax return for the months of Jan 2022 and Feb 2022; while any non-salary income earned in the USA would be included as a foreign income in my home country tax return - is that correct?

2. I still need to file the FBAR with the USA tax return

3. Other than the USA tax return for FY 2022 - I don't need to submit any other form indicating that I cease the residential status - correct?

Tax Year 2022 - Moved out of the USA, missed filing for the Sailing Permit

@tsat Hi, may I ask how did you file the tax return finally?

 

J

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