Hello book lovers!

 
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This blog aims to work with and for readers of 1040NR? or 1040?: U.S. Income Tax Returns for Visa Holders + International Organization and Foreign Embassy Employees, by Jean Mammen, EA

Blog posts will cover new and timely topics related to the interests of readers of this book. Expect new posts when there is breaking news. And when I have new insights to share with you.

I hope you will write contributions or comment on areas where you have special experience and knowledge.

Perhaps you work often with a bilateral tax treaty, or are familiar with how pensions and retirement plans in other countries are treated by the U.S. tax code. Maybe you have written client handouts that you would share.

We would love to share in your hard-won insights!

Let me know,

Jean Mammen, EA

jean@1040nror1040.com

Click here to go to book website

Sample Returns on 2020 forms posted on website, by Jean Mammen, EA

 
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The 2020 tax forms version of the three sample returns are now posted on the Sample Returns tab of www.1040nror1040.com.
The explanations are fuller, to cover 2020 issues.
See also earlier blogposts on the 2020 forms and the Revenue Procedures that provide Covid-19 related relief on presence provisions (Substantial Presence Test and Physical Presence Test for Foreign Earned Income Exclusion), and conducting business while temporarily in a country where you do not usually do business because you were caught away from home by the Covid-19 emergency.
Also see the form instructions for Form 8843, Form 2555, etc

Form 1040-NR to be Modelled on Form 1040 for 2020 Taxes, by Jean Mammen, EA

 
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DraftForms of 2020 1040-NR and Form 1040 were released August 19, 2020, by the IRS.

Each is a two-page form, to which a variety of Schedules and Forms may be attached.

Neither has an EZ form.

Both Form 1040-NR and Form 1040 will have almost all the same line numbers, according to an IRS Tax Forum presentation August 20, 2020.

On the DraftForms,

Form 1040 Line 1 reads:

  • Wages, salaries, tips, etc. Attach Form(s) W-2.

    • Form 1040-NR Lines 1a, b, and c read:

    1a Wages, salaries, tips, etc . Attach Form(s) W-2

    b Scholarship and fellowship grants. Attach Form(s) 1042-S or required statement. See instructions.

    c Total income exempt by a treaty from Schedule OI Form 1040-NR, Item L, line 1(e).

    Amending a return filed on the incorrect form to one using the correct form will be relatively easy when … Continue reading →

    Foreign Earned Income Exclusion and Covid-19

     
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    Covid-19 has caused a global health emergency and is an ‘adverse condition’  meriting relief for individuals that reasonably expected to become a “qualified individual” for purposes of claiming the foreign earned income exclusion, FEIE, under IRC section 911, but left the foreign jurisdiction during the period described in Revenue Procedure 2020-27.

    Do read the revenue procedure carefully if you think this may apply to you!

    There may be things you need to do later in 2020 for this to be available to you.

    Rev. Proc, 2020-27 will be published in Internal Revenue Bulletin 2020-20 to be issued on May 11, 2020

    Substantial Presence Test, Treaty Income Exclusion and Covid-19

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    IRS has issued a revenue procedure that allows the use of the medical condition exception on Form 8843 to except 60 consecutive days spent in the U.S.  from counting towards presence in the U.S.  during the “COVID-19 Emergency Period”. The sixty-day time period that may be excepted may start on a date of the individual’s choice during a time period between February 1, 2020, and on or before April 1, 2020.

    The same procedure provides for an individual to exclude those days of presence in order to claim benefits under an income tax treaty with respect to services income.

    This revenue procedure, Rev. Proc. 2020-20 will be published in Internal Revenue Bulletin to be issued on May 11, 2020.

    This might affect withholding for 2020, the income tax form to be filed for 2020 (1040NR or 1040).  As appropriate, individuals may want to adjust their tax planning and notify employers. … Continue reading →

    2019 Versions of Case Studies (Sample Returns) by Jean Mammen, EA

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    Now available on website http://www.1040nror1040.com are the three case studies, on the 2019 forms.

    On the website, click on the tab labelled Sample Returns.

    2017 forms: The upper entries bring up the 2017 versions of the case studies.

    2019 forms: The lower entry brings up the 2019 versions of the case studies.

    For 2019, Schedule 1 of Form 1040, used in the tax return of Josef Masaryk, is new and changed from 2018 (not illustrated).  The 2018 form introduced Schedule 1, but the treaty tax exclusion was still subtracted on Line 21. In 2019, Schedule 1, Line 8 is where “Other Income”, or income changes, are entered. They carry to Form 1040, Line 7a.

    Beginning with 2018 tax returns, generally TCJA and other tax law changes affected both Form 1040 and Form 1040NR in the same way. These included restrictions on deducting state and local income tax payments, … Continue reading →

    IRS Webinars for Tax Practitioners – 2020, by Jean Mammen, EA

     
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    Paid Preparer Due Diligence, January 16, 2020.

