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1040-NR
Quote from BC on March 28, 2025, 12:43 pmThese questions require a little background:
We became nationals in the spring of 2023 & paid our taxes for that year. We have not done a ROE. My wife and I closed both of our companies, LLC and S -Corp as of Jan 1st 2024. We went back to being sole propriters getting paid directly. In 2024 we both closed and took our respective IRA's. While listening to Roger's show they were talking that Nationals could take thier IRA's with out penalty and taxes so we did.
I took my IRA but before I could tell them not to take out taxes, they paid the taxes. My wife's, we told them not to pay the taxes. It is our understanding that we would need to fill out a 1040NR to declare this and possibly get my money back.My wife gets a W2 from a side job she does for a couple of months in the spring, she also gets a 1099 from VRBO for a rental we own. I get a 1099 from the company I work for.
- Do we have to file anything with the IRS for this year?
- Do we have to file anything with the State of Montana?
- Our accountant (that is probably not up on the National stuff) is telling us we have to fill out a 1040-NR but that we are required to pay taxes on all of this for 2024?
Maybe there is an accountant out there or someone that has done this before that could help?
Bob
These questions require a little background:
We became nationals in the spring of 2023 & paid our taxes for that year. We have not done a ROE. My wife and I closed both of our companies, LLC and S -Corp as of Jan 1st 2024. We went back to being sole propriters getting paid directly. In 2024 we both closed and took our respective IRA's. While listening to Roger's show they were talking that Nationals could take thier IRA's with out penalty and taxes so we did.
My wife gets a W2 from a side job she does for a couple of months in the spring, she also gets a 1099 from VRBO for a rental we own. I get a 1099 from the company I work for.
- Do we have to file anything with the IRS for this year?
- Do we have to file anything with the State of Montana?
- Our accountant (that is probably not up on the National stuff) is telling us we have to fill out a 1040-NR but that we are required to pay taxes on all of this for 2024?
Maybe there is an accountant out there or someone that has done this before that could help?
Bob
Quote from David on March 29, 2025, 5:17 pmHello Bob. I understand your efforts, but if you've not yet revocated your election to pay taxes. Although you and your wife are nationals you must also let them know you're not paying taxes. You can't assume that by just submitting your affidavit and noticing the IRS you're a national (nonresident alien), that it also tells them you are revocating the election to pay. You'll be obligated to pay your taxes until you complete all the prerequisite steps.
Hello Bob. I understand your efforts, but if you've not yet revocated your election to pay taxes. Although you and your wife are nationals you must also let them know you're not paying taxes. You can't assume that by just submitting your affidavit and noticing the IRS you're a national (nonresident alien), that it also tells them you are revocating the election to pay. You'll be obligated to pay your taxes until you complete all the prerequisite steps.
Quote from BC on March 31, 2025, 4:28 pmThanks, David. My employer will not accept the W-8BEN or the W-V4. They will only send me a 1099. If that's the case, am I liable to pay taxes on this income each year even though I file the ROE? I ask this because we receive interest income from CD's and income from VRBO, and my understanding from what you said above, is that I don't have to pay taxes on this after filing the ROE. I guess I am asking if 1099 income is exempt from taxes after you file the ROE.
Also, it's my understanding that as a national (and we have filed the ROE) we are not obligated to pay state taxes and that it is voluntary. Is that correct?
Thanks, David. My employer will not accept the W-8BEN or the W-V4. They will only send me a 1099. If that's the case, am I liable to pay taxes on this income each year even though I file the ROE? I ask this because we receive interest income from CD's and income from VRBO, and my understanding from what you said above, is that I don't have to pay taxes on this after filing the ROE. I guess I am asking if 1099 income is exempt from taxes after you file the ROE.
Also, it's my understanding that as a national (and we have filed the ROE) we are not obligated to pay state taxes and that it is voluntary. Is that correct?
Quote from David on April 1, 2025, 1:42 pmDid you indicate that you have been a W-2 employee with the company you do work for? If so, then after you've completed all the steps mentioned on the IRS page of the website, then they should continue to provide you a W-2 each year that illustrates $0.00 in federal income tax paid. I don't understand, if you are a W-2 employee not sure how or why they would now give you a 1099 if that is not how you're set up with them as an employee as they would still be showing SS, unemployment, health insurance, and other information on a W-2. Perhaps they've used this as an opportunity to alleviate themselves from some of these costs associated with an employee.
Also, they are not allowed to not accept your W-8BEN or W-4V. Did you follow specifically all the steps with your employer as described on the website to include updating your I-9, doing the myeVerify process, etc.?
As a national (aka: nonresident alien) and have completed the IRS steps, you do not have to pay any federal income tax. It's as simple as that and once you're in their system as such you'll no longer need to file with either the feds or the state since none of your income is now taxable....except for 26 C.F.R. 877(b) or 871(b) income.
Reread all of the IRS section of the website to make sure you've followed all the steps and have not skipped anything. By the way, there is a letter for the employer when the forms W-8BEN or the W-4V are not being accepted. It can be found under the gray bar called "STEP THREE: Forms W-4V & W-8BEN".
