[Michael_03]

Situation:
German Citizen.
Worked&lived in USA from 2006 to End of 08/2011; E-2 Visa.
Moved back to Germany; started working there 09/2011.

Income:
01/2011-08/2011: Lived in WA. Employed by US company
09/2011-now: Lived in Germany. Employed by German company

Interest from US Bank acc.:
Through 08/2011. Then closed all interest bearing accounts.

Interest on German Bank acc.:
Paid Jan. Jul. And Dec.

So...
Am I a resident and have to file 1040 or dual status?
Do I have to state the German income from September on and the German interest in December?

Thanks very much!

[AtlantaTaxExpert]

You have a choice.

1) You can file as a resident, filing Form 1040 and claiming the Foreign Tax Credit (Form 1116) for the German income taxes you paid on the German, which you MUST claim on your U.S. income tax return.

OR

2) You can file a dual-status return, in which case you claim ONLY the U.S.-sourced income on the return. However, you CANNOT claim the standard deduction; you MUST itemize, which will NOT be to your advantage since Washington state has NO state income tax.

It is likely that filing as a resident is the best option, but the return must be modeled BOTh ways to be sure.

Regardess of HOW you filed, you need to complete and submit a Residency Termination Statement to the IRS so they know NOT to look for a tax return from you for 2012.

If you want my professional help, double-click on my title above and scroll down to my profile/signature. You will find my email address and websites there.