“The best I understand it, the deduction and exemption is handled on 1040 and taxable income - from box 43 on the 1040 - is then transferred to the 1040NR. But to which box? This is completely unclear. Do I put it in into "other" and write "taxable income from form 1040"?”=========>As it is US source income, NOT income from overseas. You need to use line 21 to report any other income effectively connected with your U.S. business that is not reported elsewhere on your return on 1040NR line 21. The 1040NR will include any US source income you earned before entering the US and the 1040 will include all your income for the portion of the year you were a resident You can talk to an international tax representative at the IRS.
“Also, because of my unusual status I am am able to claim a tax treaty exemption despite having been resident (long story). Last year this was done by entering negative income into box 21 of the 1040 and adding a statement to explain. It seems like I do the same this year - but then how do I handle the tax treaty part of 1040NR?”=============> Income exempt from U.S. tax. If the income is exempt from tax by treaty,you need to complete item L of Sch OI on page 5 of Form 1040NR and line 22 on page. You need to report the total of all your income exempt from tax by a tax treaty on line 22; do not report the exempt income online 23.
Last edited by Wnhough : 04-29-2013 at 09:48 AM.