Hi,
I moved to the US in the middle of 2012 and will be filing dual status for the year. I have a 1099-Div from my Cdn brokerage that has total income from both before and after I became a resident. Furthermore, some of it is canadian sourced and some is us sourced. I am trying to figure out how to break it correctly, at least in the eyes of the IRS. Let's say the total is $400 on the 1099-Div and:
$100 is cdn divs while non-resident
$100 is us divs while non-resident
$100 is cdn divs while resident
$100 is us divs while non-resident
Should I:
a) not report the non-taxable $100 cdn NR divs, put $100 us NR divs on my Schedule NEC/1040nr statement for nr period, and put the remaining $200 on my 1040 for resident period?
b) report $300 on my 1040, and ignore the non-taxable cdn divs?
c) report all $400 on my 1040, and get an ftc for the $200 cdn?
option a seems like the correct method but my concern is that my 1040 line item will not match the 1099-Div that is submitted to the IRS.
Thanks!
1099-Div income when dual status filing
Moderator: Mark T Serbinski CA CPA
The answer is (a). It doesn't matter that the 1099 will be different.
IRS Pub 519 has removed the filing examples that they used to hav, so go find an older IRS Pub 519 (like 2003) for example.
You will see that you report the $100 of US dividends you got while non-resident on NEC form, and claculate the tax you owed (flat tax), which was probably correctly withheld by your broker. Since you correctly told your broker that you moved when you did (and submitted a W-9 to that effect) they stopped withholding on US dividends (RIGHT? I didn't think so). That should be your only US-source income fom before your move.
On your 1040, you only include the $200 from your period of residency.
Finally you report the tax and tax withheld on your US NR dividends manually on your 1040 in addition to what will be calculated., and put a notation.
IRS Pub 519 has removed the filing examples that they used to hav, so go find an older IRS Pub 519 (like 2003) for example.
You will see that you report the $100 of US dividends you got while non-resident on NEC form, and claculate the tax you owed (flat tax), which was probably correctly withheld by your broker. Since you correctly told your broker that you moved when you did (and submitted a W-9 to that effect) they stopped withholding on US dividends (RIGHT? I didn't think so). That should be your only US-source income fom before your move.
On your 1040, you only include the $200 from your period of residency.
Finally you report the tax and tax withheld on your US NR dividends manually on your 1040 in addition to what will be calculated., and put a notation.
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
Thanks. Ok so I don't worry about the inconsistencies with forms and 1040.
I also noticed that they removed the dual-status filing example from 519 this year - wonder why they would do that. but yes I was using their prior example.
Unfortunately, the nr dividends did initially have withholding tax but after I told my broker I was a us resident (and w-9 etc), it looks like their computer systems reversed all of the withholding! I guess their computers don't account for dual-status filing scenarios ;) But I don't think that will matter as I will transfer the flat-tax owed from the 1040NR NEC form, and transfer $0 withheld, so the net tax required will be added into my 1040.
I have the same problem on the canadian side. While my broker got it right, I was issued T5 and T3's from mutual funds that includes non-taxable income from after I emigrated. Do I do the same thing and simply not report the portions allocatable to after my date of departure? (and i am unfortunately aware that I have to file 8621 PFIC's for these funds as I mistakenly still held them after I became a us resident)
I also noticed that they removed the dual-status filing example from 519 this year - wonder why they would do that. but yes I was using their prior example.
Unfortunately, the nr dividends did initially have withholding tax but after I told my broker I was a us resident (and w-9 etc), it looks like their computer systems reversed all of the withholding! I guess their computers don't account for dual-status filing scenarios ;) But I don't think that will matter as I will transfer the flat-tax owed from the 1040NR NEC form, and transfer $0 withheld, so the net tax required will be added into my 1040.
I have the same problem on the canadian side. While my broker got it right, I was issued T5 and T3's from mutual funds that includes non-taxable income from after I emigrated. Do I do the same thing and simply not report the portions allocatable to after my date of departure? (and i am unfortunately aware that I have to file 8621 PFIC's for these funds as I mistakenly still held them after I became a us resident)
Report all income before departure and only Cdn-source income after departure, regardless of what it states on your T or NR forms. The Cdn tax withheld would be included with any other tax payments you made during 20102.
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
Cdn interest is no longer taxable for non-residents in genaral, and definitely not for US residents. If it were, there would have had to be aflat NR tax withheld, and would NOT appear on your CDn departure return. It would have to be paid separately.
This will be how you will need to treat your Cdn dividends. I guess my stsement above was not quite correct, so to amend:
Report all income before departure and only Cdn-source income THAT IS NOT SUBJECT TO FLAT NR TAX after departure, regardless of what it states on your T or NR forms. The Cdn tax withheld OTHER THAN THAT COVERING FLAT-TAXED ITEMS would be included with any other tax payments you made during 2012.
Most common Flat-taxed items are dividends, interest, pensions, and rents.
The emigrant guide expalins this.
This will be how you will need to treat your Cdn dividends. I guess my stsement above was not quite correct, so to amend:
Report all income before departure and only Cdn-source income THAT IS NOT SUBJECT TO FLAT NR TAX after departure, regardless of what it states on your T or NR forms. The Cdn tax withheld OTHER THAN THAT COVERING FLAT-TAXED ITEMS would be included with any other tax payments you made during 2012.
Most common Flat-taxed items are dividends, interest, pensions, and rents.
The emigrant guide expalins this.
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