Also, don't depend on your traditional CPA or accountant to understand any of this. They may know what a nonresident alien is (one that is from a treaty country), but will not know one that is associated with the national status since they will most likely not know what a national is. They may do a google search will get confused because they'll get back definitions of a Noncitizen National or National of the United States. These are not "nationals" under 8 U.S.C. 1101(a)(21). You can always send them to www.NationalStatus.info and perhaps they'll grasp it, but remember, it's not in their interest to loose a customer since nationals no longer need to file a return so the need for a CPA is negated.
Did you indicate that you have been a W-2 employee with the company you do work for? If so, then after you've completed all the steps mentioned on the IRS page of the website, then they should continue to provide you a W-2 each year that illustrates $0.00 in federal income tax paid. I don't understand, if you are a W-2 employee not sure how or why they would now give you a 1099 if that is not how you're set up with them as an employee as they would still be showing SS, unemployment, health insurance, and other information on a W-2. Perhaps they've used this as an opportunity to alleviate themselves from some of these costs associated with an employee.
Also, they are not allowed to not accept your W-8BEN or W-4V. Did you follow specifically all the steps with your employer as described on the website to include updating your I-9, doing the myeVerify process, etc.?
As a national (aka: nonresident alien) and have completed the IRS steps, you do not have to pay any federal income tax. It's as simple as that and once you're in their system as such you'll no longer need to file with either the feds or the state since none of your income is now taxable....except for 26 C.F.R. 877(b) or 871(b) income.
Reread all of the IRS section of the website to make sure you've followed all the steps and have not skipped anything. By the way, there is a letter for the employer when the forms W-8BEN or the W-4V are not being accepted. It can be found under the gray bar called "STEP THREE: Forms W-4V & W-8BEN".
Also, don't depend on your traditional CPA or accountant to understand any of this. They may know what a nonresident alien is (one that is from a treaty country), but will not know one that is associated with the national status since they will most likely not know what a national is. They may do a google search will get confused because they'll get back definitions of a Noncitizen National or National of the United States. These are not "nationals" under 8 U.S.C. 1101(a)(21). You can always send them to http://www.NationalStatus.info and perhaps they'll grasp it, but remember, it's not in their interest to loose a customer since nationals no longer need to file a return so the need for a CPA is negated.
Quote from David on April 1, 2025, 2:04 pmForgot to mention that, just like most Americans, most employers do not understand what a national is or how it relates to being a nonresident alien. Their first reaction is to probably not believe this information, then they have a difficult time finding references that explain it to them. So many employers choose to not accept the documents because they don't understand it and are afraid that it will trigger something negative for them with the IRS. Remember, employers are agents for the IRS to collect/withhold federal income tax and send it to them. They tend to be more afraid of the IRS then the employees. So the purpose of the W-8BEN and W-4V is to have the employers stop withholding and to explain that you're a national. There are other documents mentioned to give to your employer also to help educate them and to let them know you're still eligible to work for them (eVerify step). Just remember, that they are not allowed to not accept your forms. Their job as an agent for the IRS is the vet the information on the form for correctness...ie. spelling, your address, etc. but they should not necessarily have to vet the context of what you're intent is. If the IRS inquires with them about no longer withholding your federal income tax funds, then they hand them your documentation and the IRS determines the validity of your status as a nonresident alien...not the employer. Hope that makes sense.
Forgot to mention that, just like most Americans, most employers do not understand what a national is or how it relates to being a nonresident alien. Their first reaction is to probably not believe this information, then they have a difficult time finding references that explain it to them. So many employers choose to not accept the documents because they don't understand it and are afraid that it will trigger something negative for them with the IRS. Remember, employers are agents for the IRS to collect/withhold federal income tax and send it to them. They tend to be more afraid of the IRS then the employees. So the purpose of the W-8BEN and W-4V is to have the employers stop withholding and to explain that you're a national. There are other documents mentioned to give to your employer also to help educate them and to let them know you're still eligible to work for them (eVerify step). Just remember, that they are not allowed to not accept your forms. Their job as an agent for the IRS is the vet the information on the form for correctness...ie. spelling, your address, etc. but they should not necessarily have to vet the context of what you're intent is. If the IRS inquires with them about no longer withholding your federal income tax funds, then they hand them your documentation and the IRS determines the validity of your status as a nonresident alien...not the employer. Hope that makes sense.
Quote from BC on April 1, 2025, 3:45 pmDavid,
I've been getting paid monthly as a contactor for years recieving a 1099. This was done to allow me deductions for business expenses.
During a Nationals class, we were told we had to close our company's and become sole propriters for this to work, (still revicieve 1099's). Therfore as I mentioned in my first post, My wife and I closed both of our companies, LLC and S -Corp as of Jan 1st 2024. We went back to being sole propriters getting paid directly gettting 1099's.
My question is a 1099 income is exempt from taxes after you file the ROE? Or does this only apply to income generated thru a W2?
David,
I've been getting paid monthly as a contactor for years recieving a 1099. This was done to allow me deductions for business expenses.
During a Nationals class, we were told we had to close our company's and become sole propriters for this to work, (still revicieve 1099's). Therfore as I mentioned in my first post, My wife and I closed both of our companies, LLC and S -Corp as of Jan 1st 2024. We went back to being sole propriters getting paid directly gettting 1099's.
My question is a 1099 income is exempt from taxes after you file the ROE? Or does this only apply to income generated thru a W2?