Need help with filling 1040NR

Canada06 · Post by **Canada06** » Thu Mar 10, 2016 11:16 pm

HI,
Is there any online software for non resident aliens? (for 1040NR?) or is there any instructions for filling this form?

I really appreciate your help. I didn't get any response for my two previous questions. Hopefully I will get answers for this one.

I counted the days in US, it came to 158 days so I think I have to file as non resident.

Thanks

nelsona · Post by **nelsona** » Fri Mar 11, 2016 6:22 am

You CAN file 1040NR, but it is often better to file normal 1040 reporting world income. You are allowed to do this in any year.

In any event, IRS has 1040NR instructions, as does IRS publication 519.

Canada06 · Post by **Canada06** » Fri Mar 11, 2016 11:10 am

[quote="nelsona"]You CAN file 1040NR, but it is often better to file normal 1040 reporting world income. You are allowed to do this in any year.

In any event, IRS has 1040NR instructions, as does IRS publication 519.[/quote]

Thank you. You said that i can file 1040 at any time. Can i file this even if i fail the substantial presence test? I used turbo tax and it kicked me out saying that i need to file 1040NR

Your feedback is greatly appreciated

nelsona · Post by **nelsona** » Fri Mar 11, 2016 11:24 am

Yes. Of couese you must report world in come for the entire year, but you then can use all the deductions credit etc, including for 2555 and Form 1116 to reduce your US tax.

Do that, and also 1040NR, and see which is less.

Canada06 · Post by **Canada06** » Fri Mar 11, 2016 2:24 pm

[quote="nelsona"]Yes. Of couese you must report world in come for the entire year, but you then can use all the deductions credit etc, including for 2555 and Form 1116 to reduce your US tax.

Do that, and also 1040NR, and see which is less.[/quote]

Thank you. Then i also need to complete FBAR right?
I have Canadian checkin account TFSA, RRSP and RESP in canada...

nelsona · Post by **nelsona** » Fri Mar 11, 2016 2:35 pm

In your complicated situation, you migt be better off filing 1040NR, since the reporting and tax associated with FBAR, FATCA, PFIC and 3520 may outstrip any tax savings from using 1040 vs 1040NR.

You can file 1040NR based on you Cdn residential ties even in 2016, I would suggest you do this perhaps using a XXV(2) treaty filing.

It is essentially a 1040NR with the taxrate determined on a 1040 MFJ. designed EXACTLY for your case, and thus no extra reporting would be needed. You would simply need to prove (in 2016) that although you met SPT, you are still Cdn resident by treaty.

Canada06 · Post by **Canada06** » Fri Mar 11, 2016 3:12 pm

[quote="nelsona"]In your complicated situation, you migt be better off filing 1040NR, since the reporting and tax associated with FBAR, FATCA, PFIC and 3520 may outstrip any tax savings from using 1040 vs 1040NR.

You can file 1040NR based on you Cdn residential ties even in 2016, I would suggest you do this perhaps using a XXV(2) treaty filing.

It is essentially a 1040NR with the taxrate determined on a 1040 MFJ. designed EXACTLY for your case, and thus no extra reporting would be needed. You would simply need to prove (in 2016) that although you met SPT, you are still Cdn resident by treaty.[/quote]

Thanks Nelsona. Sorry i should have given more information

If i file as a non resident, then i have to file as resident of canada which when i tried with turbotaxcanada , it is telling me that i need to give almost 4000$ as tax to canada

So i think that I get more refund if i file as resident. And i read in IRS that if the bank account that if the value of the foreign account is more than $50000 then only i ned to file8939 for that account right? None of my accounts have more than $50000 USD except my RRSP mutual fund account. Also i worked only for two weeks in canada for 2015.

Do you still think it is better for me to file as non resident?

nelsona · Post by **nelsona** » Fri Mar 11, 2016 4:44 pm

Please don't use quotes. they don't work and I know what I wrote.

You will need to go thru all the evaluations for all of the above: FBAR, FATCA, PFIC, and 3520. if you can do this without a pro (which will cost you $1500) then obviously filing as non-resident willsave you tax dollars.

Canada06 · Post by **Canada06** » Fri Mar 11, 2016 9:33 pm

Thanks Nelsona. Sorry for putting quotes. didn't think of removing them earlier..

Thank you Nelsona.
I called CRA and they told me that I am a non resident of Canada. So I have to file as a resident of US. So
1. I will file 1040
2. Report foreign income in FBAR
3. Donâ€™t have to file 8938 for any of the account (TFSA mutual fund, RRSP mutual fund, RESP mutual fund (where the dividends are reinvested )and checking account as none of them have more than 50000 (the threshold)

Am I missing any other forms?

nelsona · Post by **nelsona** » Sat Mar 12, 2016 9:55 am

Yes, PFIC form 8621 for all your non-RRSP mutuals and 3520 for TFSA and RESP.

THOSE are the big headaches (and are taxable).

And I'd review the thresholds for 8938. They are not just for accounts. There re threads on that.

Canada06 · Post by **Canada06** » Sat Mar 12, 2016 7:02 pm

Thanks Nelsona.

All my mutual funds are either RRSP, TFSA or RESP.
Since you said, 8621 for non RRSP, since I don't have non RRSP mutual funds I don't have to file it right?

Regarding 3520,
I only have to file part 2. As I havnt transferred any money to any of the accounts after coming here.
But how to fill line 22?
Should I file 3520A as well?
How much and when will I be taxed for this?

Thanks

nelsona · Post by **nelsona** » Mon Mar 14, 2016 10:40 am

so your mutual in TFSA and RESP are subject to PFIC, which means paying US gains tax even if you do not sell, year by year.

I don't do form mechanics. Look at the PFIC forms.

Canada06 · Post by **Canada06** » Tue Mar 15, 2016 10:56 am

Nelsona, I am sorry to go back and forth between resident and non resident filing. But please advise on my understanding below. In a summary,
1. if I file as resident of US,
a. US:
i. Need to report US income, no need to report world income right?
ii. Fill FBAR
iii. Fill 8938 for the accounts which exceeds threshold for the accounts mentioned in FBAR
iv. Fill 3520 for TFSA and RESP accounts â€“ is there a threshold for this?
b. Canada :
i. Will file as regular but with a departure date, reporting only Canadian income

2. If I file as non resident of US
a. US:
i. Complete 1040 NR
ii. No need to fill any additional forms- is this right?

b. Canada:
i. File as resident
ii. Report world income
iii. Get tax credit for US taxes paid: TurboTax Canada takes care of this I heard

nelsona · Post by **nelsona** » Tue Mar 15, 2016 11:05 am

Really?

6(a) IXX subset 4)1040 means WORLD income.
10e-6: 8938 is not a per account threshold.

piR^2: Your departure return has WORLD income up to departure date.
log 2.346: You have no choice but to file a departure return for Canada, you no longer live there.

Enough.

Canada06 · Post by **Canada06** » Mon Apr 04, 2016 3:57 pm

Hi Nelsona, quick question.
Finally filed US tax as non resident. So will be filing canadian tax as canadian resident.

Should i report US tax refund in canadian tax filing?
If so, should i add it to my world income or should i deduct it from the foreign tax paid?

If i add it to the income i am owing more tax to canada than if i deduct it from the foreign tax paid.

Thanks
Shwetha