Hopefully this is a quick question.
After calculating the effective tax rate (proforma 1040), I read that you apply it to your taxable income on line 58 on 1040NR.
I need some clarification to this. This year I will be required to pay some AMT. So do I multiply the effective tax rate by line 40 and change line 41 and then add 41(Tax) and 42(AMT) to get a total tax for line 58?
Thank you for your help.
effective tax rate on 1040NR
Moderator: Mark T Serbinski CA CPA
The traety clause di not envision AMT, so there is a little wiggle room here.
Wgat I would do is, calculate exactly what my tax liability on the pro forma was INCLUDING taking into acount AMT.
Then, you apply the rate you got out of this, and apply it on the US wages you report on 1040NR. Period. You ahve already taken AMT into account.
If your AMT was different using 1040 vs 1040NR, this merely proves why the treaty provision was put there, to prevent being unfairly taxed.
Wgat I would do is, calculate exactly what my tax liability on the pro forma was INCLUDING taking into acount AMT.
Then, you apply the rate you got out of this, and apply it on the US wages you report on 1040NR. Period. You ahve already taken AMT into account.
If your AMT was different using 1040 vs 1040NR, this merely proves why the treaty provision was put there, to prevent being unfairly taxed.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
I guess there is no such thing as a simple answer when it comes to taxes is there?
When I went through the Proforma 1040 MFJ, I was not subjected to the AMT. Going through the 1040 NR, the AMT now wants a piece of the pie.
Here is what I'm thinking: Using the tax determined by the tables for the NR I determine the AMT due. On line 58 I add the AMT determined to the revised tax amount (effective tax rate from proforma x taxable income), or are you saying because I'm filing under treaty XXV (4) and based on that skip the AMT on the NR completely....does that question make sense?
When I went through the Proforma 1040 MFJ, I was not subjected to the AMT. Going through the 1040 NR, the AMT now wants a piece of the pie.
Here is what I'm thinking: Using the tax determined by the tables for the NR I determine the AMT due. On line 58 I add the AMT determined to the revised tax amount (effective tax rate from proforma x taxable income), or are you saying because I'm filing under treaty XXV (4) and based on that skip the AMT on the NR completely....does that question make sense?
Let me make it simpler:
The purpose of the treaty clause is to tax your US wages at the same RATE as if your were a married US citizen, filing a joint return.
As such, the calculations of tax (be they regular or AMT) on the 1040NR are immaterial. They mean nothing.
You have US wages, and you have a taxrate determined by the 1040.
As I said, since it is only the fact that you are using 1040NR that triggers AMT, then you should not be subject to AMT, thus the treaty provision.
Mechanically, this is done at line 58, where you strike out the value obtained there, with the value you obtain applying the treaty.
The purpose of the treaty clause is to tax your US wages at the same RATE as if your were a married US citizen, filing a joint return.
As such, the calculations of tax (be they regular or AMT) on the 1040NR are immaterial. They mean nothing.
You have US wages, and you have a taxrate determined by the 1040.
As I said, since it is only the fact that you are using 1040NR that triggers AMT, then you should not be subject to AMT, thus the treaty provision.
Mechanically, this is done at line 58, where you strike out the value obtained there, with the value you obtain applying the treaty.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best