r2i forum

apple123;15383

My question now for filing is that with 1040NR, which all documents out of all the ones I have, do I need to send alongwith 1040NR to IRS ?(since I am doing paper based filing this time.)

1) W2
2) 1099 DIV
3) All 1099 INTs
4) 1099- B
5) Schedule D
6) Any other worksheet like "Qualified Dividend & capital gain tax worksheet" from Page 19 of 1040NR instructions
7) Schedule A from page 3 of 1040NR
8) Schedule B (Interest & ordinary dividends) . I was looking at my year old tax returns (1040) and found this schedule, but did not see it in 1040NR. Do I still need to build and attach Schedule B now ? [/quote]

1) W2 (Page 1 of Form 1040NR left of lines 1 to 7 has the answer)
2) 1099 DIV (No need to send)
3) All 1099 INTs (No need to send)
4) 1099- B (No need to send)
5) Schedule D (No need to send - attach a separate note that 1099-B was for stock sales that exempt to you as NRA from taxes and 1099-B was sent because the broker did not had W8-BEN on file. Title of the note shoudl be 1099-B explanation).

6) Any other worksheet like "Qualified Dividend & capital gain tax worksheet" from Page 19 of 1040NR instructions (No need to send)
7) Schedule A from page 3 of 1040NR (Page 3 is part of the form. When you file the form, you are required to send the complete form)

8) Schedule B (Interest & ordinary dividends) . I was looking at my year old tax returns (1040) and found this schedule, but did not see it in 1040NR. Do I still need to build and attach Schedule B now ? (Your interest if from the banks should be tax exempt and not reported - attach an explantion for 1099-INT that the interest is not effectively connected with the conduct of US trade or business)

9) Also, 1040 NR has 5 pages. I am assuming I need to send all 5 even if I have not filled anything on Page 4. Right ?

Yes, even though the immigration agent may want to see only two pages of your passport, you need to give the whole passport. You have to file form 1040NR. Form 1040NR is five pages not 4. I would not consider filing four pages as filed.

10) I have not filled anything on page 4("Tax on income not effectively connected to US trade or business"). I hope that is ok.

Your dividends are to be listed on page 4. (Attache a note explaining that 1099-DIV is being reported on page 4 as it is income not effectively connected with the conduct of US trade or business and 1099-DIV was received because the broker did not had the form W8-BEN which since then has been filed / submitted to the broker).


11) On 1040NR, Page 5, Question D, what should I enter as my current non immigrant status. If I am filing 1040NR, it iteself means I am a non resident of US, so I am confused why is this being asked and what should be entered here.

Yours is not to question why but to do or die. The instructions are very explicit as to what to enter. Line D asks "Type of entry Visa" write in your entry visa type - check the instructions for this line and see, it is very clear.

Regarding current non immigrant status on line D, enter "left USA permanently on Jan 27th 2007 - H1B ended / revoked - This is your current non immigrant status for year 2006.

12) On 1040NR, Page 5, Question E, again as per instructions, the date of entry related to current non immigrant status should be entered. I have entered and left USA 3-4 times in last 6 years. Which date, if any, should be enetered ?

The instructions say the entry date on the most recent form I-94.

13) Does 1040NR, Sch D, and other forms need to printed back to back or one- sided ?

One sided. :emsmileo:

Desi;17769Sid,

I will move these posts to one of the other threads later.

Go to pub 519 and look up for the definition of Tax home and closer connection. The tax home to be India, you should have had the tax home their for the entire 2006, else you fail the test and have to file as resident.[/quote]

Desi,
Thank you.

I found the description of tax home which said that "it should be in existence for the entire current year". as i filed my india taxes as non-resident (with minimal income) for march 31, 2006, i infer that this is not my tax home for first 3 months of 2006. this is because tax home is described as one that is the main place of business or employment, which India wasn't for whole of 2006.

Is my understanding correct?

thank you very much, desi.

chaloIndia;19778I am planning my R2I later around November this year. I am currently on H1B. I would like to transfer my 401k and mutual fund portfolio within 2 years of my return, while taking maximum possible tax advantages.

So here is what I understand so far, please correct me if I am wrong.
1) For first two years I will have RNOR status in India i.e. no tax for income in US.

- I hope you have calculated your RNOR period and not just assuming 2 years.

2) For 2007 I will be filing as resident in USA.
3) For year 2008 onwards I will file as NRA.
a. NRA implies 0% Capital Gain tax.( What about Dividend?)

- Once W8-BEN is filed with the broker, US will not tax dividends either. India begins taxing them after RNOR period.

Based on this I have planned (again let me know if it makes most sense):
4) I will cash my mutual funds in year 2008, to take advantage of NRA+RNOR status.

- Makes sense. I am planning to sell and repurchase my funds so as to adjust my cost basis for Indian taxes after RNOR.

Things I am unsure about:
5) How do I handle my 401k. What are the tax rules regarding 401 withdrawal with NRA+RNOR status.

- I have heard conflicting answers for this in the forum, although most folks believe you will be taxed at the flat treaty rate i.e. 25% + 10% penalty.

6) Some where I read it is beneficial to convert my 401k to IRA. What are the advantages ,and tax rules regarding IRA.

- I am not aware of any benefits of converting if it is being held for a short period, other than having a choice of broker and investment options.

7) If I have 50K dollars in 401k when R2I. when and what amount should I withdraw to get maximum tax advantages during RNOR, and howmuch tax ( including penalty) would I end up paying.

- Again, if it is treated as non-ECI and you are paying 25% + 10%, the amount withdrawn may not matter. Desi/Bobus, please correct me if I am wrong.

8) I am married, and my wife is on H4, and all my portfolio (401k and mutual funds) are under my name. How to take advantage to married status when filing as NRA.

- Since you do not get exemptions, deductions nor are 401(k) withdrawals treated as ECI, you are paying a flat tax rate. So, it should not matter how it is split between you and your wife.

I know that is a lot of question, but this is one area regarding R2I that I am most confused about. I would appreciate any insights, examples or personal experiences.[/quote]