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Shafted by the IRS
Finally did my taxes today (filed for an extension in April while trying to figure out the SS number / ITIN number thing) and I ended up calling the IRS to confirm my worst fears. Conversation went something like this:
Me So, being as I was only present in the US for 4 months of 2003 that means I have to file as a Non Resident Alien, correct? Man from the IRS Correct Me Well it looks to me that Non Resident Aliens pay a higher rate of income tax, is that correct? Man from the IRS Yes that is correct Me It also looks like people filing as Non Resident Aliens cannot claim as many exemptions as Resident Aliens, is this also correct? Man from the IRS Yes, that is also correct The guy was about as dry as a bone and as much use a a pork chop at a Jewish wedding. |
Re: Shafted by the IRS
Forgot the form number but did you do the physical presence test? My husband migrated from Canada in Mid-August and was still able to file as resident. Also you have to include a letter stating you wished to be considered a resident for filing purposes. Of course, you have to have an AOS petition pending in order to do this. At least that is how it worked for us.
Rete Originally posted by indybrit Finally did my taxes today (filed for an extension in April while trying to figure out the SS number / ITIN number thing) and I ended up calling the IRS to confirm my worst fears. Conversation went something like this: Me So, being as I was only present in the US for 4 months of 2003 that means I have to file as a Non Resident Alien, correct? Man from the IRS Correct Me Well it looks to me that Non Resident Aliens pay a higher rate of income tax, is that correct? Man from the IRS Yes that is correct Me It also looks like people filing as Non Resident Aliens cannot claim as many exemptions as Resident Aliens, is this also correct? Man from the IRS Yes, that is also correct The guy was about as dry as a bone and as much use a a pork chop at a Jewish wedding. |
Welcome to the wonderful world of the USA. I heard of a case where the IRS wanted to claim tax on someones UK disability benefit they receive whilst over here.
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Hi there - it may not be as bad as it seems:
try this weblink: www.irs.gov/publications/p519/ch01.html#d0e492 and look up the "First year Choice" section. For first year choice: i) You need to have been present in the US for at least 31 consecutive days in 2003. ii) You need to be present for at least 75% of the time from the first day of your 31-day period and the last day of 2003. If you make the first-year choice, your residency starting date for 2003 is the first day of the earliest 31-day period that you use to qualify for the choice. You are treated as a U.S. resident for the rest of the year. I would assume that you don't then have to pay the higher rate tax of a non-resident alien. Can you let me know if this is right, we're going to be moving for good in July and will also fall foul of the substansive presence test for 2004 otherwise. Thanks Lottie |
Originally posted by doctor scrumpy Welcome to the wonderful world of the USA. I heard of a case where the IRS wanted to claim tax on someones UK disability benefit they receive whilst over here. I heard that if you are fired/laid off and receive unemployment benefit, you have to pay tax on it when you file. I don't know how true that is. |
Originally posted by Lottie Hi there - it may not be as bad as it seems: try this weblink: www.irs.gov/publications/p519/ch01.html#d0e492 and look up the "First year Choice" section. For first year choice: i) You need to have been present in the US for at least 31 consecutive days in 2003. ii) You need to be present for at least 75% of the time from the first day of your 31-day period and the last day of 2003. If you make the first-year choice, your residency starting date for 2003 is the first day of the earliest 31-day period that you use to qualify for the choice. You are treated as a U.S. resident for the rest of the year. I would assume that you don't then have to pay the higher rate tax of a non-resident alien. Can you let me know if this is right, we're going to be moving for good in July and will also fall foul of the substansive presence test for 2004 otherwise. Thanks Lottie You're right about the 31 consecutive days but in addition to that it says that you must have been present in the U.S. for 183 days (6 months) whereas I was only present for 122 days (4 months) so I don't qualify as a resident alien. It takes a while for the info to sink in but basically it works out like this:- 6 months or more in the U.S. = Resident Alien Less that 6 months in the U.S. = Non Resient Alien Unless of course anyone disagess with that........... |
Did you scroll down as far as the first year choice option?
This section seems to contradict the premise of <6 month =non-resident alien >6 month =resident alien However, having never even spoken to the IRS I am probably completely wrong and just being too optimistic! Taking the worst option of being a non-resident alien for 2004 (2003 in your case), would you mind telling me what % tax the IRS want to take from you... Thanks Lottie |
Originally posted by Taffyles I heard that if you are fired/laid off and receive unemployment benefit, you have to pay tax on it when you file. I don't know how true that is. |
Originally posted by Lottie Taking the worst option of being a non-resident alien for 2004 (2003 in your case), would you mind telling me what % tax the IRS want to take from you... |
Originally posted by James Box And the fact you only earned a US salary for at most 4 months, the tax amount can't be that great unless you have a really well paid job. |
Originally posted by indybrit What would you class as "really well paid"??? |
Originally posted by James Box Something like $90,000 which makes 4 months = $30,000. I make more than the average family income but not quite hit the 90K mark yet |
Originally posted by Lottie Did you scroll down as far as the first year choice option? This section seems to contradict the premise of <6 month =non-resident alien >6 month =resident alien However, having never even spoken to the IRS I am probably completely wrong and just being too optimistic! Taking the worst option of being a non-resident alien for 2004 (2003 in your case), would you mind telling me what % tax the IRS want to take from you... Thanks Lottie I just called the IRS and the guy there confirmed what you said. Need to be present in 2003 for at least 31 consecutive days. Then one has to file an extension in 2004. Then you wait until you've been present in the US in 2004 for 183 days. The 31 days in 2003 plus the 183 days in 2004 does mean that you can file your 2003 return as a resident meaning you file a regular 1040 and get a much bigger refund. Just did a little dance round my office. I owe you big time. Thanks;) ;) ;) |
Did you actually move over here in 2003? I don't know if this is a California tax rule, or a federal tax rule, but when I came over here in October '99, I reclaimed all of my tax by using the 180 day per diem. I would need to go back and check my tax returns, but I believe I was able to earn $150 per day tax free for upto 180 days. As I was only claiming 60 days for '99, I was then able to use the remaining 120 days per diem for my 2000 tax return.
Just thought it may be worth a mention...you may want to check with a good CPA about this. |
Originally posted by indybrit No I didn't but I'm dead glad I did. Just did a little dance round my office. I owe you big time. Thanks;) ;) ;) |
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