Presentation Transcript

1. FORM 1040NR – US NONRESIDENT ALIEN INCOME TAX RETURN COMPLIANCE LEVEL: BASIC MAY 12, 2011 SUSAN BROWN OTTO, CPA INTERNATIONAL TAX ADVISORY SERVICES,LLC WWW.INTERNATIONALTAXADVISORYSERVICES.COM INTERNATIONAL TAX ADVISORY SERVICES, LLC
2. CIRCULAR 230 DISCLAIMER To ensure compliance with Treasury Department regulations, we inform you that any tax advice that may be contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. INTERNATIONAL TAX ADVISORY SERVICES, LLC
3. 1. NONRESIDENT ALIEN OR RESIDENT ALIEN? INTERNATIONAL TAX ADVISORY SERVICES, LLC
4. 1A. – FLOW CHART-NONRESIDENT ALIEN OR RESIDENT ALIEN? 1B. – GREEN CARD TEST 1C. – SUBSTANTIAL PRESENCE TEST 1D. – SECTION 7701(b)(4) INTERNATIONAL TAX ADVISORY SERVICES, LLC
5. 1E. – DAYS OF PRESENCE IN THE UNITED STATES 1F. – REGULAR COMMUTERS FROM CANADA & MEXICO 1G. – DAYS IN TRANSIT, CREW MEMBERS INTERNATIONAL TAX ADVISORY SERVICES, LLC
6. 1H. – MEDICAL CONDITION 1I. – EXEMPT INDIVIDUALS 1J. – FOREIGN GOVERNMENT-RELATED INDIVIDUALS INTERNATIONAL TAX ADVISORY SERVICES, LLC
7. 1K. – TEACHERS & TRAINEES 1L. – STUDENTS 1M. – PROFESSIONAL ATHLETES 1N. – FORM 8843 INTERNATIONAL TAX ADVISORY SERVICES, LLC
8. 1O. – CLOSER CONNECTION TO A FOREIGN COUNTRY 1P. – TAX HOME 1Q. – ESTABLISHING A CLOSER CONNECTION 1R. – EFFECT OF TAX TREATIES INTERNATIONAL TAX ADVISORY SERVICES, LLC
9. 1S. – DUAL-STATUS ALIENS 1T. – FIRST YEAR OF RESIDENCY – 10-DAY DE MINIMUS TEST 1U. – FIRST YEAR CHOICE – SECTION 7701(b)(4) 1V. – CHOOSING RESIDENT ALIEN STATUS 1W. – LAST YEAR OF RESIDENCY INTERNATIONAL TAX ADVISORY SERVICES, LLC
10. 1X. – NONRESIDENT ALIEN TREATED AS A RESIDENT INTERNATIONAL TAX ADVISORY SERVICES, LLC
11. TEST QUESTIONS QUESTIONS – PART ONE TRUE OR FALSE – 1. IF AN ALIEN IS IN THE U.S. FOR 365 DAYS, THE PERSON WILL ALWAYS BE TREATED AS A FULL-YEAR RESIDENT OF THE US? INTERNATIONAL TAX ADVISORY SERVICES, LLC
12. TRUE OR FALSE – 2. DUAL-STATUS TAX RETURNS ARE SENT TO TWO DIFFERENT IRS SERVICE CENTERS, THE INTERNATIONAL CENTER IN AUSTIN, TEXAS AND THE SERVICE CENTER WHERE US CITIZENS FILE THEIR TAX RETURNS. INTERNATIONAL TAX ADVISORY SERVICES, LLC
13. MULTIPLE CHOICE– 3. - WHAT IS THE FORM NUMBER FOR REPORTING THE CLOSER CONNECTION EXCEPTION? FORM 1040NR FORM 2106 FORM 8842 FORM 8843 INTERNATIONAL TAX ADVISORY SERVICES, LLC
14. MULTIPLE CHOICE – 4. - WHAT IS THE MAXIMUM NUMBER OF DAYS YOU CAN SPEND IN THE US AND BE TREATED AS A NONRESIDENT ALIEN? A. - 10 DAYS B. - 30 DAYS C. - 31 DAYS D. - 181 DAYS INTERNATIONAL TAX ADVISORY SERVICES, LLC
