Might be worth checking if you qualify for the "First-Year Choice" election (sometimes called the "backdating rule"), which lets certain aliens who meet the substantial presence test in the year following their arrival treat themselves as US residents for part of the prior year.

Based on your situation, you definitely need to file as a dual-status alien. The green card test makes you a resident from March 12 forward, but it doesn't retroactively cover the beginning of the year. Even though you passed the substantial presence test for the period after getting your green card, that doesn't change your status for January 1 through March 11. For your filing, you'll submit Form 1040 as your main return covering March 12-December 31 (resident period), and attach Form 1040NR as a statement for January 1-March 11 (nonresident period). Write "Dual-Status Return" at the top of both forms. Since all your income is from university employment and you mention being exempt from Social Security/Medicare taxes, make sure your employer is withholding correctly for both periods. Your tax treaty benefits can still apply to the nonresident portion - just remember to file Form 8833 if you're claiming treaty benefits. The dual-status filing might seem complicated, but it ensures you're getting the correct tax treatment for each period of the year. Don't try to simplify by filing as a full-year resident - it could cost you money or create compliance issues.

This thread has been incredibly helpful! I'm a new business owner who just got my EIN last month and was completely confused about the S Corp election timeline. Reading through everyone's experiences, it sounds like the key factor is when you actually START doing business activities, not just when you get your paperwork filed. For those still figuring this out - it seems like the consensus is that if you haven't opened business bank accounts, made sales, issued stock, or conducted any real business operations, your 2 month + 15 day clock hasn't even started yet. That's such a relief because I was stressing about some arbitrary January 1st or incorporation date deadline. Gabriel, definitely document when you first start any business activities so you have a clear timeline for your Form 2553 filing. And based on what others have shared, even if you do miss the deadline, the IRS seems pretty reasonable about late election relief for new businesses with legitimate reasons. Thanks everyone for sharing your real experiences - this is way more helpful than the confusing official guidance!

Gabriel, I went through this exact same confusion when I formed my LLC and elected S Corp status! The good news is that based on what you've described, you're likely still within your filing window. The 2 month and 15 day period starts from the earliest of three events: when you begin conducting business, when you acquire assets, or when you issue stock. Simply having your Articles of Incorporation filed doesn't automatically start the clock - it's about when you actually start operating as a business. Since you mentioned you haven't opened business bank accounts or conducted any transactions yet, your deadline period may not have even begun. The key is documenting when you take your first actual business action (opening that business bank account, making your first purchase, issuing stock certificates, etc.). I'd recommend filing Form 2553 as soon as you do start business operations, rather than waiting until near the deadline. And definitely keep detailed records of when you begin each business activity - this documentation will be valuable if the IRS ever questions your timeline. Don't stress too much about this! The IRS understands that new business owners often face confusion about these deadlines, and they're generally reasonable about late election relief if needed. But it sounds like you may not even need that option.

One thing no one mentioned yet - if you're using the property occasionally for personal use, that complicates things even more. Even a week of personal use can change how expenses need to be allocated. We learned this the hard way when we used our rental for just 10 days ourselves, and it messed up our entire tax calculation.

Your tax preparer's wording was confusing, but they're not technically wrong about the economic effect. The key insight here is that mortgage principal payments aren't deductible expenses, which means more of your rental income remains taxable. Think of it this way: if you collect $2,000 in rent and have a $1,500 mortgage payment ($1,000 principal + $500 interest), you can only deduct the $500 interest portion. So you're effectively paying tax on $1,500 of income instead of $500, making it feel like you're being "taxed on the principal." However, don't forget about depreciation! You can depreciate the building portion of your rental property (not the land) over 27.5 years, which often provides a substantial deduction that helps offset this issue. For a $300,000 rental property where $240,000 is allocated to the building, that's about $8,727 in annual depreciation deductions. Also keep detailed records of all repairs, maintenance, property management fees, insurance, and property taxes - these are all deductible and can significantly reduce your taxable rental income. The principal payments are building equity in your property, which will benefit you when you eventually sell, but they just don't provide current-year tax relief.

I just wanted to add that when you file next year, you might want to attach a cover letter explaining the situation along with copies of both the CP565 and CP567, plus a printout of your transcript showing the return was processed successfully. This creates a paper trail that will help if anyone questions the ITIN validity in the future. Also, keep in mind that ITINs expire if not used on a tax return for three consecutive years. So make sure to use it consistently, even if you're filing separate returns in some years. I've seen this exact issue at least 5 times with clients - contradiction between approval and rejection. In every case, when the return was processed with the ITIN, that trumped any rejection notice. The IRS systems just don't communicate well between departments.

I'm dealing with a very similar situation right now! My husband (also a nonresident alien) got his ITIN approved in May, we filed our return and got our refund processed, then got a rejection notice in June. Reading through all these responses has been so helpful. I checked our transcript online like several people suggested and it clearly shows our return was processed with his ITIN. That seems to be the key evidence that everything is actually fine despite the confusing rejection notice. One thing I learned from our tax preparer is that these contradictory notices are becoming more common as the IRS updates their computer systems. The different departments don't always sync up in real time, which creates these weird situations where you get approved then rejected (or sometimes the reverse). For anyone else in this boat - definitely keep both notices and check your transcript. If your return was processed and refund issued, you're almost certainly good to go. The processing system is what actually matters, not the automated notices.

I feel for you - this exact scenario happened to me two years ago and it's absolutely maddening! The disconnect between IRS payment processing and their notice system is a real problem that affects thousands of taxpayers every year. Here's what I learned from my experience: First, absolutely respond to the CP23 in writing even though you've called. Include copies of your payment confirmation, bank statements showing the deduction, and reference your previous calls with dates and any rep ID numbers you got. Send it certified mail to create a paper trail. Second, when you call back (and you'll probably need to call again), ask specifically for a "payment processing tracer" to be initiated on your account. This is different from just having them look up your payment - it's a formal process to track down payments that are stuck in their system. Also request a collection hold while the tracer is active. The most important thing I learned: don't assume this will resolve itself automatically once they find your payment. You'll likely need to follow up to ensure any penalties and interest are properly removed. The IRS rarely reverses these automatically even when the delay was entirely on their end. Document everything, stay persistent, and know that while frustrating, this will eventually get resolved. You paid on time and have proof - that's what matters most.

I've been following this thread closely because I'm dealing with a similar CP23 situation, and I wanted to share something that might help others avoid this mess in the future. After going through payment processing delays twice now, I've learned that the method you use to make estimated payments can significantly impact processing time. Electronic payments made through EFTPS (Electronic Federal Tax Payment System) seem to process more reliably than payments made through third-party processors or even the IRS Direct Pay system. For anyone making future estimated payments, I'd strongly recommend using EFTPS directly and keeping screenshot records of the confirmation page, not just the confirmation number. The screenshot shows the full transaction details that can be incredibly helpful if you need to dispute processing delays later. Also, for those currently dealing with this issue - when you call the IRS, ask specifically if your payment is in their "unpostable" queue. Sometimes payments get stuck there due to mismatched information (like slightly different name formatting or SSN entry errors) and require manual intervention to process. This is different from just being "slow to process" and needs a different type of resolution. The whole system is frustrating, but understanding these technical details can help you ask better questions and get more targeted help from IRS representatives.