Dual Status return confusion

[expatexpat]

Surrendered my US PR status early 2013. Filing dual status return for 2013.

Self employed, paid on 1099 from US based client, all work performed in Canada therefore not US sourced.

Filed and paid taxes on 100% income in Canada.

Now filing dual status for US. Filing 1040 "statement" for portion related to income prior to surrendering green card therefore considered a tax resident), taking a FTC for taxes paid in Canada related to that income. I have indicated that the difference between the 1099 amount and the 1040 entry is due to non residency for the majority of the year.

Filing 1040NR "return" for remainder of year.

I am little confused about the elections / forms related to the foreign source income while a non resident, my understanding is that I simply omit all such income and file the 1040NR as if it's an informational return along with the 1040 statement.

My question is: am I correct in assuming that my situation doesn't require nor would it qualify for such considerations as 2555, foreign income exclusions, or the page 5 OI election for tax treaty treatment? I am simply not required to report the non resident portion of the income.

Any assistance or guidance is greatly appreciated.

[nelsona]

You are not claiming any exemption based on a treaty. The income form the second half of the year (in fact, the entire year) is Cdn-sourced by IRS rules, not by treaty. You simply do not report that income.

So your 1040NR will have income on line 13, brought from your 1040 and any other income you had from the first part of the year, as indivated on your 1040. In essence, you bring all the numbers forward from your 1040 to your 1040NR, along with the schedule C, schedule SE, if applicable, scedule D, etc; form 1116 info goes on line 45.
PLUS any NEC income that yopu include on page 4 from any other US-sourced income you recieved after expatriation.

The 1040NR is your 2013 tax return. No "qoutes" about it. That is the form that determines your tax. It just gets some of its information (particularly lines 8-23, and in your case, line 45) from the 1040 "statement" that you provide.

[expatexpat]

Nelsona, appreciate the prompt reply.

I have a follow up query around self employment taxes, they are calculated and applied after the FTC. I'm not sure what relief / forms / procedure is available to receive an exemption / exclusion for them? (I paid into the Canadian plan during the year.)

Thanks again.

[nelsona]

You are exempt from self-employemnt taxes, whether citizen or not, because you live in canada, and pay into the Cdn SS system. SE tax is not considered income tax in US, which is why it is added after FTC. But, in any event you don't pay it.
CRA will issue you a compliance certificate upon request. You can file your 1040NR without it, but make sure you get one, should IRS ask later.

leaving all this a little late, eh?

[expatexpat]

yes, I guess it really is down to the wire.. unfortunately I had forwarded my file to one of clients' accountants a few weeks ago to handle completion and submission but turns out they didn't know what they were doing.. so here I am... no one to blame but myself I suppose...

A further clarification on the SE taxes if I may? Is there a required declaration or exemption request that I have to make (in a cover letter?) related to the SE taxes on the 1040 income? I have a compliance certificate pending from the Canadian SS.

[nelsona]

Look in the instructions.