15. MULTIPLE CHOICE – 5. - WHAT INTERNAL REVENUE CODE SECTION CONTAINS THE DEFINITION OF ALIENS? A. – SECTION 162 B. – SECTION 911 C. – SECTION 7701(b) D. - SECTION 1 INTERNATIONAL TAX ADVISORY SERVICES, LLC
16. 2. SOURCE OF INCOME 2A. – RESIDENT ALIENS 2B. – NONRESIDENT ALIENS 2C. – INTEREST INCOME INTERNATIONAL TAX ADVISORY SERVICES, LLC
17. 2D. – DIVIDENDS 2E. – PERSONAL SERVICES – TIME BASIS &GEOGRAPHICAL BASIS 2F. – SCHOLARSHIPS, GRANTS, PRIZES & AWARDS 2G. – PENSIONS & ANNUITIES, RENTS & ROYALTYIES, REAL PROPERTY 2H. - PERSONAL PROPERTY INTERNATIONAL TAX ADVISORY SERVICES, LLC
18. 3. EXCLUSIONS FROM GROSS INCOME INTERNATIONAL TAX ADVISORY SERVICES, LLC
19. 4. HOW INCOME OF ALIENS IS TAXED INTERNATIONAL TAX ADVISORY SERVICES, LLC
20. 5A. FIGURING YOUR TAX 5B. SELF-EMPLOYMENT TAX INTERNATIONAL TAX ADVISORY SERVICES, LLC
21. 6. DUAL-STATUS TAX YEAR INTERNATIONAL TAX ADVISORY SERVICES, LLC
22. 7. FILING INFORMATION INTERNATIONAL TAX ADVISORY SERVICES, LLC
23. 8. PAYING TAX THROUGH WITHHOLDING OR ESTMATED TAX NOTE-NEW FOCUS ON FORM W-8BEN & FORM W-9 INTERNATIONAL TAX ADVISORY SERVICES, LLC
24. 9. TAX TREATY BENEFITS – INCLUDING FORM 8833 INTERNATIONAL TAX ADVISORY SERVICES, LLC
25. 10. EMPLOYEES OF FOREIGN GOVENMENTS & INTERNATIONAL ORGANIZATIONS INTERNATIONAL TAX ADVISORY SERVICES, LLC
26. 11. DEPARTING ALIENS & THE SAILING OR DEPARTURE PERMIT INTERNATIONAL TAX ADVISORY SERVICES, LLC
27. 12. FREQUENTLY ASKED QUESTIONS. INTERNATIONAL TAX ADVISORY SERVICES, LLC
28. 13. FOREIGN BANK ACCOUNT REPORTS – FBARS INTERNATIONAL TAX ADVISORY SERVICES, LLC
29. QUESTIONS – PART TWO TRUE OR FALSE – 6. – NONRESIDENT ALIENS CAN EXEMPT INTEREST INCOME ON A US BANK ACCOUNT INTERNATIONAL TAX ADVISORY SERVICES, LLC
30. TRUE OR FALSE – 7. ALL FOREIGN TAXES PAID DURING THE YEAR ARE CREDITABLE ON A US FEDERAL INCOME TAX RETURN INTERNATIONAL TAX ADVISORY SERVICES, LLC
31. MULTLIPLE CHOICE – 8. TAX HOME – AN ALIEN FROM GERMANY ARRIVES IN THE US FOR A THREE YEAR ASSIGNMENT. SHE OWNS A HOUSE IN GERMANY THAT SHE RENTS OUT WHILE ON ASSIGNMENT. SHE RENTS AN APARTMENT TO LIVE IN WHILEIN THE US ON ASSIGNMENT. WHERE IS THE TAXPAYER’S TAX HOME? A. – GERMANY B. - THE US C. – BOTH GERMANY & THE US D. – NONE OF THE ABOVE INTERNATIONAL TAX ADVISORY SERVICES, LLC
32. MULTIPLE CHOICE – 9. FOREIGN TAX CREDIT – SAME ASSIGNEE PAYS GERMAN INCOME TAXES IN THE YEAR OF ARRIVAL RELATING TO INCOME EARNED TWO YEARS AGO. THE INCOME WAS NOT TAXED IN THE US. WHAT AMOUNT IS CREDITABLE FOR US INCOME TAX PURPOSES? A. – NONE – YOU MUST TAKE THE FOREIGN TAXES AS AN ITEMIZED DEDUCTION B. – ALL OF IT, AS IT WAS PAID WHILE A RESIDENT OF THE US C. – 50% OF IT – ALLOCATE BASED UPON THE NUMBER OF YEARS AFTER THE TAX YEAR IT RELATES TO D. – NONE OF THE ABOVE INTERNATIONAL TAX ADVISORY SERVICES, LLC
