Don't forget about currency conversion fees! When I transferred my savings from Europe, my bank charged me an outrageous amount. Check if your bank has a partner bank in the US - sometimes they offer better rates. Or use a service like Wise or OFX for better exchange rates. I ended up losing almost $800 in fees and bad exchange rates because I didn't look into this first!!

One thing I haven't seen mentioned yet is the timing of when you transfer the money. If you're planning to transfer a large amount, consider spreading it across multiple smaller transfers over a few months rather than one big lump sum. This can help avoid triggering automated bank reporting systems that might flag large international transfers. Also, make sure to keep records of the exchange rates on the day you transfer - you might need this information for tax purposes later. The IRS uses specific exchange rates for different dates, and having your own documentation can save headaches if there are any questions about the USD equivalent value of your foreign earnings. Finally, if you haven't already, consider opening your US bank account first and letting it "season" with smaller deposits before doing the big transfer. Some banks are more comfortable with large international transfers when they already have a relationship with you.

I went through this exact situation two years ago and can confirm that the consensus here is correct - your 401(k) distribution should be reported as ECI on Line 17a of Form 1040-NR. The key principle is that retirement distributions maintain the same tax character as the income that funded them. Since your contributions were made while you were working in the US (and thus earning effectively connected income), the distribution retains that ECI character even though you're now a nonresident alien. I initially made the mistake of reporting mine on Schedule NEC as non-ECI income, but after researching Revenue Ruling 79-388 and consulting with an international tax specialist, I filed an amended return to correct it. The IRS accepted the amendment without any issues. One important note: make sure to check if your tax treaty has any special provisions for retirement distributions. Some treaties provide for reduced withholding rates or other benefits that you don't want to miss out on. Also, keep detailed records of your employment history in the US, as this documentation supports the ECI classification if the IRS ever questions it. Don't let your accountant's advice in the comment below go unchallenged - this is a specialized area where many general practitioners get it wrong.

As someone who recently went through this exact situation, I can confirm that your 401(k) distribution should indeed be reported as ECI on Line 17a of Form 1040-NR. The reasoning everyone has shared here is spot-on - the distribution retains the character of the income that funded it. I made the same mistake initially and reported mine on Schedule NEC, but after doing more research and finding Revenue Ruling 79-388, I realized my error. The ruling makes it clear that retirement plan distributions to former employees maintain their ECI status even after the individual becomes a nonresident alien. One thing I'd add is to be extra careful about the withholding. Your 401(k) plan administrator may have withheld taxes at the standard 30% nonresident rate, but since this is ECI, you might be entitled to a refund depending on your other income and deductions. Make sure to calculate your actual tax liability properly. Also, don't forget to check if your home country's tax treaty has any provisions about retirement distributions - some treaties allow for reduced withholding or provide other benefits that could save you money. The tax treaty analysis can be complex, but it's worth investigating since it could significantly impact your final tax bill.

One other thing to consider - how complex is your inventory? If you carry thousands of SKUs with varying turnover rates, the hybrid method with accrual inventory might actually benefit you. But if your inventory is simpler, you might want to consider fully switching to cash basis and just treating inventory as non-incidental materials and supplies. For my small bookstore, we switched to full cash basis and just expense inventory when we use/sell it. The record-keeping is WAY simpler and we've had no issues with the IRS. But we have relatively predictable inventory turnover.

This thread has been incredibly helpful! I'm a newcomer here dealing with the exact same issue for my small electronics repair shop (about $400K annual revenue). My accountant has been insisting on full accrual, but after reading through everyone's experiences, it sounds like the hybrid approach would be perfect for my business. I do have seasonal inventory fluctuations where I stock up heavily before back-to-school and holiday seasons, so maintaining proper COGS tracking through accrual inventory accounting makes sense. But using cash basis for my service revenue and most expenses would definitely simplify my bookkeeping. Has anyone here actually gone through an IRS examination while using the hybrid method? I'm curious about how smoothly that process went and whether the IRS agents were familiar with these small business provisions under the Tax Cuts and Jobs Act. Also, for those who mentioned Form 3115 - approximately how much did your accountants charge to prepare that form? I'm trying to budget for the transition costs.

Just want to add my experience for anyone else going through this - I had to verify my Illinois state tax ID about 6 months ago. The whole process was actually pretty straightforward once I got started. Like others mentioned, having your driver's license, previous year's AGI, and current W-2 ready makes it super quick. The MyTax Illinois portal worked fine for me, no technical issues. One thing I'd recommend is doing it early in the day if possible - I submitted mine around 10 AM and got a confirmation email within a few hours. The waiting period after that was the hardest part, but my refund came through in about 2.5 weeks. Hang in there, it's just a security measure but your refund will come!

I went through Illinois ID verification about 2 months ago and it was honestly not as bad as I thought it would be! The whole online process took me maybe 15 minutes once I had all my documents ready. Here's what helped me: 1) Make sure your driver's license photo is clear and not blurry when you upload it, 2) Double-check that your Social Security number matches exactly what's on your return, and 3) If you're married filing jointly, have your spouse's info ready too. My refund was delayed by about 3 weeks total, but I got email updates along the way which was nice. Don't stress too much - just get it done ASAP and you'll be fine!

I'm currently dealing with this exact situation! I was on an F-1 visa during 2020-2022 and just discovered that my employer was incorrectly withholding FICA taxes for almost two full years. I had no idea I was exempt until a friend mentioned it recently. Reading through all these responses is super helpful - it sounds like Form 843 is definitely the way to go. I'm leaning toward doing it myself rather than using a service since several people have had success with the DIY approach. One question I have: if I worked part-time during school and then full-time during summer breaks, does that affect my eligibility at all? I was always maintaining my F-1 status and was definitely under the 5-year rule for non-resident aliens. Also, did anyone here have issues with employers who initially refused to provide employment verification letters? Thanks for all the detailed advice - this thread is exactly what I needed to get started on my refund claim!

I went through this exact same process last year and wanted to share my experience! I was on an F-1 visa from 2018-2020 and discovered that my employer had been incorrectly withholding FICA taxes for the entire period. I decided to handle the Form 843 filing myself rather than using a service, and it worked out great. The key things that helped me succeed: 1. **Be extremely thorough with documentation** - I included copies of every relevant document (passport, visa, I-94, all W-2s, employment letters) 2. **Write a clear explanatory letter** - I kept it to one page explaining my F-1 status, why FICA taxes shouldn't have been withheld, and the specific refund amount I was requesting 3. **Send via certified mail** - This gave me peace of mind and proof of delivery 4. **Be patient** - The process took about 6 months total, but I eventually received a refund check for $2,847 The most challenging part was getting employment verification letters from my employers, but once I explained it was just confirming dates and job title, they were cooperative. Since you were only in your second year in 2019, you definitely qualify as a non-resident alien. The amount you could get back might surprise you - FICA taxes add up quickly! Don't let the bureaucracy discourage you, the refund is absolutely worth pursuing.