Capital loss under XXV

aamir50 · Post by **aamir50** » Wed Mar 19, 2014 4:14 pm

Hi,
I am Canadian living in Canada and working in US. I commute to US everyday for work.

I got my w-2. I also have stocks losses of 10K in 2013. All stocks are Canadian and through Canadian broker.

For past I was filing mfj return utilizing XXV. Now I am not sure how to report this Capital Loss (Schedule D) to reduce AGI from my US tax?

10K loss gives US taxpayer -3000 on line 13 of 1040. I should be able to get same -3000 on line 14 of 1040NR with XXV, right?

Thanks for your advise

nelsona · Post by **nelsona** » Wed Mar 19, 2014 5:53 pm

Not correct.

You can use the $3000 loss on your 1040 to come up with the adjusted tax rate. But the 1040NR income cannot be reduced by this loss, since it is not US connected income.

The benefit comes form the lower rate, not lower US income.

nelsona · Post by **nelsona** » Wed Mar 19, 2014 5:56 pm

Note that if the losses had been incurred by your spouse, you would not be able to claim then at all on the XXV mfj 1040 .

aamir50 · Post by **aamir50** » Thu Mar 20, 2014 8:30 am

So I should not take -3000 losses in 1040NR, instead I should use calculated tax from 1040 in which I already subtract -3000 losses.

Thanks

nelsona · Post by **nelsona** » Thu Mar 20, 2014 9:19 am

You should not take the -3000 on 1040NR, correct. You should use it on 1040 to determine your tax RATE, and then use the tax RATE on the 1040NR income, in the manner I have described elsewhere.

aamir50 · Post by **aamir50** » Thu Mar 20, 2014 2:14 pm

Fully understood.

Thanks.

Am I eligible to report this 10K loss in Michigan state return?

nelsona · Post by **nelsona** » Thu Mar 20, 2014 2:38 pm

I don't address specific state tax issues, but, generally, only what appears on your actual federal tax return is eligible for use on stse tax returns.

But I'll let you figure that out.

Be careful of unneccesarily reducing US tax, since it merly makes you owe more in Canada.