Most new H1B holders are unaware of the First Year Choice when they file their first tax return. If you missed it in 2023 and filed 1040NR, you’re not alone. The big question now–can it be fixed?
Tax legislation permits amendments up to three years, so timing is not the problem. But First Year Choice has rigid eligibility criteria. If it was not claimed in the initial return, amending later is complicated.
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The IRS says that Form 1040X can be utilized if a taxpayer ought to have filed 1040 rather than 1040NR. The issue is, omitting the First Year Choice can imply that requirement is not fulfilled, This leaves uncertainty regarding whether or not the change will be accepted by the IRS.
Some tax pros recommend filing an amendment with a letter of explanation. Others feel once the option is lost, it’s lost. Either situation, professional advice is essential prior to acting.
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This kind mistake happens to everyone, but the American tax system is not always merciful. Understanding the proper tax approach early can prevent a world of trouble later.
