As a non-resident of the US, I am not subject to NIIT. How do I get TurboTax to exclude this tax?

[TomVancouver]

I am a dual-resident individual, resident in Canada.  Per IRS Guidance, I am not subject to NIIT:

5. What individuals are not subject to the Net Investment Income Tax?

Nonresident Aliens (NRAs) are not subject to the Net Investment Income Tax. If an NRA is married to a U.S. citizen or resident and has made, or is planning to make, an election under section 6013(g) or 6013(h) to be treated as a resident alien for purposes of filing as Married Filing Jointly, the final regulations provide these couples special rules and a corresponding section 6013(g)/(h) election for the NIIT. 

A dual-resident individual, within the meaning of regulation §301.7701(b)-7(a)(1), who determines that he or she is a resident of a foreign country for tax purposes pursuant to an income tax treaty between the United States and that foreign country and claims benefits of the treaty as a nonresident of the United States is considered a NRA for purposes of the NIIT.

A dual-status individual, who is a resident of the United States for part of the year and a NRA for the other part of the year, is subject to the NIIT only with respect to the portion of the year during which the individual is a United States resident. The threshold amount (described in # 3 above) is not reduced or prorated for a dual-status resident. 

[TaxGuyBill · Accepted solution]

In order to avoid NIIT, you would need to make special elections and file Form 1040NR and Form 8833.  TurboTax does not prepare those form, so in the event you are doing that, you can't use TurboTax.

Dual-resident individual.

If you are a dual-resident individual, within the meaning of Regulations section 301.7701(b)-7(a)(1), generally you will be treated as a U.S. resident for purposes of the NIIT. However, you will be treated as an NRA for purposes of the NIIT if:

• You determine you would be treated as a resident of a foreign country for purposes of an income tax treaty between the United States and that foreign country,

• You elect to be treated as a resident of the foreign country for purposes of computing your U.S. income tax liability, and

• You file Form 1040NR, U.S. Nonresident Alien Income Tax Return, and Form 8833, Treaty-Based Return Position Return Disclosure Under Section 6114 or 7701(b), as provided in Regulations section 301.7701(b)-7(b).

https://www.irs.gov/instructions/i8960#idm139639005242544

[TomVancouver]

Thanks Bill.  The 1040NR does not permit joint filing.  Is there any way to continue to file jointly (we are both dual-resident individuals) and avoid NIIT?

[TaxGuyBill]

Nope, not that I'm aware of.