Help with 1040NR-EZ and 8840

[dbinontario]

I was in the US for a total of 71 days under a TN-1 visa. During that time I had closer ties to Canada then the US.

I am filing 1040NR-EZ with 8840.

1. Do I pro-rate the $3500 exemption amount based on the number of days I was in the US with the TN-1 (i.e. 3500 x 71 / 365)?

2. 8840 asks for the location of investments (I had US & Canadian equities with my Canadian brokerage). If I state US & Canada on 8840, will i be required to declare dividend income received from those US companies on my return?

3. On 1040NR-EZ, item J asks about Tax Treaty information. Do I need to fill this out? My hunch is no, because of 8840, but the US source dividends confuses things.

Your advice is much appreciated.

DB

[nelsona]

You should not file 8840. 8840 is for those who meet the substantial presence test, but have a closer connection to another country.

You never met the SPT, so there is no point filing 8840, you don't have a connection to US anyways.

Form 1040NR has the required lines on which you show that you diud not meet SPT. That is sufficient.

1. No. The exemption is all there for you.

2. N/A

3. You would only list treaty provisions if you were exempting income based on that treaty. You are not. Your US dividends should have had US tax withheld by your broker. Your dividends, since they are not connected with your US business, go on the table on page 4, and you pay the flat dividend tax for Cdns, which, I believe is 15%. we are talking true dividends here, not cap gains distributions, right? They don't go on line 10. This is for dividends earned thru a US business. Then you add both the tax that was witheld form your job, and the tax withheld buy the broker to your payments (line 58)

Geneeral notes. There is a treaty provision that allows you to exempt US wages (if you were an employee) from US tax if they were less than US$10K. Were they?

IF you were a contractor, NONE of the income from that contract is taxable.

These would be case where you would apply a treaty provision to exempt the income.


Remember though that being over aggressive in reducing your US tax doesn't halp you, since it merely makes your Cdn tax higher (since you will have less credit).

[dbinontario]

So I filed my US federal and state tax returns. Assuming these are correct, I have started my Canadian and Ontario tax returns via UFILE. I would like to confirm the following:

1. For my foreign income, do I enter the amount from box 1 of form W-2?

2. For foreign taxes paid, do I enter the sum of my US and state taxes plus social security and medicare amounts?

Thank you for your help. This is a great resource!

[dbinontario]

I just found the following post which answers my questions: http://forums.serbinski.com/viewtopic.php?t=3209

[nelsona]

1. Your US wages will be the only foreign incomew you have. That number is the Cdn equivalent of Box 1 (unless you contributed to 401(K) which you would add back to box 1).

Use that amount toward your total wages for the year, and as you foreign income for the year.

2. Your eligible foreign taxes are the FEd tax you calculated on your 1040NR, your state tax you alculayted on your state return, plus the SS and medicare indicatedon your w-2.