1040nr

[AccTaxMan]

Is anyone familiar with foreign national tax in the US?

Taxpayer, who is not a green card holder, stayed in the US mostly in 2008 and 2009. If counting the days, he qualifies to file a Form 1040 because of the substantial presence test. But can he still elect to file a Form 1040NR instead?

Also, if he files a Form 1040NR, I suppose his income in his home country (non-US source) do not need to be added to it. Am I right?

[gkaiseril]

You should also look at the type of visa the individual holds, as some visa types have excluded days from the presence test. Then there maybe special adjustments for tax treaty agreements.

[AccTaxMan]

You should also look at the type of visa the individual holds, as some visa types have excluded days from the presence test. Then there maybe special adjustments for tax treaty agreements.

That's true. But the situation is he does not want to file a 1040. So my question is whether he has the choice to elect to file a Form 1040NR even though we assume that he is eligible to file a 1040 due to the substantial presence.

And the reason is simple. He had income in his home country (non-US source) too. So if he files a Form 1040, he will have to add his non-US source income in his home country to it too.

[AccTaxMan]

That's true. But the situation is he does not want to file a 1040. So my question is whether he has the choice to elect to file a Form 1040NR even though we assume that he is eligible to file a 1040 due to the substantial presence.

And the reason is simple. He had income in his home country (non-US source) too. So if he files a Form 1040, he will have to add his non-US source income in his home country to it too.

After reading Pub 519, I think he must file a 1040 if he meets the substantial presence test. But he is under a J-1 visa and they also say the days in the US as a "trainee" under J-1 visa does not count. So it seems he does not meet the substantial presence test and will have to file a 1040NR anyway.

[gkaiseril]

And be sure to check the country the taxpayer is from. Some have special provisions for claiming wife and children as dependents or could be allowed to take the standard exemption. Also some countries have special provisions for exempting some income from taxes.

[Roberts]

I do the taxes for some foreign doctors who are doing fellowship work in the US. The first year they always receive the 1040NR for the Federal and a regular 1040 for my state. The second year they are both regular 1040's. Doesn't matter how long they have been in the US.

I've had CPAs claim I'm 100% wrong on that and that's ok. The IRS demanded I do it that way. The state STILL hasn't really come to a final answer on what they want. About every other year I get a manager that DEMANDS I file with the opposite form and claims the previous management was 100% wrong.

[gkaiseril]

And what was the type of visa they had?

[Roberts]

And what was the type of visa they had?

Different types of Visa's. You can talk with the IRS but I've never noticed that the type of visa really makes a difference in their opinion. They always want to know what type of Visa but I've never found an instance where it seemed to matter.

JMO but the type of Visa is more of an issue for how the income is reported to the IRS from the employer. I've had certain Visa holders (J I think) that never received a true tax form. They received a letter written out personally that disclosed income. Wow, the IRS really flipped a lid about that one when I mentioned it. )

[gkaiseril]

Well with a 'J' visa none of their time in the U.S. counts for significant presence test. You can also file form 8840 Closer Connection Exception Statement for Aliens and form 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), both or which are filed with the 1040 -NR. The instructions for the 1040-NR also list the the following exception on page 2:

"However, even if you are a U.S. resident under one of these tests you still may be considered a nonresident alien if you qualify as a resident of a treaty country within the meaning of an income tax treaty between the United States and that country."

From IRS Pub 519 page 6:

"Exempt individual. Do not count days for which you are an exempt individual. The term “exempt individual” does not refer to someone exempt from U.S. tax, but to anyone in the following categories.
"· An individual temporarily present in the United States as a foreign government-related individual.
"· A teacher or trainee temporarily present in the United States under a “J” or “Q” visa who substantially complies with the requirements of the visa.
"· A professional athlete temporarily in the United States to compete in a charitable sports event."

But a lot of this depends upon what the IRS employee understands about the situation.

The cases I see involve the 'J' visa and claims for treaty treatment and closer ties to another country than the U.S.