First tax declaration and foreign unearned income

[davew9128]

I very much appreciate you help but I don't think you completely right regarding my case.


1)

We have to file tax as green card holders. Maybe IRS doesn't have any special rules about it but USCIS has! When you renew your green cards, or apply for citizenship, you will be asked to supply copies of the tax returns you have filed. If you don't file tax, your application can be refused and you could be forced to leave the US. I now such cases. You need to show to USCIS that you have immigration intentions and a tax refund is a very good bet for it. Even an immigration officer at the port of entry could ask it if you were aboard more then half of a year.

2)

It doesn't matter when we've received a green card. DV visas, when stamped by the immigration officer at the port of your arrival (the airport where you went through the immigration) become your official green card. That is why they're stamped as I-551 - they are I-551 (the official document certifying to your status of a permanent resident alien)! Stamped visa is as good as the physical green card for 1 year, during which you're expected to receive your physical card, which is what indeed happened in my case.

3)

Dear Taxing Matters, you said that I can file a tax form from the moment as I have become a permanent resident but not from the whole year. In my case, it was September 2019. Could you please share any publication or article from IRS where it is said that it is possible? I've read Publication 519, Publication 54, Publication 514 and I didn't find such information. In my understanding, it is not technically possible to file tax for part of a year unless you file dual status.


Thanks,
Alex

Not for nothing but you clearly don't understand anything you've been told.

 

[davew9128]

I am not at work right now, so I cannot say for certain, but many, many things can now be attached to electronic tax returns either by using an unformatted statement or attaching a pdf file that I am nearly certain that a return with that kind of declaration could still be efiled.

My friends in the international tax community tell me that relying on PDF attachments to an e-filed return that doesn't specifically link to required forms in the return is just asking for trouble because it will never get seen. If someone has a filing requirement and needs to attach something to the return that doesn't link to a specific item in the software, you file it on paper.

 

[illuminato]

No, he did not say that you should file a part year tax return. He said that you only had to include your income earned after you received the green card. There is no such thing as a part year federal tax return.

I apologize for confusing. You right. My question is where can find the law regarding including my income earned only after I received green card (or entered to the U.S.) It is what I have found §7701(b)(2)(ii):
In the case of an individual who is a lawfully permanent resident of the United States at any time during the calendar year, but does not meet the substantial presence test of paragraph (3), the residency starting date shall be the first day in such calendar year on which he was present in the United States while a lawful permanent resident of the United States.
https://www.law.cornell.edu/uscode/text/26/7701#b_2_A_ii

 

[illuminato]

Not for nothing but you clearly don't understand anything you've been told.

Please could you be more specific? Actually only one question what I have for now is regarding 3) above. I think that I am 100% right regarding 1) and 2).

 

[illuminato]

Actually now I have found the same prase in publication 519:

Residency starting date under green card test.
If you meet the green card test at any time during a calendar year, but do not meet the substantial presence test for that year, your residency starting date is the first day in the calendar year on which you are present in the United States as a lawful permanent resident.
https://www.irs.gov/publications/p519

So it seems for me that I have to file tax for full year unless there are other rules about what I don't know.

 

[Taxing Matters]

Actually now I have found the same prase in publication 519:

Residency starting date under green card test.
If you meet the green card test at any time during a calendar year, but do not meet the substantial presence test for that year, your residency starting date is the first day in the calendar year on which you are present in the United States as a lawful permanent resident.
https://www.irs.gov/publications/p519

So it seems for me that I have to file tax for full year unless there are other rules about what I don't know.

It's a return for the entire year, but since you were a resident only after getting the green card you need only report your U.S. source income earned during the year and any foreign source income after you got the green card. Your foreign income — e.g. the Russian investments — that you had prior to getting the green card you don't need to include on your return.

 

[LdiJ]

My friends in the international tax community tell me that relying on PDF attachments to an e-filed return that doesn't specifically link to required forms in the return is just asking for trouble because it will never get seen. If someone has a filing requirement and needs to attach something to the return that doesn't link to a specific item in the software, you file it on paper.

