Form 1040NR - Quick help request

[FEDUKE404]

A client has presented me with a friend who has a "simple" return. Well, it truly is except the client holds a L1 visa and in 2010 filed a Form 1040NR along with the Form 1040 and related state return.

The 2010 Form 1040NR is basically full of goose eggs, except for the Sch OI with several bits of non-income information entered. Apparently the client did need to file a non-US income tax return for the first three months of 2010, i.e. prior to moving to the US.

For 2011, the underlying circumstances are essentially the same, except the person lived/worked in the US the entire year and has NO foreign income of any kind. The visa status is apparently the same.

Do I have to work up a 2011 Form 1040NR to accompany his Form 1040? My experience with such is minimal (and my software does not even have the forms!). Apparently the presence of a Form 1040NR will also negate the ability to efile, which puts me further behind the 8-ball. Maybe there are some fill-in forms on the IRS web site. Again, I am doing a long-time client a favor, and could likely prepare a similar Form 1040NR with many zeros if necessary.

If this was February, I would dig through the rules but for now I am hoping someone with experience in these matters can give me a quick do/don't do type of response. On April 10th, out of courtesy to the potential new clilent, I need to fish or cut bait very quickly.

Thanks in advance.

FE

[Lion]

I'd put them on extension to give myself time to research.

Don't know that Visa type. But, do they qualified as a resident based on one of the tests? And if so, can they now file a Form 1040 without the NR? They would have to report worldwide income, but you say that is not an issue for 2011.

[FEDUKE404]

More info

I'd put them on extension to give myself time to research.

Don't know that Visa type. But, do they qualified as a resident based on one of the tests? And if so, can they now file a Form 1040 without the NR? They would have to report worldwide income, but you say that is not an issue for 2011.

The tax return is literally one W2, two items on Sch A (state tax and property tax), and perhaps a bit of bank interest. Can't get much simpler than that!

The L1 visa is apparently an employee visa. Info: http://www.immihelp.com/visas/l1/

The 2010 Form 1040 shows "Dual-Status Return" at the top, and the accompanying 2010 Form 1040NR shows "Dual-Status Statement" at the top. Filing status shown is "2 - Other single nonresident alien." The Form 1040NR "statement" is completely blank otherwise, except for information shown on page 5 (Schedule OI). A Form 8948 is attached, with reason being "Dual-status return not eligible for e-file." The 2010 taxes were prepared by a "big name" accounting firm.

I'm getting a lot of "others in a similar situation here have filed a Form 1040 (only) with no problems" comments.

FE

[Koss]

Form 1040NR

I may be able to help you get to the bottom of this very fast.

If the 2010 return was done correctly, and he was a dual-status alien, that means that for part of 2010 he was a nonresident alien, and for part of 2010 he was a resident alien.

That probably means that during 2010, he became a resident alien under the substantial presence test, or possibly under the rules of a tax treaty.

If so, then he may simply be considered a resident alien going forward, for all of 2011. And that would mean that for 2011, you file a regular Form 1040.

Need to know--

1. What country is his citizenship?
2. How long has he been in the USA?
3. Has his time in the USA been uninterrupted, or did he leave the country and come back?

BMK

[FEDUKE404]

Getting closer

I may be able to help you get to the bottom of this very fast.

If the 2010 return was done correctly, and he was dual-status alien, that means that for part of 2010 he was a nonresident alien, and for part of 2010 he was a resident alien.

That probably means that during 2010, he became a resident alien under the substantial presence test, or possibly under the rules of a tax treaty.

If so, then he may simply be considered a resident alien going forward, for all of 2011. And that would mean that for 2011, you file a regular Form 1040.

Need to know--

1. What country is his citizenship?
2. How long has he been in the USA?
3. Has his time in the USA been uninterrupted, or did leave the country and come back?

BMK

Thanks for looking into this, Koss.

1) Home country is India.
2 & 3) Client has been in US continuously since early March of 2010, when he began work in his current location. There were even some (token, leftover?) Form 3903 expenses on his 2010 Form 1040.

The phrase "resident alien" seems quite appropriate for the circumstances at hand. Person is an employee of a major banking corporation.

FE

[Koss]

Resident Alien

Based on those dates, he appears to meet the substantial presence test for 2011. That fits well with the inference that he was a nonresident alien for the first part of 2010, and that he became a resident alien during 2010, by meeting the substantial presence test at a certain point during the year.

You can take a quick look at the flowchart in Pub. 519, at this link:

http://www.irs.gov/publications/p519/ch01.html#en_US_publink1000222128

The flowchart is Figure 1-A.

If he is a resident alien for tax purposes, then he can file a regular Form 1040 like anyone else. And it can be e-filed.

Caveat: A little knowledge can be dangerous. Some "days of presence" don't count, but that doesn't appear to be applicable here, based on the class of visa.

And for nonresident aliens, there are special rules for spouses, dependents, and the standard deduction, that apply only to citizens of India, because of the tax treaty. No joke.

But that's not applicable, either, if he is considered a resident alien.

BMK

[FEDUKE404]

Question is resolved

Thanks for the April 10th crash course.

The flow chart pretty well nails it. Interestingly enough, for 2010 I came up with "resident alien" but apparently that nasty little Footnote 1 was an issue.

I'm not about to rattle that 2010 cage!

FWIW, box 39b of Form 1040 was checked (person is unmarried), which took away the standard deduction.

Looks as if it's safe to journey onward with a "mere" Form 1040 for 2011.

FE