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April 3, 2013 - Phil Hodgen

Form 1040NR Filing, Tax Payment Deadlines

I received an email from a CPA friend of mine today. She and another person in her office disagreed on a seemingly simple question. They were preparing a Form 1040NR for a nonresident alien and wanted to get an extension of time to file the tax return. They both agreed that Form 4868 should be filed before June 15 to get the extension of time to file a timely tax return. But they disagreed on making the tax payment: is the tax payment due on April 15 or June 15?

I was about to reflexively answer her question when I thought to myself, “Hang on.... continue reading

Nonresidents with US Activities
August 1, 2012 - Phil Hodgen

Basis step-up on assets inherited from nonresident

Yes, I’m back from more than a week off the grid in the Quetico Provincial Park, paddling and portaging. This was a Boy Scout trip with my son’s troop, starting from the Charles L. Sommers Wilderness Canoe Base. Who knew that going canoeing involves carrying extremely heavy stuff over steep, treacherous portages in the rain? I’ve already signed up for next year’s trip–a 12 day high country backpacking extravaganza at Philmont.

People keep asking me, uh, where’s your brother? (YouTube, turn it up loud).

No, actually, people keep asking me about whether they get a step up in basis for foreign assets inherited from a nonresident/noncitizen decedent.... continue reading

Nonresidents with US Activities
April 21, 2012 - Phil Hodgen

Property you acquired before coming to the USA

This is a quick little blog post to answer a recurring question for many people out there.  It came up in the course of some work I am doing right now.

Situation

You are a nonresident of the United States.  Thirty years ago you bought a piece of land in your home country for US$10,000.  Now it is worth US$200,000.

You immigrate to the United States, then sell the land for its current value — US$200,000.

Question

Do you pay U.S. capital gain tax on the entire $190,000 of capital gain?

Answer

Yes.

Why

Just because you change status from nonresident to resident of the United States, you don’t change the U.S.... continue reading

Nonresidents with US Activities
April 17, 2012 - Phil Hodgen

Nonresidents’ U.S. bank interest earned to be reported to IRS

The IRS came out with their Regulations which tell banks that they must report interest earned by nonresidents.  Up to now, this was not done.  If a nonresident opened a bank account in the United States, the interest earned was not reported to the U.S. government.

The bank interest itself is not taxable in the United States.  These new Regulations do not change that.  These new Regulations merely force the bank to tell the U.S. government how much interest was earned, and the identity of the nonresident bank account holder.

Why?

The IRS is trying to force every foreign bank in the world to report the accounts of U.S.... continue reading

Nonresidents with US Activities
March 8, 2012 - Phil Hodgen

Mexican cross-border families and U.S. taxation

I received an email today from a CPA with an interesting situation.  I shot him a quick email to respond to a question, but the situation is interesting enough that it is worth sharing.

His comment:

I have a practice in (U.S. city near the US/Mexico border).  I’m seeing a prevalence of a nonresident alien spouse & children living in the U.S. for security purposes while the working spouse lives and works in Mexico.  Working spouse visits family in the U.S. for short periods of time (no substantial presence), brings cash for living expenses, mortgage, etc.  In this case, I believe that there is no U.S.

... continue reading
Nonresidents with US Activities