Please help...Did we file our taxes wrong?

[Mykonos 10]

I entered the US in Feb 2016 on K1 visa. My fiance and I got married in April. I got my greencard in September and started working.

We just recently filed our taxes online. It was accepted, and I thought everything was ok, but I have just discovered that since I was both a resident and nonresident in 2016, that I was dual status and we needed to submit a different return for this? I read the pinned post, but am still  little confused. I didnt have any income from Canada at any point in 2016, except for about 3k in February, but that was before I even entered the US. Do you think this is ok that we filed normally, or do we have to file an amended return?

[jamesuk113 5]

Working through my taxes now (with a very similar timeline to you).

 

You did not attach a statement electing to be treated as a resident alien for tax purposes for the entire year (although this was an option)

 

However, you do meet the substantial presence test for 2016, and therefore you are a resident for tax purposes for the entire year. I believe your 3K should have been declared on line 7. (Use this page to determine the USD amount)

 

As far as I can tell, this means you are not dual status for tax purposes (you weren't earning at the start of 2016 and you're not claiming any treaty exemptions anyway, so I don't know why you would want to be considered as such)

 

You may have to amend, what does that involve? Is it free? 

 

Don't take my word for this, I started researching US tax tonight.

[NikLR 13,227]

It's complicated and different than Canadian taxes where you only count income from the portion you were a resident.  You were supposed to put it down and then use another form, I forget the form name, to show you had foreign income that cant be taxed and exclude it.  However, to be honest i wouldnt file an amended return because regardless you exclude the income anyhow. 

[jamesuk113 5]

You're only meant to put it down on a separate form if you're asserting dual status.

 

Let's work it through, the link above says,

 

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You are a dual status alien when you have been both a U.S. resident alien and a nonresident alien in the same tax year.

Ok fair enough, this seems like Mykonos situation, s/he was not in the US at the start of the year and was in the US at the end. But lets check to make sure.

 

What is a "resident alien"? See Determining Alien Tax Status. 

 

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you are considered a nonresident alien unless you meet one of two tests. You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1-December 31).

 

Mykonos didn't have a green card on Jan 1, but does s/he meet the substantial presence test?

 

By the end of the tax year, Mykonos was present for 31 days during 2016 plus a further 183 in 2016, therefore Mykonos is considered resident for tax purposes for the entire of 2016.

 

As a resident alien for the entire of 2016, s/he will have to pay tax on (or at least declare) the 3K earned in Canada at the start of 2016.

 

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If you are a U.S. resident alien, you must report all ... income on your U.S. tax return. You must report these amounts whether they are earned within or outside the United States.

 

Whilst we're here, to ANYONE reading this, do not forget to file your FBAR. The penalty risk is so great that they really should warn you about this with a dedicated letter or something.

[Suss&Camm 2,213]

On 2/9/2017 at 10:12 AM, jamesuk113 said:

You're only meant to put it down on a separate form if you're asserting dual status.

 

Let's work it through, the link above says,

 

Ok fair enough, this seems like Mykonos situation, s/he was not in the US at the start of the year and was in the US at the end. But lets check to make sure.

 

What is a "resident alien"? See Determining Alien Tax Status. 

 

 

Mykonos didn't have a green card on Jan 1, but does s/he meet the substantial presence test?

 

By the end of the tax year, Mykonos was present for 31 days during 2016 plus a further 183 in 2016, therefore Mykonos is considered resident for tax purposes for the entire of 2016.

I want to clear smth up. On this site: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test, it says.

 

"Substantial Presence Test

You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year."

The term "calender year" here refers to the 12 months used to meet the substantial presence test. Not that the person is a tax resident for the entire year.

On this site: https://www.irs.gov/individuals/international-taxpayers/residency-starting-and-ending-dates, it says:

"Residency Starting Date under the Substantial Presence Test

If you meet the substantial presence test for a calendar year, your residency starting date is generally the first day you are present in the United States during that calendar year."

 

Meaning exactly what it says. If they are qualifiying under the substantial presence test they are a tax reside only from the first day present. They will need to include an election statement choosing to be a tax resident for the entire 2016 in order to claim FEIE earned earlier in the year, as you can only use this exemption if you are a tax resident when the income is earned.

 

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As a resident alien for the entire of 2016, s/he will have to pay tax on (or at least declare) the 3K earned in Canada at the start of 2016.

True WITH the election statement.

 

Quote

 

Whilst we're here, to ANYONE reading this, do not forget to file your FBAR. The penalty risk is so great that they really should warn you about this with a dedicated letter or something.

Here is a VJ link that explains some more about FBAR for other ppl reading. If you arrived late in the tax year, you do not need to file this. 

 

Edited February 13, 2017 by Suss&Camm