    Foreign Tax Credit, January 30, 2020 (rescheduled from late 2019)

    The IRS stakeholders liaison office has announced its first two free webinars for CE credit for 2020.

    They  generally are Thursdays, at 2 pm U.S. Eastern time. or 9 am GMT/UTC.

    https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-tax-practitioners

    Use the link to go to the web site and register, if not already registered.

     

    International Topics in IRS Webinars, by Jean Mammen, EA

     
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    A wide variety of free, 2 CE live webinars are offered by the IRS stakeholder liaison service – usually on Thursdays, often at 2 PM ET. On busy days, there may also be one offered at another time.

    These seminars give the IRS view on topics where tax professionals seem to need more help, based on tax return issues and cases that go before Tax Court.

    Upcoming International Topics:

    October 17, 2019, two webinars on international topics are scheduled:

    “Tax Obligations of U.S. Individuals Living and Working Abroad“, at 11 am ET

    This is a follow-up to the live 2 CE international presentations in June. One of the presenters told me during the National Harbor IRS Tax Forum that this additional presentation was scheduled because over 3,000 questions had been submitted during the June presentations.

    The presentation portion of this webinar will be relatively short. Most … Continue reading →

    Diversity Immigrant Visa (Green Card) Holders and U.S. Taxes, by Jean Mammen, EA

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    Winners of the U.S. diversity immigrant visa lottery may welcome more information about the U.S. tax system. They may not have considered tax implications when deciding if or when to accept the visa and enter the U.S. Usually they have not previously spent long periods in the U.S. on a visa, and they may not have family or friends familiar with the U.S. tax system.

    Taxable Income

    A green card holder becomes responsible for reporting and paying U.S. taxes on total worldwide income, by U.S. tax rules, from the date they enter the U.S. on the immigrant visa and become a ‘Lawful Permanent Resident’ (LPR) (green card holder). This continues until the LPR (later perhaps citizen) formally ends that status as well as all tax responsibilities through  ‘expatriation’ procedures.

    Resident vs non-resident

    Let’s compare:

    Taxpayer DIV was just issued an immigrant visa (IV) through the Diversity lottery program. Once admitted … Continue reading →

    How to Prepare 2018 Form 1040NR and Treaty Income Exclusion on Form 1040, by Jean Mammen, EA

     
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    Filing readiness for 2018 returns: the resources available to you are the form instructions (in draft form as of today), the 7th Classic edition of “1040NR? or 1040? U.S. Income Tax Returns for Visa Holders   + International Organization and Foreign Embassy Employees”, recent  blogposts on the website, www.1040nror1040.com., and articles on the IRS website.  Not yet available: the 2018 edition of Publication 519, U.S. Tax Guide for Aliens.

    2018 Form 1040NR is relatively unchanged from 2017, compared to the changes in Form 1040. TCJA did not provoke a reorganization of Form 1040NR. Some lines were dropped. A few lines were marked “reserved” or were renumbered. Item M on use of the IRC 871(d) election was added to Schedule OI.  That’s it.

    Thus, the TCJA notes in the 7th Classic edition of “1040NR? or 1040: U.S. Income Tax Returns for Visa Holders   +   International Organization Employees”, which uses … Continue reading →

    2018 TCJA vs. 2017 Tax Code: Case Study Comparisons, by Jean Mammen, EA

     
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    How do Maria De Lima (Case Study I) and Carlos W. Masaryk (Case Study II) Fare?

    The case studies are found both on my website http://www.1040nror1040.com  and in my book, “1040NR? or 1040?   U.S. Income Tax Returns for Visa Holders   +   International Organization and Foreign Embassy Employees”  https://www.amazon.com/1040NR-1040-Income-Returns-Holders/dp/1986498603/ref=sr_1_1?s=books&ie=UTF8&qid=1535673889&sr=1-1&keywords=Jean+Mammen

    The bottom line of each case study has Maria and Carlos coming out slightly better in 2018 than in 2017. The loss of the personal exemption and the small amount of itemized deductions that Carlos could no longer take were slightly outweighed by the lowering of the applicable tax bracket from 15% to 12%.

    Case Study I – Maria De Lima

    2017                           2018

    Wages on W-2                                                                      $ 39,560                     $ 39,560

    AGI                                                                                         $ 39,560                     $ 39,560

    Itemized Deductions                                                           $  1,400                      $  1,400

    Exemptions                                                                           $  4,050                      0

    Taxable Income                                                                    $ 34,110                     $ 38,160

    Tax                                                                                          $  4,653                      $  4,389

    … Continue reading →