Became a LPR in Dec, SSN issued next year - Tax Filing question

[A_Singh 21]

Hello All,

I became a CR1 GC holder on 23 Dec 2013 and was issued SSN in 2014 Jan. I did not work in the US for the year 2013. Therefore since I did not have SSn and did not have US income, i did not file taxes for that year. My wife filed her taxes but she filed as Married Filing Separate. We do that always to reduce payments on her student loans.

Now I'm ready fo file N400, and i'm wondering if I was supposed to file taxes for the year 2013, given that I became a LPR on 23rd dec. I'm reading a lot on IRS but can't get an aswer, it says I could be a dual status alien (non resident and resident). If I'm a resident sinc e23rd dec and combine my worldwide income since that day, its less than 3900 USD. Do i need to file taxes for 2013.

Will this be an impact for my citizenship if i don't have 2013 return transcript? Btw, my i751 was approved and i got my 10 year GC. I told USCIS at athat time that I didn't work in US as I got my SSN in 2014 (which is absolutely true)

[htfaust 131]

Hello,

Since you had a green card on Dec 31st 2013, then YES, you were considered a US resident for at least the period beginning the date you were granted residence. You can also elect to be treated as a resident for the whole year. See: https://www.irs.gov/individuals/international-taxpayers/alien-residency-green-card-test

If you make this election (by amending a return), you were possibly required to file if your worldwide income in 2013 exceeded $3,900 for the MFS status, $20,000 for MFJ - see next paragraph. (Source: IRS 2013 pub 501, Table 1, available at https://www.irs.gov/pub/irs-prior/p501--2013.pdf -- see also Table 3 since you also have to file if any of the circumstances on Table 3 apply to you). If required to file, you must report all of your worldwide income. You may be able to claim an exclusion on Form 2555 or 2555-EZ, and/or a Form 1116, Foreign Tax Credit.

It may be beneficial to amend your wife's 2013 return and use the Married Filing Jointly status as it in most cases generates much lower liability compared to MFS status. Rare exceptions, MFS is usually the worst filing status. She would still be able to claim the deductions and credits she claimed, with possibly more since MFJ has more available credits, thresholds are usually higher and phaseouts begin at higher AGI / MAGI.

You may have to pay a Failure-to-File penalty that can possibly make it not worth it, though. I didn't look into this.

You need to factor all of this and see if amending the return would generate a higher or lower liability than the amount your wife owed for that year.

Edited September 28, 2016 by htfaust

[htfaust 131]

Hello,

Since you had a green card on Dec 31st 2013, then YES, you were considered a US resident for at least the period beginning the date you were granted residence. You can also elect to be treated as a resident for the whole year. See: https://www.irs.gov/individuals/international-taxpayers/alien-residency-green-card-test

If you make this election (by amending a return), you were possibly required to file if your worldwide income in 2013 exceeded $3,900 for the MFS status, $20,000 for MFJ - see next paragraph. (Source: IRS 2013 pub 501, Table 1, available at https://www.irs.gov/pub/irs-prior/p501--2013.pdf -- see also Table 3 since you also have to file if any of the circumstances on Table 3 apply to you). If required to file, you must report all of your worldwide income. You may be able to claim an exclusion on Form 2555 or 2555-EZ, and/or a Form 1116, Foreign Tax Credit.

It may be beneficial to amend your wife's 2013 return and use the Married Filing Jointly status as it in most cases generates much lower liability compared to MFS status. Rare exceptions, MFS is usually the worst filing status. She would still be able to claim the deductions and credits she claimed, with possibly more since MFJ has more available credits, thresholds are usually higher and phaseouts begin at higher AGI / MAGI.

You may have to pay a Failure-to-File penalty that can possibly make it not worth it, though. I didn't look into this.

You need to factor all of this and see if amending the return would generate a higher or lower liability than the amount your wife owed for that year.

To clarify: you only ABSOLUTELY have to file if the US income you earned between 12/23/2013 and 12/31/2016 was at least $3,900 OR any of the conditions on Table 3 applied to you during that period. Even if not required to file, doing so as stated may be beneficial - you'd have to do the simulations taking all the factors (including a possible failure-to-file penalty) and see which option is the best for you.

[A_Singh 21]

To clarify: you only ABSOLUTELY have to file if the US income you earned between 12/23/2013 and 12/31/2016 was at least $3,900 OR any of the conditions on Table 3 applied to you during that period. Even if not required to file, doing so as stated may be beneficial - you'd have to do the simulations taking all the factors (including a possible failure-to-file penalty) and see which option is the best for you.

Yes, based on the Table 3, I'm planning to go for MFS. I understand the loss of benefits and an additional tax that will be applied, but that suits me well.

So now my US income since 12/23/2013 to 12/31/2013 is definitely less than $3900. Remember even though i get paid vacation during this time, my salary wouldn't be that much. plus since I got my SSN issued in jan, there was no income.

Now the question comes is about the WORLD income for the year 2013, yes it was more than $3900, but there is also something known as the Dual Status Alien on the IRS website, now, based on that, if I read correctly, I might not be required to file taxes as my Green Card was very late in the year with no US income.

I filed my taxes for the remaining years since 2014 and on and have nothing owe from the IRS, moreover have always gotten a refund, even though I still file MFS.

So I am very much inclined to mark on the N400 for my citizenship that, I did NOT fail to file taxes since I became a LPR and also am attaching a written signed statement saying that i did not file my taxes for the year 2013 as I had no US income. I used the same letter when I provided documents for my i751 (Removal of Conditions) and that was approved with no RFE.

what do you think ?

[A_Singh 21]

i also checked this page on the IRS and looks like I am a Dual Status Alien for the year 2013.https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-aliens

Since I was in the US (on visitors visa) for no more than 15 days in the year 2013 prior to Dec 23 I was a Non Resident Alien, Therefore per the above page,

" For The Part of The Year I was a Nonresident Alien" - i don't have any liability as my income from US sources was 0. i was working fulltime job in Canada and paid my taxes in Canada properly for 2013.

"For The Part of the Year You are a U.S. Resident Alien" - Which is staring 12/23/2013 - 12/31/2013 - I did not have income greater than $3900, therefore technically for MFS, I am not supposed or required(better term) to file tax return.

So I guess i will be explaining this to the Immigration officer if he asks me about my tax transcripts for the year 2013.

does this make sense?

[htfaust 131]

Sounds good. You need to attach an statement explaining why you were not required to file, that's all. Explain you didn't earn more than the filing threshold and that the circumstances in Table 3 did not apply.

I'd simulate both MFJ and MFS for 2016 before filing just to make sure of which is gonna give a higher refund in your situation, but it's up to you.