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I am a non-US citizen (Brazilian) who lived in the US for approximately

2 years (2006 and 2007)...
I am a non-US citizen (Brazilian) who lived in the US for approximately 2 years (2006 and 2007). I have been back home since 2008.

Last week, I received a letter from IRS saying that I had to file my 2010 Form 1040 to avoid an assessment. The note says that “although our records show that you have not filed an income tax return for 2010, we have determined that you owe taxes for that year”. The note also provides amounts related to incomes that I made on the stock market, and the corresponding tax due, penalties, etc. I made some transactions on the stock market in 2010, so I assume those profits to be correct.

So my questions are:
1. Being a non-resident and non-US citizen, am I required to file a tax return form 1040 even if I have not received any wages in the US at all?
2. What if I received profits from stock market?
3. If yes, then what form am I required to file?
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Answered in 6 minutes by:
9/10/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,682
Experience: Taxes, Immigration, Labor Relations
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Lev :

Hi and welcome to Just Answer!
First of all - because you filed your income tax returns as a resident in 2006 and 2007 - the IRS is still treated you as a resident - and because income is reported on your tax account - the IRS still expects your tax return. To overcome these expectations - you need somehow to tell the IRS about your situation.

Customer:

ok, couple follow up questions then:

Lev :

1. Being a non-resident and non-US citizen, am I required to file a tax return form 1040 even if I have not received any wages in the US at all?
If you are a nonresident alien - you are taxed ONLY on income from US sources. If you have taxable income - you need to file the form 1040NR - not form 1040.
2. What if I received profits from stock market?
You need to inform your broker that you are a nonresident alien by providing the form W8BEN. If you have any taxable income - the broker will withhold required income taxes - and that might help you to avoid filing your own tax return. Most likely - your broker has form W9 that you filed previously where you are listed as a resident alien - and that is why your income is reported to the IRS certain way.

Customer:

Excellent. my follow up questions:
1. Is telling my broker that I am a nonresident alien is enough, or do I also need to tell the IRS that? If yes, then what form am I required to use?
2. If I tell them (broker and/or IRS), then I will not be required to file tax returns anymore, or that will depend on any other factors?

Lev :

3. If yes, then what form am I required to file?
To correct your 2010 situation - you need to file your tax return for 2010 using form 1040NR - and report only income from US sources. You will determine your tax liability if any on that tax return. Attach a letter with explanation of facts - as you did in this question.
To correct your situation for future - you need to send form W8BEN to your broker and inform that your status changed to nonresident alien. The broker will report only income from US sources and will withhold income taxes as needed. If you do not have other income from US sources - you will not be required to file the tax return.

Lev :

1. Is telling my broker that I am a nonresident alien is enough, or do I also need to tell the IRS that? If yes, then what form am I required to use?
Yes - for future purposes - but not for past years for which your broker already reported to the IRS.
You need to use this form - Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding - http://www.irs.gov/file_source/pub/irs-pdf/fw8ben.pdf
If you contact your broker - you will be given this form.
2. If I tell them (broker and/or IRS), then I will not be required to file tax returns anymore, or that will depend on any other factors?
Because that is an investment income - not effectively connected with business in the US - you are taxed on income from US sources only. Your broker as a withholding agent will withhold 30% and will send you and the IRS form 1042S reporting your income and withholding. If you do not owe any additional taxes and are not claiming a refund - you are not required to file the tax return.
For instance - capital gain for selling stocks is not taxable, interest credited on your account is not taxable, dividends paid by US corporations are taxable. Etc.

Customer:

Perfect. So it is clear to me that I need to user form W-8BEN with my broker to take care of the future AND I need to file my tax return for 2010 using form 1040NR to fix my 2010 problem. What about 2011 and 2012? Am I required to file these two years using 1040NR, or will that be treated as future, since I have not been contacted by IRS yet? (and maybe I have not been contacted because I have not had any profits) But assuming I also had profits in 2011 and 2012, then how should I proceed?

Lev :

What about 2011 and 2012? Am I required to file these two years using 1040NR, or will that be treated as future, since I have not been contacted by IRS yet?
That is based on your income during these years. If you had taxable income - yes - filing might be required. If that income was reported to the IRS by your broker - the IRS expects to see your tax return - and that is only a matter of time for them to contact you.
(and maybe I have not been contacted because I have not had any profits) But assuming I also had profits in 2011 and 2012, then how should I proceed?
I suggest to request your tax account transcript from the IRS for these years - and you will clear see what were reported - and will act accordingly.

Lev :

For ordering transcripts - see here - http://www.irs.gov/uac/Tax-Return-Transcripts

Customer:

ok, thanks once again. I tried to order my transcripts for 2011 and 2012, and I received a message that "transcript is not available for the year you have requested". I tried 2010 just to make sure, and I received a confirmation. So, can I assume that there are no transcripts because I do not owe anything to the IRS, or is that a wrong assumption?

Lev :

Because you did not file tax returns for these years - tax RETURN transcripts are not available - but you need to request your tax ACCOUNT transcripts.
.You need to use the form www.irs.gov/pub/irs-pdf/f4506t.pdf to obtain your tax account transcript. Please be sure to select Tax account Transcript.and check the box 6b.

Customer:

ok, thanks for your assistance. I appreciate.

Lev :

You may also request transcripts by calling 1-800-908-9946_, or order by mail using IRS Form 4506T (Request for Transcript of Tax Return).


There is no fee for transcripts. Allow five to ten days for delivery if you order online or by phone.

Lev :

On the form - check the box 8 for information about W2, 1099, 1098 forms.

Lev
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Experience: Taxes, Immigration, Labor Relations
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