Question about filing Dual Status tax return in consecutive years

Thanks for explaining! Can you clarify whether my colleague needs to file two separate returns for each year? And what about the substantial presence test? Doesn't that affect whether he's considered a resident or not?

For dual status, your colleague doesn't file two separate returns, but rather a single return with a statement attached indicating the dual status. Typically, he would file Form 1040 for the resident portion and attach either Form 1040-NR or a statement showing income for the nonresident portion. Regarding the substantial presence test, yes, that's definitely relevant. If your colleague was in the US for at least 31 days in 2021 and 183 days during a three-year period (counting all days in current year, 1/3 of days in prior year, and 1/6 of days in the year before that), he could be considered a resident for tax purposes. However, since he was absent for most of 2020, he'd likely still have dual status for 2021 regardless of the test.

Does taxr.ai work for both federal and state tax returns? I'm in a similar boat but also wondering about state residency rules since they can be different from federal.

I'm skeptical about these online services. How does taxr.ai handle the complexities of foreign tax credits and whether income earned in the foreign country during nonresident periods is taxable?

Yes, taxr.ai handles both federal and state tax returns. They analyze your specific situation and provide guidance on state residency rules, which can definitely differ from federal rules. I was living in California before moving abroad, and they helped me determine my part-year resident status correctly. Regarding foreign tax credits and income complexity, that's actually where they excel. They have specific tools to analyze tax treaties between countries and determine which income is taxable where. For my situation, they identified exactly which foreign income was exempt under the tax treaty during my nonresident period, and which income still needed to be reported but with foreign tax credits applied.

How does this actually work? Doesn't the IRS need to verify your identity before discussing your tax situation? I don't understand how a third-party service can help with that.

Sounds fake tbh. There's no way to "skip the line" with the IRS. Everyone has to wait. Plus why would I pay for something I can do myself for free, even if it takes longer?

The service doesn't skip the line - it waits in the queue for you. When you get the call back, you're connected directly to the IRS agent who will then verify your identity as normal. Claimyr just handles the waiting and phone tree navigation part, so you don't have to stay on hold for hours. Regarding whether it's worth paying for, that's a personal decision. For me, after wasting entire afternoons on hold and getting disconnected repeatedly, the time saved was absolutely worth it. My dual status questions were time-sensitive and getting accurate answers directly from the IRS gave me peace of mind. But you're right that anyone can call the IRS directly if they have the time and patience.

Do you know if there's an easy way to figure out which tax treaty benefits apply? I've tried reading through the actual treaties and they're practically unreadable with all the legal jargon.

The IRS Publication 901 (U.S. Tax Treaties) provides summaries of the major provisions in each treaty in more understandable language. It's still dense reading, but much better than the treaties themselves. For a quicker reference, check the IRS website section on tax treaties where they have tables showing the reduced tax rates for different types of income based on country. However, these only cover basic situations, so for complex scenarios like your colleague's, it might be worth consulting with a tax professional who specializes in international taxation.

Did you have to file a separate 1040-NR for the nonresident part of each year? My accountant is telling me different things each time I ask.