Article XXV 1040NR no longer allowed?

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sjantzi
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Article XXV 1040NR no longer allowed?

Post by sjantzi »

nelsona
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Re: Article XXV 1040NR no longer allowed?

Post by nelsona »

Not enough info to go by, but there seems to be a disconnect regarding which clause of XXV they were using. By submitting a "hypothetical" 1040, they are really using the THIRD paragraph of the Article, which spells out exactly what must be done.

However, it seems they were arguing using the FIRST paragraph. but not wanting to include the worldwide income, which must be done if only filing a 1040 (this would make them like a US citizen living in Canada), and then using whatever deductions available.

I don't know about education credits, but I do know that in some years the child tax credit required US citizenship for the child, in others it required a SSN, regardless of the citizenship of the parent. As such, this would not be discrimination to deny the credit if the child was Cdn or didn't have an SSN, since it would also be denied in the case where the parent was American.

Bottom line is that if you are going to file a 1040 (be it a true one, or a hypothetical one for XXV(3)), it must include world income in order to qualify for full range of allowable credits and deductions.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
goldstone
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Joined: Wed May 29, 2019 11:27 am

Re: Article XXV 1040NR no longer allowed?

Post by goldstone »

This case is indeed convoluted. I'm just learning about all this stuff but here are some thoughts. I would be happy to be corrected if any of this is incorrect.

In the 1980 tax treaty I believe it is XXV (4) which allows a married non resident to file a 1040 on a joint basis on his full year income. And this is what results in him filing a hypothetical 1040 with his 1040NRs. But this clause only appears to cover the joint aspect and not anything about child credits etc.

He is maintaining that he should get the child credits but his case didn't seem to make it clear that he felt he should get those because he is indeed declaring world wide income.

The court ignored that he was declaring world wide income when it said that this was the difference between him and a US citizen.

However, I have learned that child credits can only be claimed for children who have an ITIN. Since his children lived in Canada and were non US residents they would not have qualified for an ITIN and the credits wouldn't be allowed in any event.
goldstone
Posts: 32
Joined: Wed May 29, 2019 11:27 am

Re: Article XXV 1040NR no longer allowed?

Post by goldstone »

Sorry, just learned that XXV (4) was renumbered to XXV (3) in 2007.
nelsona
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Re: Article XXV 1040NR no longer allowed?

Post by nelsona »

To me, it appears that he did not include world income, which is a requirement for XXV(3).

But, as I said, some credits and deductions are not available to US citizens living abroad, so discrimination would not have occured. Child tax credit IN SOME YEARS was limited to SSN holders (no discrimination).

When preparing your fake 1040 for XXV(3), you prepare it with FULL income deductions and credits available (except foreign tax credit of course).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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