Non Resident Return?

[Terry D EA]

This is a new one for me. Former client moved back home to Portugal. He moved at the end of 2012 so last year was a normal 1040. This year, and if I am correct, he has income from a U.S. retirement account with federal withholdings which require the 1040NR? Any help will be appreciated.

A little more info maybe helpful.

1. Client has left the US for good.

2. Client was a resident US citizen for a number of years.

3. It would appear that this client needs to submit in writing to the IRS and under the penalties of purgery that he no longer lives in the US. I read this in Pub 519.

Also, this client thinks he may be penalized for not complying with the Affordable Health Care Act.

[kcjenkins]

From the IRS site:

6. What are the statutory exemptions from the requirement to obtain minimum essential coverage?

9. Not lawfully present. You are not a U.S. citizen, a U.S. national or an alien lawfully present in the U.S.

From other sources:

Americans who are NOT residents of the USA, do NOT have to participate if you meet the requirements of being a resident of another country (or if you are outside the USA for 330 days or more per year). You can find more details below on Exemptions to ACA and how to qualify as a Non-Resident US citizen at:

https://www.healthcare.gov/exemptions/

Exemptions from the ACA requirements and IRS payments

Under certain circumstances, you won’t have to make the individual responsibility payment. This is called an “exemption.”

You qualify for an exemption if:

You are outside the USA for more than 330 days that year, or
You’re uninsured for less than 3 months of the year, or
You have Medicare, Medicaid, or some VA coverages, or
You have such low annual income that you are not required to file with the IRS: see the IRS Interactive Tax Assistant (ITA).

The second item (from the Healthcare.gov websites) seems to mean that you can go back to the USA for up to 3 months without getting health insurance, but that is overruled by:

You qualify for an exemption to ACA / Obamacare if you are outside the USA at least 330 days per calendar year. (330 day “physical presence” rule)

[Pacun]

File form 1040 and include global income.

[Terry D EA]

Again, I am new at this. I don't have a clear understanding as to why I would file a 1040 which is a US resident return for someone who is no longer a resident of the US. I am not really sure if there is a filing requirement at all. The 1099R has 10,000 distribution. Thats it no other income and no other deductions. Simple as can be but I want to be sure the correct form is used.

KC, thanks for the link for the ACA and the info.

[Max W]

First - 330 days does not determine whether resident or NR, that is for the foreign income exemption. It is less than 183 days over 3 years counting all the days in current yr (2013) + 1/3 days in prior yr + 1/6 days in 2nd prior yr. If he was out of the country in 2013 and part of 2012, he would qualify for NR.

However, filing NR there is no std deduction. Deductions have to be itemized, so on that basis there would be s small amount of taxed owed which would reduce his refund.

Filing a regular 1040 he gets all of his withholding back. He should advise the issuer of the 1099R not to withhold any taxes for future years.

As for ACA ,he can just declare that he was out of the country for the entire year. Would anybody in the IRS section handling ACA be astute enough to go to a supervisor and say this TP should be filing NR?

[joanmcq]

If he's a citizen, or holds a green card, he files a 1040 on worldwide income regardless of where he lives.

[kcjenkins]

Terry, I agree with Joan, you said he became a citizen, so it does not matter where he lives, a US Citizen files a 1040 no matter where he lives.