IRS has not processed 1040NR resulting in inability to claim foreign tax credit

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WaitingForThheIRS
Posts: 1
Joined: Sun Aug 21, 2022 2:50 pm

IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by WaitingForThheIRS »

I am in a position where the IRS has not processed my return (as others have posted) and it is leading to the CRA not allowing an over $100,000 (CAN) foreign tax credit and looking for ideas on how I can get this corrected. CRA has provided me a 2 month extension but I don't have confidence that the IRS will be able to process my return in time and I also have concern that the IRS will not issue an equivalent of the Canadian Notice of Assessment because no further tax is owing.

My Questions:

Q1) How can I get the IRS to process my return?
Q2) How can I get the IRS to send me the equivalent of "Notice of Assessment" as the agent I spoke to on the phone indicated they will not send a copy of this if no further taxes are owed.
Q3) Is there any point in me contacting the US Tax Advocacy Service? https://www.irs.gov/taxpayer-advocate
Q4) Is there a better way when calling from a Canadian or US phone to contact the IRS International tx department other than 800-829-1040 x 1 2 1 2
Q5) Is it recommend that I resubmit my documents (snail mail) or will that complicate things (I understand I should write (previously files address on Date at the top pf the form.))
Q6) Any other ideas?


My Situation:

1. I am a Canadian citizen who previously worked in the US and took a large lump sum 401K distribution , paid over $90,000 US taxes to IRS through 30% withholding at source (w8ben on file) and also estimated tax filing to the IRS near the time of distribution of an additional amount of over $20,000 to account for 10 percent early withdrawal penalty.
a. I have the 1040s that shows the 30% withheld at source ~ $90000 US
b. I called the IRS and asked for a "Account Transcript" and was told like others are posting here the IRS has not processed my 2021 taxes yet. They did note they received the additional payment noted above and sent me the "Account Transcript" showing an "estimated tax payment" for the amount listed above ($20,000)
i. I filed 1040NR and have Canada Post receipt showing package (1040-NR owing a balance of 0) was accepted by IRS at zip 73301 prior to due date of April 18, 2022.
2. CRA is not allowing my credit for the tax paid to IRS citing the following:

We changed your claim for income tax paid to a foreign country from $xx,xxx.xx to $0.00 for the
reason(s) given below.
You did not send us a copy of one or more of the following document(s):
- federal, state, and municipal tax returns and all associated schedules and forms
- your "Account Transcript" from the IRS
- your account statement or similar document from the state and municipal tax authority
- proof of payment made to or refund received from the tax authority
- all information slips (W-2, 1042-S, 1099)
- any other document that may be needed to support your claim
- a breakdown by income type (for example, interest, dividends capital gains), country, and recipient
Note: The Tax Return Transcript is not a final tax liability document and therefore it is not acceptable
on its own.
sjantzi
Posts: 64
Joined: Wed Feb 20, 2013 11:44 am

Re: IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by sjantzi »

Did you send RevCan what you we're able to before they denied your claim?
DonMurphyCanada
Posts: 73
Joined: Sat Mar 01, 2014 11:41 pm

Re: IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by DonMurphyCanada »

I go through an accountant and #2 above is answer from rev canada from another client for same issue.

Rev Canada has asked for further i formation from me and has provided a 2 month extension to get my information from the irs. According to my accountant having 1040s and "account transcript" showing estimated tax was not enough for other client and will not be enough for me to satisfy rev can. That is why I am scrambling to do whatever I can to make this work.

Do you have experiences in this area?
stewak2
Posts: 107
Joined: Mon Sep 18, 2006 2:47 pm

Re: IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by stewak2 »

I have a similar situation - I am cross border commuter.
My accountant received the review letter requesting transcripts ( this has happened before )
My 1040NR was NOT E-filed, but paper filed, which appears to be reason for delay.
My accountant has submitted my state transcripts, check images of the state and federal payments, and the IRS interim transcript saying return not yet processed and the payment credit on file, along with USPS Return Receipt for the paper copy.
So far I have not heard that they are disallowing my FTC, but I am worried.
I think the key here is to E-file to avoid this in future.
Josephvarkey
Posts: 11
Joined: Tue Nov 30, 2004 11:05 am

Re: IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by Josephvarkey »

Same issue..1040 NR and NOT yet processed. IRS agent told that due to the backlog, they can only process mine around Dec 2022.
Note: They don't have my returns yet.
Having sleepless nights..
szbjsh
Posts: 22
Joined: Fri Nov 13, 2020 12:04 pm

Re: IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by szbjsh »

Is this for 2020 1040NR or 2021 1040NR? I still have not received refund for paper filed 2020 1040 NR. IRS did receive it but paused refund. Am still waiting.
Numbersman61
Posts: 12
Joined: Wed Sep 09, 2020 1:02 pm

Re: IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by Numbersman61 »

Claimed foreign tax credit for 2020 due to tax paid to IRS and State of Arizona. CRA requested proof of foreign tax paid. My accountant filed copies of 1040 and State tax return together with copy of check cashed by Arizona. Accepted by CRA. Eventually, the 1040 was processed as filed.
Josephvarkey
Posts: 11
Joined: Tue Nov 30, 2004 11:05 am

Re: IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by Josephvarkey »

szbjsh wrote:
> Is this for 2020 1040NR or 2021 1040NR? I still have not received refund
> for paper filed 2020 1040 NR. IRS did receive it but paused refund. Am
> still waiting.
This is for 2021.
My 2020, I filed April Mid last year and it got processed around Sept End.

My 2021, I filed APril Mid this year, This is the one, I'm still waiting.(Fingers crossed - NOT received/NOt proccessed yet as of my last talk with the IRS. They told, have 8.5 million or so paper returns and the ETA is around Dec 22.(even may go to Jan).
Josephvarkey
Posts: 11
Joined: Tue Nov 30, 2004 11:05 am

Re: IRS has not processed 1040NR resulting in inability to claim foreign tax credit

Post by Josephvarkey »

Numbersman61 wrote:
> Claimed foreign tax credit for 2020 due to tax paid to IRS and State of
> Arizona. CRA requested proof of foreign tax paid. My accountant filed
> copies of 1040 and State tax return together with copy of check cashed by
> Arizona. Accepted by CRA. Eventually, the 1040 was processed as filed.

That is acceptable per the IRS agent.
In my case, there is no refund yet on my account.
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