[Non-resident alien] Received 1099-Div instead of 1042-S

[tbudd]

Since I was a non-resident in 2022 for the purposes of taxation (My address was updated to a Foreign (India) address back in 2021), I thought my brokerage firm (Fidelity) would report the income through dividends (ordinary and qualified), total capital gains distributions, interests etc in a 1042-S form instead of in 1099-XXX forms.
However Fidelity is saying that the 1099-div/int is the correct way of reporting the income info even though they are leaving the state info (state name, state ID, state tax withheld) as blank in the form. 

Now while trying to enter this data on SprintTax, I'm not able to proceed as the state info, in my case, is missing in the Fidelity provided 1099, and there's no way to circumvent this.

Should I just enter this 1099-Div data as a 1042-S on SprintTax, carefully mapping the fields from the former to the latter? If so, how?

[xmasbaby0]

NON RESIDENT ALIEN  

If you are a non-resident alien, your return must be filed on Form 1040NR, which cannot be prepared using TurboTax.  You can use TT’s partner, sprintax:

https://www.sprintax.com/non-resident-alien-tax-1040nr-turbotax.html

[tbudd]

Thanks! I know I need to file 1040 NR, and I have been using SprintTax for the same as I mentioned in my post.

[nralien]

@tbudd Any update on how you solved this in Sprintax?

[tbudd]

SprintTax forms appeared to be pretty dumb, with not so helpful customer support.

I am working with H&R block to do my 1040-NR. 

[nralien]

@tbudd I asked Sprintax and they said it doesn't matter what state you put there. The information is not transferred anywhere on the actual return. When I tried to do it via HR Block, the software said I owe no tax on the dividends when in reality I owe 15% based on the tax treaty. I am not sure if HR Block is even doing it right. 

Are you using an advisor to do it at HR Block? Also are you trying to report your 1099DIV as is or trying to input it as 1042-S?

[tbudd]

The problem with putting some state in the 1099 questionnaire on SprintTax is that the software decides that I need to file a State return, and also calculates some unexplained tax liability.

I was thoroughly confused with SprintTax and decided to give up. TaxAct might be another viable alternative.

Coming to HR block, I'm not sure how exactly their software works, but for me, even the draft taxes were not generated until I made the payment (I had a 1099DIV+INT from my brokerage firm and a 1042-S form). I had to pay $99 extra for the 1042-S on top of the regular $99 charges for the DIY version (a total of $198).

Initially, the system generated a draft 1040 (not 1040-NR) , to my surprise, and on reaching out to them I was told that my responses to their questionnaire led to the 1040 instead of the expected1040-NR. However, the reason was not at all obvious to me and after a couple of email exchanges, they agreed to fix it to 1040 NR. Subsequently they seemed to have correctly applied the 25% tax on my 1099-DIV ordinary dividends (so I just got my 1099-DIV used as is). I have already paid the federal taxes, but am waiting on some clarification on the 1042-S before getting the returns filed.

I didn't explicitly ask for an advisor but it seems HR block has appointed someone, and I need to put my signature against a declaration that my taxes are being done by a tax preparer.

[nralien]

Interesting. I didn't have that issue with Sprintax. I will take a look at TaxAct next year. The HR Block did seem iffy for me and I didn't want to use it. Plus $99 for 1042-S, I felt was ripping us off. 

Good luck with your return!

[tbudd]

Even I wanted to go ahead with TaxAct, but was sort of trapped with HR block as they weren't ready to refund the paid fees.

Will consider TaxAct for next year. Let's keep in touch.

Which country are you filing from? I'm from India.

[kulishah]

@tbudd This was a useful read - given I am in the same boat. First off, I have Fidelity holding my foreign assets too - can you tell me why they refused in sending/creating a 1042-S instead of a 1099 given you have a foreign legal address (India)?I feel the entire benefit of the 1042-S of withholding tax, which can easily then be used as proof of tax paid in India in form 67 would get beaten? This seems inaccurate & odd. I was bit worn out by the 'almost manual' process with Sprintax - do let me know if taxAct is any better, @nralien 

Directed at both of you :  Do you calculate your foreign income for 'India taxes' using calendar year or FY? Reason I ask is while the tax law maybe read literally to calculate FY format, however the calendar seems to be more a practical method given proof of tax payment too exists, while in filing FY format, the January-March quarter, unless you have 1042-S withholding for every single account, causes a double taxation issue

Please do share your detailed thoughts - I am plagued by the same. 

[email address removed] 

[tbudd]

I'm not sure why the 1042-S was not issued. I had multiple conversations with fidelity, but still failed to understand their explanation to why a 1099 was issued instead of a 1042-S.

For your other question, I'd be paying taxes on my US income in India for the first time this FY (2023-24), as I just turned an ordinary resident (ROR).

I also have 1042-S for 2023 from Fidelity but following are the issues

1. For some reason, taxes were not withheld on the entire income (dividends + interest on the cash position), so I need to pay taxes separately to the IRS regardless. In other words, 1042-S won't be sufficient even if I consider the calendar year for India tax liability on the US income.

2. For Q1 2024, I'm considering showing the tax withheld statement from Fidelity + balance tax payment (manual) for #1 above (which is Q2-Q4, 2023, as I turned an ROR only in Q2, 2023) + balance tax payment (manual) for Q1 2024.

What are your thoughts on #2? Basically, the TLDR is that there might always be certain taxes not represented in 1042-S, which therefore have to be paid separately to the IRS, and the payment accordingly somehow certified for. We'd need to account for such tax payment through receipts  (not sure if the online receipts obtained on payment of taxes on IRS would qualify as valid tax receipts, but I don't see any alternative) and statements from brokerage houses  (e.g. taxes withheld in Q1 2024, for which we don't have any 1042-S yet).

And, afaik, even though foreign assets need to be declared only for the calendar year (Jan -Dec), the taxes do need to be paid for all income, including foreign income, earned during the FY.

Refer to the following article

https://economictimes.indiatimes.com/wealth/tax/how-to-report-your-foreign-in[product key removed]t[...