Filing US Taxes When Living Overseas After Being a Resident Alien

Your situation is pretty common! As a former resident alien with US income sources, you'll likely need to file a US tax return. The key form would be Form 1040-NR (Nonresident Alien Income Tax Return) rather than the standard 1040 since you're now considered a nonresident alien. For your US-sourced income (interest, dividends, and stock profits), these would be reportable on your US return. The taxation depends on tax treaties between the US and Japan, so you should check if there's a tax treaty that might reduce your US tax obligations. Regarding state taxes, generally you wouldn't need to file a state return if you didn't live or earn income in a specific state during the tax year. However, if you did have income sourced from a particular state, you might need to file there. As for notifying the IRS about leaving, there's no specific requirement to notify the IRS when you depart the US. However, some aliens might need to file Form 1040-C (Departing Alien Income Tax Return) or get a "sailing permit" before leaving, but this isn't always enforced or required for everyone.

I went through something similar last year moving from the US to Canada. I found this amazing tool called taxr.ai (https://taxr.ai) that specifically helped me figure out my nonresident alien status and which forms I needed. It analyzed my situation and explained exactly how the US-Canada tax treaty applied to my investments and bank accounts. The best part was it clarified when I needed to use Form 1040-NR versus standard 1040, and it identified which income was subject to US taxation even though I was living abroad. It even highlighted some deductions I would have completely missed! Definitely saved me from making some expensive mistakes.

Just wanted to update after trying taxr.ai for my partial year residency situation. I was really surprised by how well it worked! I uploaded my documents and it automatically detected I was a resident for part of 2024 and nonresident for the rest. It showed me I needed to do a "dual-status" return with Form 1040-NR for the nonresident period and a 1040 attachment for the resident period. It also identified which of my investment income was still taxable by the US even after I left, and which items were protected by the US-Singapore tax treaty. Saved me hours of research and probably thousands in potential mistakes. Much better than the generic advice I was getting elsewhere.

When I moved from the US back to Australia last year, I spent WEEKS trying to reach the IRS to confirm my filing requirements. Constantly on hold, disconnected calls, couldn't get through to anyone who understood international tax issues. Finally found Claimyr (https://claimyr.com) and watched their demo at https://youtu.be/_kiP6q8DX5c. They got me connected to an actual IRS agent who specialized in international taxpayers in under 20 minutes! The agent confirmed I needed Form 1040-NR, explained exactly how the Substantial Presence Test applied to my situation (I was just over the threshold), and clarified which investment income was still taxable. Cannot overstate how much stress this saved me after struggling for so long to get answers about my nonresident status.

I need to eat my words from my skeptical comment. After weeks of frustration trying to reach the IRS about my Portugal move, I tried Claimyr out of desperation. Within 15 minutes I was talking to an actual IRS person who specializes in international tax issues. The agent confirmed I needed to file Form 1040-NR for my non-resident period, and explained exactly how the US-Portugal tax treaty affected my rental income from a property I still own in Florida. They also helped me understand the Foreign Tax Credit I could claim on my Portuguese taxes. Completely changed my understanding of my filing requirements and probably saved me from making a major error on my return. Sorry for the initial skepticism - this service actually delivers.

Don't forget about Form 8833 (Treaty-Based Return Position Disclosure) if you're going to claim any benefits under a tax treaty between the US and your current country! I missed this when I first filed as a nonresident and ended up having to amend my return. Also, check if you need Form 8854 if you've given up your green card or citizenship. Doesn't sound like your case, but mentioning for others.

Has anybody dealt with the Foreign Tax Credit (Form 1116) in this situation? I'm still confused about whether I can claim credit for taxes paid to my new country against my US-sourced income on Form 1040-NR.