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Posted by Mark Bole on April 11, 2008, 12:42 pm
Please log in for more thread options removeps-groups@yahoo.com wrote:
>
>> Suppose foreign citizen, single with no dependents, makes clean break:
>> first 2/3rds of tax year, reside in and income in foreign country only;
>> last 1/3rd of year, live and work in U.S. on H-type visa with no foreign
>> income. No special treaty provisions apply. No application for
>> residency during the tax year, everything simple as can be. W-2 is very
>> straight-forward, wouldn't even know it was for a nonresident by looking
>> at it.
>
> Note that the 183 day rule is not met. Is the person married to a US
> citizen or resident?
Thanx for the reply. No, as stated in first sentence, status is single.
[...]
>> 2) Is the tax result all the same either way under (1), or is it correct
>> that a nonresident alien can only itemize deductions, no standard
>> deduction available? IOW, by filing as a resident, a full standard
>> deduction would apply, whereas otherwise it would not?
>
> Right. There's an exception for Indian apprentices, who get the
> standard deduction all the same.
>
Where would that go on the 1040NR?
>
>> 3) While it is clear that only U.S. source income is taxable in this
>> case, is the tax rate determined solely by such income, or does the
>> method apply where you combine all income, even if not locally taxed, to
>> determine the tax rate? The calculations on the form indicate the former.
>
> On the 1040-NR, US income connected with trade or business in the US
> (let's call it U1) is taxed at the normal rates. The calculations
> suggest that you do not include US source income subject to the 30%
> rule (let's call it U2) in determing the tax rate of U1, nor do you
> include the worldwide income (let's call it W1) in determing the tax
> rate of U1. Do you agree?
Yes, but that is what I was asking.
>
> What if the person's income puts them in the 35% tax bracket, but
> because they are a non-resident they file 1040-NR and pay only 30%?
> Is this possible, or does the law modify the flat 30% to 35%?
>
-Mark Bole
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