# US PhD Student in Germany



## noshaker (Feb 10, 2021)

Hi Everyone

I hope everyone is in good health. My situation is as follows.
I am an Indian citizen. I was a PhD student in the US. I left the US at end of March 2020 after graduation. 
I filed my tax return for 2019 in April 2020 as a resident alien as I had spent more than 5 years in US.

I think I satisfy the substantial presence test for the year 2020 as I spent the following time in the US so I think I can be considered a resident alien for 2020. 
2020 : 77 days (I left in March)
2019 : 365 days * (1/3) = 121 days
121 + 77 > 183

I left the US for India in March and am currently working in Germany and have worked here since October. 

I have the following questions:
1. Should I be file my tax return as a resident alien in the US or should I file a dual status tax return?
2. Do I have a choice in the above? I would like to file as a resident alien to I can claim the Economic Impact payment for which resident aliens are eligible. 
3. In case I file as a I resident alien, I want to claim a Foreign Tax Credit with Form 1116. Do I need to provide proof of tax payments (in germany) along with the form. Would my German tax return suffice as proof. 

Thank you.


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## Moulard (Feb 3, 2017)

1. Be mindful that there are exceptions to the physical presence test. Take a look at pub 519 and read to see if any of the circumstances apply (for example if you were in the US on a J, Q, F or M visa you may be exempt from the test in certain circumstances).

2. There is always a bit of choice involved (it is a self reporting system after-all). But usually it involves people trying to get out of the US tax system rather than stay in...

3. To claim the FTC you must have paid or accrued the income tax liability. You do not need to provide any proof, but you should keep a copy of your German tax return with your US return so you could justify your claim if ever necessary.


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## noshaker (Feb 10, 2021)

Thank you Moulard for your response.
Yeah its an interesting situation for me to be wanting to stay in the tax system rather than leave it. I have earned income in Germany as a part of my employment and my employer has deducted income taxes from it. 

From what I understand, though I was on the F1 visa, I do not qualify for the exception as I had spent more than 5 years in the US. 
The only exception I think I could qualify for is the "closer connection to a foreign country" exception which requires me to maintain a tax home in a different country than the US. 
However, the definition of tax home for me seems a bit uncertain.
1. My permanent home is in India but I don't have any income there nor have I paid any taxes there. I spent 6 months in India in 2020. 
2. I worked/studied for the first 3 months of 2020 in the US
3. I worked the last 3 months of 2020 in Germany. 

The tax home is required to exist for the entire year, which doesn't seem to be true for me, as even after I left the US I didn't stay in India for the entire year. So I think I cannot choose this exception.


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## Sean-The Cloud Expat (Feb 28, 2021)

noshaker said:


> Hi Everyone
> 
> I hope everyone is in good health. My situation is as follows.
> I am an Indian citizen. I was a PhD student in the US. I left the US at end of March 2020 after graduation.
> ...


Most Probably, you fall in Dual Status Category, since you have now left the US. You need to attach the departure statement to your Tax return, if you are filing a DS return. 
You could file a resident Alien Tax return for 2020, however your German income would be taxed in the US. You also get the benefit of Standard Deduction of $12k which you won't for a DS return. You could get the EIP, but you may want to check again the rules for the same.
AFAIK, you don't need to attach the proof of tax payment in Germany. But you should keep all records ready, if they do demand it from you. Hope this helps.


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## noshaker (Feb 10, 2021)

Thanks Sean. I have decided to file as a dual status return as a Non Resident as at the end of the year 2020 I was not a resident in the US and from Publication 19 page 34, it recommends that I file as a Non Resident in this scenario. By depature statement I assume you mean the departing alien permit. I don't think I need it as I was a student which seems to be an exception to it. I have received one cheque for EIP in Dec 2020 as I filed as a resident for 2019.


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## Sean-The Cloud Expat (Feb 28, 2021)

noshaker said:


> Thanks Sean. I have decided to file as a dual status return as a Non Resident as at the end of the year 2020 I was not a resident in the US and from Publication 19 page 34, it recommends that I file as a Non Resident in this scenario. By depature statement I assume you mean the departing alien permit. I don't think I need it as I was a student which seems to be an exception to it. I have received one cheque for EIP in Dec 2020 as I filed as a resident for 2019.


 Departure alien permit is different. Departure Statement must be prepared along with the DS departure tax return. It states your last day in the US, your country of origin, passport number etc. and country which you have closer ties to, for the rest of the year. The Tax software will generate this statement. This is like the supporting to the IRS for the dual status return mentioning your date of departure, effectively when your SBT stops. Without this, the IRS will assume you to be a full year resident!


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## noshaker (Feb 10, 2021)

Oh. I think you are referring to the closer connection to the foreign country statement. Which software are you referring to? I was planning to just write this on paper and attach the relevant documents and attach Form 8840.


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## Sean-The Cloud Expat (Feb 28, 2021)

noshaker said:


> Oh. I think you are referring to the closer connection to the foreign country statement. Which software are you referring to? I was planning to just write this on paper and attach the relevant documents and attach Form 8840.


Nope. Filing form 8840, closer connection will make you a Non-resident, if you meet the exception to the closer connection test. In a Dual Status return, your Form 1040NR is the Tax return and Form 1040 is the statement. You must mention on top of your return as " Dual-Status Return". I would recommend using a Paid Software, rather than completing it on a PDF. Hope this helps


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## noshaker (Feb 10, 2021)

Do you have recommendations for any software which can manage dual status returns. All that I have seen are either for Resident or Non resident and not dual status.


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## noshaker (Feb 10, 2021)

Thank you for your help Sean. I was able to use an online software taxact.com to prepare my tax return with Form 1040NR as the return and 1040 as the statement. 

I have one extra question. As you stated the IRS publication 519 states that unless I file a Residency Termination statement, by default my residency will end at the end of the calendar year. 
I think this is the statement that you were referring to in your previous comments. 
As you stated it needs to contain my personal details and details of my presence in the US.

I was wondering if you had any examples of such a statement as the software did not prepare it for me. 
My main concern is,
1. how should I establish that I had a closer connection to a foreign country. What documents does this statement need. 
2. Also, do I just need to write all of it on paper, sign it under penalty of perjury and attach it to the tax return?

Thank you for your help so far.


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