33. MULTIPLE CHOICE – 10. – WHAT IS THE DEADLINE FOR FILING A FORM 1040NR WHEN ONE HAS NO WAGES SUBJECT TO WITHHOLDING TAX? A. – MARCH 15TH B. – APRIL 15TH C. – JUNE 30TH D. – NONE OF THE ABOVE INTERNATIONAL TAX ADVISORY SERVICES, LLC
34. 14. STATE INCOME TAX INTERNATIONAL TAX ADVISORY SERVICES, LLC
35. 14A. – DOMICILE INTERNATIONAL TAX ADVISORY SERVICES, LLC
36. 14B. – NEW YORK STATE PERMANENT PLACE OF ABODE SPECIFIC PURPOSE OF LIMITED DURATION EXCEPTION LIVING QUARTERS – QUESTION ON PAGE FOUR FORM IT-203-B – ADDRESS & DAY COUNT INTERNATIONAL TAX ADVISORY SERVICES, LLC
37. 14C – CONNECTICUT INTERNATIONAL TAX ADVISORY SERVICES, LLC
38. 14D. – NEW JERSEY INTERNATIONAL TAX ADVISORY SERVICES, LLC
39. QUESTIONS – PART THREE TRUE OR FALSE – 11. – IF YOU ARE TREATY EXEMPT FOR FEDERAL TAX PURPOSES, YOU WILL ALWAYS BE TREATY EXEMPT FOR NY, NJ & CONNECTICUT STATE INCOME TAX PURPOSES INTERNATIONAL TAX ADVISORY SERVICES, LLC
40. TRUE OR FALSE – 12. YOU SOURCE YOUR COMPENSATION FOR STATE INCOME TAX PURPOSES THE SAME AS FOR FEDERAL TAX PURPOSES INTERNATIONAL TAX ADVISORY SERVICES, LLC
41. MULTIPLE CHOICE– 13. – FOR NYS PURPOSES – IF AN ALIEN IS DOMICILED OVERSEAS FOR THE ENTIRE YEAR, UP TO HOW MANY MONTHS CAN SOMEBODY HAVE AN ABODE IN NYS AND STILL BE CONSIDERED A NYS NONRESIDENT? ONE TWO THREE ELEVEN INTERNATIONAL TAX ADVISORY SERVICES, LLC
42. MULTIPLE CHOICE – 14. FOR NEW YORK STATE PURPOSES, WHAT IS THE FIRST QUESTION YOU MUST ASK YOURSELF WHEN TRYING TO DETERMINE THE ALIEN’S NYS RESIDENCY STATUS? A. - WHAT IS YOUR COUNTRY OF BIRTH? B. - HOW MANY CHILDREN DO YOU HAVE? C. - WHERE ARE YOU DOMICILED? D. - WHAT IS YOUR MARITAL STATUS? INTERNATIONAL TAX ADVISORY SERVICES, LLC
43. MULTIPLE CHOICE – 15. NEW YORK STATE – PLEASE SELECT THE ANSWER THAT BEST ANSWERS THE QUESTION. WHAT ARE THE QUESTIONS ON THE NYSNONRESIDENT TAX RETURN THAT BEST HELPS NYS TO DETERMINE IF YOUR CLIENT IS A RESIDENT OR NONRESIDENT A. - FORM IT-203 – PAGE ONE – PERMANENT ADDRESS & PAGE FOUR LIVING QUARTERS QUESTION (LINE 74) B. - FORM IT-370 – EXTENSION FORM – TAXPAYER ABROAD ON APRIL 15 QUESTION C. - FORM IT-203 – MAILING ADDRESS (PAGE ONE) & PAGE FOUR, LINE 74 – DID YOU MAINTAIN LIVING QUARTERS IN NYS D. - FORM IT-203 PAGE FOUR, LINE 74 – DID YOU MAINTAIN LIVING QUARTERS & FORM IT-203-B– ADDRESS OF LIVING QUARTERS AND DAY COUNT INTERNATIONAL TAX ADVISORY SERVICES, LLC
44. THANK YOU FOR YOU PARTICIPATION! ANY OTHER QUESTIONS? INTERNATIONAL TAX ADVISORY SERVICES, LLC