First year immigrant taxation

[goldstone]

I'm back researching taxation for my daughter and her family who recently moved to the USA. It has been quite an interesting exercise.

They arrived in the USA on July 26 and so will not meet the Substantial Presence test at the end of 2022. This means that their base case is to file individual 1040NRs.

As Maggie and Nelsona pointed out in another thread, there are certain elections open to them. The most relevant appears to be the ' First year choice to be treated as resident.' They would qualify for this election although they would have to apply for an extension to the filing date for their 2022 taxes beyond April so that they would meet the SP test at the time of filing.

However, even if they make this election it appears that they would then become Dual Status filers with a Resident return for the period after their arrival in the US. But Dual Status filers are not able to use the standard deduction or to file jointly. ( Unless possibly they can utilise a further election concerning a non resident spouse which might allow joint filing ). So, there does not appear to be much benefit to making the First Year election.

Their income in the first part of the year, prior to arriving in the US, was quite low. Thus, if they were able to find an election which enabled them to be taxed for the full year as US residents, filing jointly, and claim the standard deduction, then that would result in lower taxes. However, we have been unable to find any such election.

I would be very grateful for any comments or suggestions you may have on all of this. Are we missing something and getting things blindingly wrong ? Or should we give up the struggle and just take the simple route with them filing 1040NRs ?

Thanks very much for your help.

[nelsona]

1. They do not have to wait to file a 1040, as a Cdn is allowed anytime to do so, regardless of SPT. Treaty Article 25. As long as they report WORLD inoome for the year, including the portion before arrival.

[goldstone]

Thanks very much Nelsona. That was just what I was looking for.