Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

Shafted by the IRS

Shafted by the IRS

Old Jul 16th 2004, 12:27 am
  #1  
Unclear Engineer
Thread Starter
 
indybrit's Avatar
 
Joined: Jul 2004
Location: Noblesville, Indiana.
Posts: 130
indybrit is on a distinguished road
Default 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.
indybrit is offline  
Old Jul 16th 2004, 1:20 am
  #2  
Concierge
 
Rete's Avatar
 
Joined: Apr 2001
Posts: 43,725
Rete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond reputeRete has a reputation beyond repute
Default 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.
Rete is offline  
Old Jul 16th 2004, 10:03 am
  #3  
BE Forum Addict
 
Joined: Dec 2002
Posts: 2,894
doctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to beholddoctor scrumpy is a splendid one to behold
Default

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.
doctor scrumpy is offline  
Old Jul 16th 2004, 12:29 pm
  #4  
BE Enthusiast
 
Lottie's Avatar
 
Joined: Apr 2004
Posts: 309
Lottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud of
Default

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
Lottie is offline  
Old Jul 16th 2004, 1:58 pm
  #5  
BE Forum Addict
 
Joined: Mar 2003
Location: Florida
Posts: 1,296
Taffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond reputeTaffyles has a reputation beyond repute
Default

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.
Taffyles is offline  
Old Jul 16th 2004, 2:26 pm
  #6  
Unclear Engineer
Thread Starter
 
indybrit's Avatar
 
Joined: Jul 2004
Location: Noblesville, Indiana.
Posts: 130
indybrit is on a distinguished road
Default

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
I did go to that site and read up about it.

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...........
indybrit is offline  
Old Jul 16th 2004, 3:02 pm
  #7  
BE Enthusiast
 
Lottie's Avatar
 
Joined: Apr 2004
Posts: 309
Lottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud of
Default

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
Lottie is offline  
Old Jul 16th 2004, 3:17 pm
  #8  
BE Enthusiast
 
Joined: Oct 2003
Location: Arizona
Posts: 961
effi has much to be proud ofeffi has much to be proud ofeffi has much to be proud ofeffi has much to be proud ofeffi has much to be proud ofeffi has much to be proud ofeffi has much to be proud ofeffi has much to be proud ofeffi has much to be proud ofeffi has much to be proud ofeffi has much to be proud of
Default

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.
That is very true.
effi is offline  
Old Jul 16th 2004, 3:37 pm
  #9  
Member
 
James Box's Avatar
 
Joined: Jun 2004
Location: Bath, UK ---> Indianapolis, IN
Posts: 371
James Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant future
Default

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...
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.
James Box is offline  
Old Jul 16th 2004, 4:07 pm
  #10  
Unclear Engineer
Thread Starter
 
indybrit's Avatar
 
Joined: Jul 2004
Location: Noblesville, Indiana.
Posts: 130
indybrit is on a distinguished road
Default

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.
What would you class as "really well paid"???
indybrit is offline  
Old Jul 16th 2004, 4:19 pm
  #11  
Member
 
James Box's Avatar
 
Joined: Jun 2004
Location: Bath, UK ---> Indianapolis, IN
Posts: 371
James Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant futureJames Box has a brilliant future
Default

Originally posted by indybrit
What would you class as "really well paid"???
Something like $90,000 which makes 4 months = $30,000.
James Box is offline  
Old Jul 16th 2004, 4:36 pm
  #12  
Unclear Engineer
Thread Starter
 
indybrit's Avatar
 
Joined: Jul 2004
Location: Noblesville, Indiana.
Posts: 130
indybrit is on a distinguished road
Default

Originally posted by James Box
Something like $90,000 which makes 4 months = $30,000.
LOL..........nice one, I wish.

I make more than the average family income but not quite hit the 90K mark yet
indybrit is offline  
Old Jul 16th 2004, 4:42 pm
  #13  
Unclear Engineer
Thread Starter
 
indybrit's Avatar
 
Joined: Jul 2004
Location: Noblesville, Indiana.
Posts: 130
indybrit is on a distinguished road
Default

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
No I didn't but I'm dead glad I did.

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
indybrit is offline  
Old Jul 16th 2004, 5:20 pm
  #14  
 
syllk's Avatar
 
Joined: Jun 2004
Posts: 18,950
syllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond reputesyllk has a reputation beyond repute
Default

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.
syllk is offline  
Old Jul 21st 2004, 9:49 am
  #15  
BE Enthusiast
 
Lottie's Avatar
 
Joined: Apr 2004
Posts: 309
Lottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud ofLottie has much to be proud of
Default

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
No problem, pleased that it all worked out for you!!
Lottie is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.