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U.S. 1040NR – Nonresident Alien Individual U.S. Tax Returns
Are you a foreign national living and working in the U.S.? Are you uncertain as to which U.S. tax return you are required to file and when it’s due? If so the international tax professionals at CanadAmerican Tax Services can help.
The importance of distinguishing between resident aliens and nonresident aliens is essential as resident aliens, like U.S. citizens, are taxed on a worldwide income basis, whereas nonresident aliens are taxed only on U.S. source income. Therefore, prior to preparing any returns, we must analyze and confirm your status, albeit as a nonresident alien, as the initial analysis must be completed first and involves a comprehensive review of all relevant facts and circumstances.
If you are a non-resident alien working or otherwise doing business in the United States, you are required to file a tax return if your U.S. source income is greater than your personal exemption ($3,900 in 2013). To "file a return" means to prepare a Form 1040NR and to send it to the IRS, either by mail or by electronic means, if available. For U.S. tax purposes, you are considered to be engaged in a business even if you are an employee working for wages. For example, a foreign high-tech software engineer living and working for a company in the U.S. on an H1B or TN NAFTA visa.
U.S. Rental Income
All rental U.S. property owners who receive rent for their property for 14 days or more will benefit from filing annual US Federal Tax Returns, (Form 1040NR) whether profitable or not. Why? Because U.S. rental income is subject to a mandatory 30% withhold on the gross rents received.
The 1040NR Return is due the 15th day of the sixth month. For a December year end the filing deadline is June 15th of the following year.
Expenses are offset against rental income and the list of allowable expenses include operating costs, utilities, Mortgage Interest, Real Estate Tax, Insurance, Management fees and travel costs for each owner listed on the Title deeds. Furthermore, the structure, not the land, is depreciated over a 27.5 year and the furniture and appliances between 5-15 years resulting, in most cases, in minimal net taxable income.
If you are a foreign national and need professional and affordable assistance with meeting your U.S. tax filing obligations, we can help. We will competently apply all applicable tax treaty benefits thereby keeping you compliant with U.S. tax laws while maximizing your tax refund to the fullest extent possible.