There are several key tax forms that you need to be aware of as a nonresident in the US.
After all, knowing what to expect can make the difference when tax season rolls around.
Form 8233 is one of the most important forms to know, as it can stop you paying too much tax on your income.
In this blog post, we’ll look at Form 8233 and how Sprintax Forms can help you to complete it! Continue reading “What is Form 8233 and how do you file it?” »
Many nonresidents are unaware that income earned from investments in the US is subject to tax from the IRS.
What’s more, if you have earned investment income, you may be required to file a tax return.
With this in mind, if you are unfamiliar with the process of managing this tax responsibility, you may be feeling daunted by the task of filing correctly.
In this guide we will discuss everything you need to know to include investment income on your US tax return.
In the US, investment income is considered to be passive income. This means that it is not effectively connected with trade or business inside the US.
This is an important detail as it indicates that the income is taxed differently to regular US-sourced income.
Essentially, investment income is made from interest payments, dividends, or capital gains realized on the sale of stock or other assets.
For example, Cryptocurrency is one of the most popular areas where investment income is earned in the US.
So, if you made a profit during the tax year on any cryptocurrency (which you traded from a US exchange or broker) while you were living within the US, you will have to declare it on a tax return.
Yes, if you earn investment income as a nonresident in the US, you will be taxed on it.
However, many nonresidents are not aware of this tax on investment income in the US. Usually, any share of investment profit you make will be charged at the regular Capital Gains Tax (CGT) rate of 30%.
Dividends received from your investments will also be taxed at 30%.
However, if your home country has a tax treaty with the US, you may be able to claim a reduction in taxes paid.
If you earned income through Robinhood, eToro or a similar system, it’s likely you’ll receive a 1099-B form.
You will receive your 1099-B form from your broker or banker. The information on your 1099-B form will need to be outlined on your 1040NR tax return.
This form outlines gains and losses throughout the year for the trader.
Information on the form such as the date the share was acquired and sold will be needed to complete it.
Sprintax Returns can help you complete your 1040NR form so that your investment income is reported properly.
Once you receive your 1099 form from your broker or banker, you will need to complete your tax return 1040NR with the information from the 1099-B, 1099-Int or 1099-Div forms you received.
Remember, it’s vitally important you report your investment income tax on your tax return. Doing so will keep you compliant with the tax authorities.
Тhis will outline the number of transactions made toward one company.
The very first date you bought the stocks
The last date you sold the stocks
The total amount on which you bought the transactions reported.
1d – Proceeds
The total amount on which you sold the transactions reported.
Typically, to estimate your wash sale you have to subtract the wash sale amount from the cost basis amount from the broker’s report and enter the result in the cost basis field on Sprintax 1099-B to arrive at the correct gain.
Note that this is not something that Sprintax will calculate for you, it is an amount that you will calculate by yourself and then be used by the software to prepare your return.
You do not fill anything here as you do NOT have taxes withheld on the 1099 forms.
Enter ‘0’ if you are not allowed to continue without filling the boxes.
Box 14 – State name
The state you lived in while buying and selling the stocks.
Box 15 – State identification no.
Enter ‘0’ as you do NOT have a state identification number.
Payer’s details
You should enter the details of the company you traded with. For example – Robinhood.
If you do not have their tax identification number – you can put a ‘0’ in each box.
When you are using Sprintax, you will be asked if your income is effectively connected to an US business or trade.
If your only US business activity is trading in stocks, securities, or commodities (including hedging transactions) through a US resident broker or other agent, you are NOT engaged in a trade or business in the United States and you can select ‘No’ for this question.
That’s easy – Sprintax Returns!
Sprintax Returns was created specifically with nonresidents in the US in mind, aiming to ensure they complete the often tricky tax-filing process correctly and on time.
Our specialist software was designed to help you e-file both federal and state taxes.
We will guide you through the entire process – helping you to claim every tax relief you’re due to minimize your investment tax bill.
With Sprintax Returns, you can:
Simply create your Sprintax Returns account here or login to get started!
If you are a nonresident alien (NRA) who lived or worked in the US, you will have tax responsibilities, regardless of whether you earned income.
In essence, every nonresident is required to file their taxes.
When you sit down to file you may discover that you owe tax. But don’t worry, it is very common for nonresidents to owe money to the IRS.
In this guide we discover some of the reasons you may owe tax and how to file your tax return
Continue reading “Why do I owe federal tax on my 1040NR tax return?” »
Continue reading “Nonresident alien tax withholding – a comprehensive guide for US employers” »
Tax season can be difficult for a lot of nonresidents who move to the US.
With so many different aspects of taxes in the US, it can be easy to feel a little overwhelmed.
Filing both state taxes and federal taxes are vitally important to ensure your nonresident state income tax withholding is correct.
Nonresident state tax returns are one of the lesser-known areas of tax for many people, so in this blog post we’ll outline everything you need to know about them as well as how to file them.
So, without further ado, let’s dive right in! Continue reading “How to file a nonresident state tax return” »
The topic of e-signatures on tax forms is a relatively new subject.
