Discussion:Foreigner's Filing Status
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Discussion Forum Index --> Tax Questions --> Foreigner's Filing Status
| 5 April 2006 | |
| I have a J1 Visa taxpayer from the Philippines. I believe that tax form 1040-NR should be used. He has W2 and 1099-MISC income. My question is, is the first $3,000 (exempted amount) be deducted from his total income? Or simply, if the income is greater and above the $3,000, the entire income is taxable without considering the exempted amount. | |
| 5 April 2006 | |
| The first $3,000 of his exempt compensation is excluded from gross income under the treaty. He should attach Form 8833 to his 1040NR to claim the treaty benefits. | |
| 5 April 2006 | |
| How do I go about it? Because the 1040-NR form I've prepared doesn't show the $3,000 exemption. Where will I put the exemption? Is this on top of the itemized deductions and personal exemptions being claimed? Please bear with me this is my first time preparing a J1 tax return. | |
| 6 April 2006 | |
| Deduct the $3000 from the wages reported on line 8, report the treaty exempt income on line 22, and make an entry in page 5 item M showing the country, the treaty article, and the amount. I've never filed an 8833 along with that, and no one has ever complained, but Riley2 may be right that you are supposed to.
I read the rules on what must and must not be reported on an 8833 a while ago and found them pretty unintelligible, but as I remember them what applied to my clients is that you don't have to file 8833 for exemptions that apply to students, teachers, researchers, trainees, etc, and that for other "personal services" income you don't have to file it for amounts under $10,000. | |
| 6 April 2006 | |
| Oh, two other things: Bank interest is generally not taxable for NRs. You list that on page 5 item L. This is exempt by IRC, not by treaty. And I think different states have different rules about whether the exempt amount or bank interest is also exempt for state purposes. If anyone knows for sure, please let us know. | |
| 6 April 2006 | |
| Reduce taxable wages on line 8 by $3,000.
Include the $3,000 on line 22 of the 1040NR (exempt income). Also, complete question M on page 5 indicating the Treaty Article and the amount claimed as exempt. Also, I believe that Question M takes the place of Form 8833. | |
| 6 April 2006 | |
| Thanks a lot Dhtax and Riley2 for the enlightenment. One last question, can I e-file this or I need to submit a paper return? | |
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