International Tax

Part III: Special considerations when filing Form 1040NR

This three part series will look at who qualifies, requirements and exemptions of the form based on individual circumstances, and, finally, special considerations to note when filing a 1040NR: U.S. Nonresident Alien Income Tax Return.  Even after you have determined which form you should use for filing as an NRA as discussed in Part II, important special rules and considerations can play important roles in future tax planning when filing Form 1040NR.

The main focus of this segment will take a closer look at spouse elections under Section 6013 comparisons, filing status considerations for same-sex couples, and special rules for dual-status taxpayers.

Spouse elections considerations under Section 6013

Section 6013 (g) – Election to treat Nonresident Spouse as U.S. Resident: Only applies to married taxpayers with one spouse being a NRA and other must either be a U.S. citizen or resident at the end of the tax year.  This is a continuing election that can only be used once in a lifetime, meaning this election must be selected every future tax year after the initial tax year it is used.  Neither spouse can make another 6013 (g) election in the future even if the spouses separate, divorce, or remarry.  The death of either spouse will result in the termination of the election. Termination or suspension of the election by either spouse will result in the inability to use this election in any future tax years for either spouse as well.  Both spouses are taxed on worldwide income. Neither spouse is eligible to claim they are not U.S. residents under a tax treaty.

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Part II: What form should I file?

This three part series will look at who qualifies, requirements and exemptions based on individual circumstances, and, finally, special considerations to note when filing a 1040NR: U.S. Nonresident Alien Income Tax Return.  After establishing who is considered a U.S. nonresident alien (NRA) in Part I, the next step is understanding what conditions require an NRA to file this form.

This segment covers the qualifying conditions and exceptions for using Form 1040NR and 1040NR-EZ as well as additional form requirements based on triggering circumstances.

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Question:
We purchased personal use foreign property in July 2012 for $300,000. On 1/1/14, the property was converted to rental use. It was rented out for three months in 2014. For purposes of setting up this rental property to calculate depreciation, should I use the exchange rate as of July 2012 or 1/1/14? Also, can you confirm that foreign rental property should be using ADS depreciation method with mid-month convention.

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Question:
My entire family moved from a foreign country to US during 2014. I have two children. They each had foreign accounts exceeding $10,000 during the year. One child left funds in a foreign account. The other child brought all the money to the US, so closed the account in Belgium and opened in the US. Do they need to file the FBAR forms?

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Question:
Our US based C corporation is 100% owned by a US resident. The owner needs to transfer 100% of their shares to a foreign related corporation in another country. What would be the tax implications of transferring C corporation stock to a foreign entity?

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