That is because the IRS has traditionally required paper signatures on all of their tax forms.
However, for some tax forms, the rules have changed somewhat over recent years.
This is due to a number of reasons, mainly due to the fact that the IRS is constantly looking to modernize the way in which they operate.
In this blog, we’ll delve into what the current rules on whether or not you as a nonresident alien on an F, J, M or Q visa can sign your tax forms online, and if it is beneficial for you.
An e-signature, also known as an electronic signature, is an efficient way to sign documents electronically with a digital ID.
Where does this apply to tax forms? Well, many tax forms can be completed electronically, but rules have stated that they need a paper signature.
However, the IRS has recognized that completing, printing, and sending tax forms is a significant burden as opposed to e-filing them, so they are beginning to change their rules.
The current law that allows e-signatures on tax documents is in place until 31 October 2023.
From the end of October 2023 onwards, it is likely that it will be extended.
The main benefit of using an e-signature is that it saves time on tax return preparation for workers.
As well as this, when you apply an electronic signature to your document, it will lock it from further editing. This provides a safeguard against potential document manipulation after the taxpayer has completed the form.
They can also save you money, as every time you use an e-signature, it prevents you from having to print the document and ultimately spend more money on paper (and ink!).
To add an e-signature to a tax form, you will need to try a software that offers this service. For example, DocuSign e-signature is officially recognized by the IRS.
There are subtle differences between electronic signatures and digital signatures, despite how similar they sound.
Although both are used to add authenticity to documents, they perform different operations.
Digital signatures use technology to encrypt a signature – ensuring the person is not lying about their identity.
The difference is that e-signatures outline that a signatory is to be legally bound by the terms within a specific document.
Recently, the IRS has begun to lax its rules on tax document signatures.
For nonresidents, that applies to many of the common tax forms used in tax season.
Sprintax can add e-signatures on W-4, W-9, W8-BEN, and Form 8233, but not W-7. You can do this with Sprintax Forms.
To e-file your tax documents with Sprintax, you will need to electronically sign your forms using the information requested on the screen when you are finalizing your return.
Before signing your return, you must verify your identity with us. This will require you to provide information from your previous federal tax return (If you did not file a tax return for tax year 2020, please enter ‘0’ as your prior year adjusted gross income).
Next, you’ll be asked to agree to a disclaimer and consent statements before agreeing the information you entered is correct.
Finally, simply click ‘E-File My Return’ to electronically send your tax return to the IRS.
Check out the handy video below that outlines how to electronically file your return with Sprintax Returns!
As a nonresident, Sprintax will offer assistance with all you need come tax season.
At Sprintax, we:
E-file nonresident tax return with Sprintax
Most international students dread the thought of taxes when they are in the United States.
After all, there is so much focus on without getting confused about things like tax forms and treaties.
Many international students need help with their taxes – this can leave them vulnerable to people looking to exploit them.
Tax and Internal Revenue Service scams have been on the rise over the past few years. Here at Sprintax, we strive to educate and assist international students in the US so that they don’t make mistakes when it comes to tax. Continue reading “IRS tax scams – what they are and how to avoid them” »
It has been nearly one year since Sprintax underwent brand updates to ensure we were delivering the very best possible product for our customers.
Our goal is to assist employers and nonresidents alike in the US with preparing their taxes, ensuring they are 100% tax compliant.
Each brand offers a simple and easy-to-use product that couples peace of mind with tax compliance – often a rarity in the US!
So, what is each Sprintax product, and what will it do for you?
Find out below!
Continue reading “Explainer: What each Sprintax Product will do for you” »
Many employers in the US often find the tax obligations of their J-1 visa employees to be a challenging area to navigate.
With so many forms and information needed with each employee, there is no surprise that some employers find the process of tax withholding for J-1 visa students tricky. This, coupled with the fact they will not be a resident for tax purposes, make it more challenging.
The need to complete all of the forms correctly cannot be underestimated, as every nonresident needs to abide by US tax law.
In this guide we will examine the key tax information that US employers need to know when employing J1 workers.
Continue reading “Hiring J-1 Employees – A Complete Guide to employers’ tax requirements” »
The W-8 forms are notoriously tricky for nonresidents to complete.
However, it’s important to have a good understanding of these documents – especially if you intend to earn income while in the US.
So, with that in mind, we have gathered everything you need to know about form W-8BEN into this handy guide.
So what is the purpose of a W-8BEN? Let’s take a look…
(Last updated: 13 June 2022)
It’s tricky being self-employed – after all, you need to keep a close eye on your income and all of your deductible expenses!
It’s even more tricky being self-employed in a country where you are unfamiliar with the local tax rules.
What’s more, when you are considered a nonresident for tax, special rules apply to you when compared with a resident.
In this blog we will cover the key information that nonresident self-employed individuals in the US need to know about their tax filing obligations. Continue reading “What are my tax obligations as a nonresident self-employed worker in the US?” »