Are Inherited IRA distribtions Not Effectively Connected?

ejay · Post by **ejay** » Tue May 05, 2015 3:13 pm

Hello everyone. I was reading this thread earlier:
http://forums.serbinski.com/viewtopic.p ... 1e0abd3692

Could anyone please confirm that Inherited IRA distributions are Not Effectively Connected income? (That is, are reportable on 1040NR under schedule NEC and *not* under schedule OI or on the front page?)

Thanks.

nelsona · Post by **nelsona** » Tue May 05, 2015 4:02 pm

Inherited IRA's are NOT income connected to a US trade or business, so must be reported on NEC (if you are filing 1040NR at all).

However, If you were correctly withheld, and are not required to file 1040NR for another reason, no need to file anything.

ejay · Post by **ejay** » Wed May 06, 2015 12:32 am

Thank you.

The only other reason I have to file would be to keep my ITIN (which will expire unless used on at least one valid return in a five year period).

Is it okay to file a 1040NR with only Schedule NEC income and no tax to pay? (i.e. with proper withholding at source and $0.00 outstanding liability?)

If so, is it best to then continue to file in each subsequent year, or would just once every five years be acceptable?

nelsona · Post by **nelsona** » Wed May 06, 2015 9:56 am

There is no probkem filing a return with only NEC.

ejay · Post by **ejay** » Thu May 07, 2015 7:21 am

Thanks again. Just to be clear: if I file for this year only, the IRS will not then expect me to continue filing in subsequent years, as long as my NEC remains correctly withheld?

nelsona · Post by **nelsona** » Thu May 07, 2015 7:44 am

1040NR are for non-residents. IRS doesn't expect you to have US income.

ejay · Post by **ejay** » Tue May 12, 2015 11:12 am

Thanks so much for your help on this. If you don't mind I'd like to ask you about another thing that confused me while I was reading through the 1040NR instructions.

If there were NEC income at a 0% rate (say for copyright royalties), would that mean it also needs to be reported on Schedule OI, line L? (because the 0% rate would mean that the income is exempt?)

nelsona · Post by **nelsona** » Tue May 12, 2015 11:51 am

Let's not get into the tax exempt and non-taxable debate. That is a waste of my precious time.

You would report it, unless you have no other reason to file a 10450NR. If you did file 1040NR, you are supposed to report it.

ejay · Post by **ejay** » Tue May 12, 2015 12:10 pm

I didn't mean to waste your time. I am very grateful for your help here.
I only wanted to know if such income had to be listed on both page 4 and page 5, instead of on page 4 only. Sorry.