Two questions from a new CR1 immigrant in 2021

[Coricat 3]

Hello all, 

I've found the questions and answers posted on this forum to be really helpful - thank you! However I have 2 questions that still confuses me:

 

1. I became a green card holder and immigrated to the US in Sept 2021. My husband (US citizen) was already living here. I want to make sure that we can indeed file jointly and treat me as a US resident for the entire year. I see forum posts that all say YES, but the IRS instructions seem to say this is only allowed if one spouse is not physically in the US at the end of the year? ("If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident.) Is there another qualifying scenario that I'm missing in the instructions?

 

2. In my case, can I indeed qualify for foreign income exclusion for my salary earned before I immigrated to the US, if I left my previous home country before December 2021? Again, the posts in this forum all seem to say YES, but IRS instructions says you must live abroad for the entire tax year (bona fide residence test) or at least 330 days (physical presence test). 

 

Thank you so much!

[Crazy Cat 41,985]

1.  You are mis-interpreting what the IRS says.  "Non-Resident Alien" can also apply to someone physically inside the US...such as yourself.   

 

https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens#:~:text=An alien is any individual,or the substantial presence test.

 

[Wuozopo 4,293]

34 minutes ago, Coricat said:

1. I became a green card holder and immigrated to the US in Sept 2021. My husband (US citizen) was already living here. I want to make sure that we can indeed file jointly and treat me as a US resident for the entire year. I see forum posts that all say YES, but the IRS instructions seem to say this is only allowed if one spouse is not physically in the US at the end of the year? ("If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident.) Is there another qualifying scenario that I'm missing in the instructions?

See IRS Publication 519  https://www.irs.gov/pub/irs-pdf/p519.pdf

Page 3 starts the topic of whether you are a resident alien or nonresident alien. There are two tests to determine that—greencard test or physical presence test. On page 4 is where you will find—

Green Card Test
You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year 2021.

 

As a resident, you can file a regular tax return (1040) rather than a nonresident return (1040NR). It is the 1040NR that can’t be fled jointly. So you are free to file just like any American as Married Filing Jointly.

 

[Wuozopo 4,293]

52 minutes ago, Coricat said:

2. In my case, can I indeed qualify for foreign income exclusion for my salary earned before I immigrated to the US, if I left my previous home country before December 2021? Again, the posts in this forum all seem to say YES, but IRS instructions says you must live abroad for the entire tax year (bona fide residence test) or at least 330 days (physical presence test). 

Bonafide Resident test is easier to explain to you. 
Instructions to form 2555 https://www.irs.gov/pub/irs-pdf/i2555.pdf  page 2-3

Bona Fide Residence Test
To meet this test, you must be one of the following.
❌• A U.S. citizen who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1–December 31, if you file a calendar year return).

✔️• A U.S. resident alien who is a citizen or national of a country with which the United States has ✔️an income tax treaty in effect and who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1–December 31, if you file a calendar year return). 
 

You are a Canadian citizen, right? Probably you were born there. So you were a bonafide resident (not a tourist or illegally there) for many entire tax years. The tax year does  not have to be only 2021.   I used bonafide resident  the year of my Form 2555. For bonafide residence start date, I put the date of my birth because I was born a British citizen.

 

Neither test says you have to be bonafide or physically present for the entire year you are filing. From Jan 2020 to Sept 2021, you were physically present in Canada. That’s more than 330 days and also includes an entire tax year (2020 tax year). 

[Coricat 3]

Thank you both so much, @Wuozopo and @Crazy Cat! Both of you have explained the trivial details of the rules so well. I really appreciate it!

 

3 hours ago, Wuozopo said:

Bonafide Resident test is easier to explain to you. 
Instructions to form 2555 https://www.irs.gov/pub/irs-pdf/i2555.pdf  page 2-3

Bona Fide Residence Test
To meet this test, you must be one of the following.
❌• A U.S. citizen who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1–December 31, if you file a calendar year return).

✔️• A U.S. resident alien who is a citizen or national of a country with which the United States has ✔️an income tax treaty in effect and who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1–December 31, if you file a calendar year return). 
 

You are a Canadian citizen, right? Probably you were born there. So you were a bonafide resident (not a tourist or illegally there) for many entire tax years. The tax year does  not have to be only 2021.   I used bonafide resident  the year of my Form 2555. For bonafide residence start date, I put the date of my birth because I was born a British citizen.

 

Neither test says you have to be bonafide or physically present for the entire year you are filing. From Jan 2020 to Sept 2021, you were physically present in Canada. That’s more than 330 days and also includes an entire tax year (2020 tax year). 

 

[analitikas 3]

I am in a similar situation, so I would just suggest reading up on Dual-Status aliens section in the p519 document. 

[Crazy Cat 41,985]

1 minute ago, analitikas said:

I am in a similar situation, so I would just suggest reading up on Dual-Status aliens section in the p519 document. 

That can be  extremely beneficial when the new immigrant had significant income before entering the US.  My wife was a dual-status alien her first year.  She had significant foreign income the entire year, but her dual status for tax purposes was definitely the best strategy for us in 2017.  She avoided US taxation of income received prior to arriving in the US.