Received IRS-Notice-CP11

agrisiva · Post by **agrisiva** » Sun Jun 09, 2013 1:30 pm

For 2012, I was a full-year Canadian resident and US non-resident (based on SPT). I worked full-time for a US employer remotely from Canada. As per the instructions of 1040NR, I wrote my bank interests on lines Schedule-NED-line 2c (0%), and Schedule-OI-Line-L1-TaxTreaty-(Article-XI) and on Page-1-Line-22.

Today, I got a notice-CP11 from IRS stating that I should include my bank interest to my Taxable Income because of the following. â€œWe canâ€™t allow your tax treaty exemption. Your claim is not a valid treaty claim. We changed your return accordinglyâ€

Any ideas/suggestions? I can get refund from CRA for the above taxed amount, but I want to make sure if the IRS got it right?

nelsona · Post by **nelsona** » Mon Jun 10, 2013 3:03 pm

You shouldn't have included any anbank income as a non-resident.

agrisiva · Post by **agrisiva** » Mon Jun 10, 2013 3:29 pm

thanks Nelsona. I will simply not disclose my bank interests and capital gains next year for sure. Any ideas, what made them to include my bank interest in my taxable income? I will attach my 1099-INT and I can tell them they are not effectively-connected income to my employment. But do you have any thoughts? Your reply would certainly help me in writing a letter to them.

nelsona · Post by **nelsona** » Mon Jun 10, 2013 4:17 pm

By reorting it you basically said it isn't really bank income, in=ts business income but not connected. Awkward.

What cap gains would you have reported? You are a Cdn resident. Only US real estate would ever be reported on 1040NR. This is by treaty.

From the 1040NR instructions:

Interest from a U.S. bank, savings
and loan association, credit union, or
similar institution, and from certain
deposits with U.S. insurance
companies, is tax exempt to a
nonresident alien if it is not effectively
connected with a U.S. trade or
business.

agrisiva · Post by **agrisiva** » Mon Jun 10, 2013 4:45 pm

I will send them my 1099-INT and tell them they are my bank interests. I wrote with my pen on my form that they are US bank interest, probably they ignored it. Also, I had only a small capital gain distribution last year but will have big capital gain next year that I will not report.
I will update the status once I receive any response from them. Thanks again Nelsona as always.

agrisiva · Post by **agrisiva** » Wed Jun 12, 2013 10:16 am

Thanks MKMILLER for your reply. Yes, I agree Cap Gains are not taxable for my case just like Bank Interests. I was just not comfortable not reporting these incomes at all, as I thought IRS could come back and tell me that I intentionally hid them. It will be nice if they redesign the forms to accommodate reporting these incomes and taking treaty claims so that I can be confident with my return that I have disclosed all of my incomes.

nelsona · Post by **nelsona** » Wed Jun 12, 2013 10:57 am

agrisiva, you do realize that mkmiller was merely a robo-post, in which a portion of one of my responses was cropped and then spam url's were added.

he didn't provide you with any information.

agrisiva · Post by **agrisiva** » Wed Jun 12, 2013 11:54 am

thanks Nelsona. Too bad, i was fooled by that robo-user. Now i see that it just took a line from your reply.