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Anonymous
Not applicable

I am more than 183 days in US. Yet, due to a tax treaty I am about to receive a Form 1042-S. Is it possible to not accept the treaty and file my taxes as US tax resident?

The substantial presence check has been completed and I can be considered a US resident for tax purposes.
4 Replies
Cynthiad66
Expert Alumni

I am more than 183 days in US. Yet, due to a tax treaty I am about to receive a Form 1042-S. Is it possible to not accept the treaty and file my taxes as US tax resident?

The so-called 183-day rule serves as a ruler and is the most simple guideline for determining tax residency. It basically states, that if a person spends more than half of the year (183 days) in a single country, then this person will become a tax resident of that country.

 

However, the definition of residency under U.S. tax laws does not override tax treaty definitions of residency. If you are a dual-resident taxpayer (a resident of both the United States and another country under each country's tax laws), you can still claim the benefits under an income tax treaty.

 

U.S. Tax Treaties and Double Taxation

The U.S. has tax treaties with other countries to determine jurisdiction for income tax purposes and to avoid double taxation of their citizens. These agreements contain provisions for the resolution of conflicting claims of residence.

Anonymous
Not applicable

I am more than 183 days in US. Yet, due to a tax treaty I am about to receive a Form 1042-S. Is it possible to not accept the treaty and file my taxes as US tax resident?

Dear @Cynthiad66,

Thank you for your reply.

Actually my question is whether we are able to not claim tax treaty benefits, even after a 1042-S has been issued, and elect to pay the amount of taxes due at the U.S. when filling our tax return.

DaveF1006
Expert Alumni

I am more than 183 days in US. Yet, due to a tax treaty I am about to receive a Form 1042-S. Is it possible to not accept the treaty and file my taxes as US tax resident?

it depends. When you go through the foreign income questions.  When you get to the screen that asks Would You Like to Try and Exclude Your Foreign Earned Income? No, I know I don't qualify to exclude my foreign income and then your Foreign income will be taxable and you will pay taxes on it.

 

Just one passing note, if the IRS has a 1042-S on file and they determine there was withholding from a foreign country, they may refund you the taxes you paid in this country. It's rare but may happen. 

 

 

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Anonymous
Not applicable

I am more than 183 days in US. Yet, due to a tax treaty I am about to receive a Form 1042-S. Is it possible to not accept the treaty and file my taxes as US tax resident?

@DaveF1006 thank you for your reply and the note.

I understand the process you are describing in terms of how to define this in turbotax. However, there is a part in your answer that confuses me: is U.S. based income reported in form 1042-S considered as foreign income?

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