We use it all of the time and its never posed a problem. In fact, there are now required PDF attachments for some specific circumstances.

 

[illuminato]

It's a return for the entire year, but since you were a resident only after getting the green card you need only report your U.S. source income earned during the year and any foreign source income after you got the green card. Your foreign income — e.g. the Russian investments — that you had prior to getting the green card you don't need to include on your return.

I am sorry, but do you know where can I find confirmation of this information?

 

[Taxing Matters]

I am sorry, but do you know where can I find confirmation of this information?

Yes. See the discussion of dual status tax year in IRS Publication 519 (which starts on page 31 of the PDF version). You will see it states the following:

For the part of the year you are a resident alien, you are taxed on income from all sources. Income from sources outside the United States is taxable if you receive it while you are a resident alien. The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year.​

​

For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources and on certain foreign source income treated as effectively connected with a U.S. trade or business. The rules for treating foreign source income as effectively connected are discussed in chapter 4 under Foreign Income .​

​

Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien. The income is not taxable even if you earned it while you were a resident alien or if you became a resident alien or a U.S. citizen after receiving it and before the end of the year.​

​

Income from U.S. sources is taxable whether you receive it while a nonresident alien or a resident alien unless specifically exempt under the Internal Revenue Code or a tax treaty provision. Generally, tax treaty provisions apply only to the part of the year you were a nonresident. In certain cases, however, treaty provisions may apply while you were a resident alien. See chapter 9 for more information.​

 

[illuminato]

@Taxing Matters

Thanks. But as I can see it will be the case only if I choose the Dual Status. But I want to choose the Resident Alien Status for the whole year. The reason for this I want to use standard deductible and joint return.

 

[STEPHAN]

It's a return for the entire year, but since you were a resident only after getting the green card you need

Just to clarify, the day he entered the US on his permanent residence visa, is the relevant date. The "Green Card" - the physical card - usually comes weeks later, sometimes 10-12 months.

 

[Taxing Matters]

@Taxing Matters

Thanks. But as I can see it will be the case only if I choose the Dual Status. But I want to choose the Resident Alien Status for the whole year. The reason for this I want to use standard deductible and joint return.

No, you're not understanding this properly. If you do as I suggest you are filing as a resident and will be able to take the standard deduction. But you would not have to include your foreign source income from the period before you were a resident for tax purposes. That's what the portion of the publication I quoted tells you.

 

[Taxing Matters]

Just to clarify, the day he entered the US on his permanent residence visa, is the relevant date. The "Green Card" - the physical card - usually comes weeks later, sometimes 10-12 months.

Yes, it's the date that he is is granted permanent resident status and not the date that he gets the physical green card in his hands which matters. That's a good clarification.

 

[LdiJ]

@Taxing Matters

Thanks. But as I can see it will be the case only if I choose the Dual Status. But I want to choose the Resident Alien Status for the whole year. The reason for this I want to use standard deductible and joint return.

Since English is your second language I am going to try to explain things a little bit plainer manner.

What you want is to file a regular 1040 and to choose married filing jointly as your filing status.

TaxingMatters is telling you that YES, you would file a 1040 and choose married filing jointly as your filing status. You simply would not include any foreign income that you received before you became a permanent resident.

 

[illuminato]

@Taxing Matters @LdiJ
Thanks for help. But I cannot agree with your statement:
"not include any foreign income that you received before you became a permanent resident"

In pub 519 I can see a paragraph
"
Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien. The income is not taxable even if you earned it while you were a resident alien or if you became a resident alien or a U.S. citizen after receiving it and before the end of the year.
"
but it is under section 6. Dual-Status Tax Year. I don't want to choose Dual-Status Tax Year because in this case I would not have a standard deductible and I cannot to fill jointly.


Quick question. Let's assume for a second that I am single. In your opinion, am I also eligible to not include any foreign income that I received before I became a permanent resident?