Video instructions and help with filling out and completing Why Form 8815 Nonresident

Instructions and Help about Why Form 8815 Nonresident

Hello and welcome to our webinar on the tax obligations of non-residents this webinar has been prepared for informational purposes only it was prepared also for educational purposes only this presentation is not legal or tax advice nor is it to be construed as such each individual circumstances are different you should seek legal and/or tax advice to address any specific questions you may have my name is Jimmy Sexton I'll be your presenter today a little bit about myself I have a bachelor's in business administration a JD in LLM in international taxation I am the president of Esquire Group an international tax advisory firm with offices in Austria Germany the United Arab Emirates in the United States specialized in international taxation including tax issues facing US citizens and resume aliens living abroad expatriation investing and doing business abroad and foreign investment in the u.s. fluent in English and German if you want to know a little bit more about me you can check out my profile on our website the link is available at the bottom of this slide so today's webinar is going to be about the tax obligations of non-residents so in order to determine what the tax obligations of a non-resident are we first have to define who a non-resident alien is so a non-resident alien is a non-us citizen who does not mean either the green card test or the substantial presence test so the green card test is basically a non-us citizen that has a United States green card if you are a knight if you are a non United States citizen that has a green card then you would be considered a resident alien and not a non-resident alien the other test is the substantial presence test which is essentially where a non-resident alien can become resident alien simply by spending too much time in the United States now the substantial presence test calculates days over a three-year period and essentially if a person who would otherwise be a non-resident alien spends 183 days in the United States over a 3-year period then that person would become a resident alien and 183 days is is not calculated simply by adding up the days over a three-year period rather if the person has spent 31 days or more in the United States during the current year you would add up all of the days in 2017 this being the current here you'd add a third of the days from the prior year so a third of the dates from 2016 and a sixth of the days from the year before that which would be 2015 in this example so if the total of all the days in 2017 a third of the days of 2016 and a sixth of the days of 2015 equal to 183 days or more than that person would have met the substantial presence test so a non-resident alien is somebody who's not a United States citizen does not meet the green card test and does not meet the substantial presence test so when does a non-resident alien have to file a u.s. tax return there's generally three criteria or three situations in which a non-resident alien would be required to file the u.s. income tax return the first would be if the alien was considered to be engaged in a US trade or business and we're going to talk more about what constitutes a US trade or business if they had received US source fixed determinable annual or periodical income for short at that come on which the tax liability was not satisfied through withholding we'll also talk more about that or to claim a refund and we'll talk a little bit more about that as well so these are the three situations in which a non-resident alien would generally be required to file the u.s. income tax return so the first of those criteria was if the non-resident alien was engaged in the u.s. trader business so if a non-resident alien was engaged or considered to be engaged in a u.s. trader business than the income from that u.s. trader business would be considered what's known as effectively connected income or c so some examples of effectively connected income would be performance personal services in the US this is essentially being employed or self employed in the United States or being a partner in a partnership that is engaged in a u.s. trade or business so for example if you had let's say a non-resident alien who was a resident of Germany and lived in Germany but invested in a partnership that operated a restaurant in Los Angeles that restaurant would be considered a US trade or business and the income from that restaurant would be effectively connected income and this non-resident German partner would be required to file a tax return to report this portion of partnership income owning and operating a business in the u.s. that selling services products or merchandise would be considered a u.s. trade or business and the income therefrom would be effectively connected income gains and losses from the sale of u.s. real property interests so if you had a foreigner who was a non-resident alien they sold a piece of real estate in the United States that would be considered effectively connected income also US rental real estate income is generally F DAP incumbent election that could be filed to treat it as effectively connected income so if a non-resident alien is required to file a u.s. income tax return because they have effectively connected income then then they would be allowed normal deductions and credits much like a u.s. resident would be allowed when filing their regular US income tax return one of the key differences between resident tax returns and non-resident tax returns is that is that if a non-resident does not file an income tax return within 16 months of the due date the IRS can