This course focuses on basic elements of U.S. income taxation of aliens ineligible to file as U.S. citizens or residents. It covers when to file Form 1040 and when to file Form 1040NR.To explain tax law regarding: ▪ Determination of U.S. status ▪ Taxation of nonresident or dual-status aliens ▪ Visa types ▪ Researching treaties ▪ IRS forms related to international issues.
1, (incorrect)
What is the exemption period for the substantial presence test for a STUDENT who is in the U.S. on an F or J visa?
Any part of five calendar years.
No exemption period is allowed.
Any part of two calendar years in any six-year period.
XXAny part of five-calendar years, provided that the student is in the U.S. for more than 183 days during the previous year.
2, (incorrect)
Sung is a citizen of South Korea and a resident of Canada working in the U.S. Which of the following statements is accurate?
The tax treaty between the U.S. and Canada applies to him
XXThe tax treaty between the U.S. and South Korea applies to him
The tax laws of South Korea, but no tax treaty, apply to him.
The tax laws of Canada, but no tax treaty, apply to him.
3,
Isabel (a citizen of Peru who is in the U.S. on a B-1 visa) and her husband William (a U.S. citizen) have lived continuously in Alexandria, Virginia, since moving to the U.S. on October 15, 2011. In August 2012, she separates from him and moves into her own apartment. For 2012, Isabel is a U.S. resident because:
Her husband is a U.S. citizen.
She intends to live in Alexandria for the next 183 days.
She has applied for a green card.
XXShe has lived in the U.S. for more than 183 days in 2012 and meets the substantial presence test.
4, (incorrect)
Amy came to the U.S. under an F-1 visa on September 15, 2011. She returned to England on March 15, 2012. On May 2, 2012, Amy entered the U.S. under an H-1 visa. What is her starting day of resident status under the substantial presence test?
January 1, 2012
May 2, 2012
XXSeptember 15, 2011
January 1, 2013
5,
Submission of which of the following forms generally requires payment of all taxes due?
Form 8833
Form 8840
XXForm 1040-C
Form 8898
6,
Form 8843 is used to exclude:
Income that is not taxable on a Form 1040NR due to a treaty.
XXDays present in the U.S. for the purpose of establishing the substantial presence test.
Days present in the U.S. due to a closer connection to a foreign country.
Income earned in the USVI.
7,
Jean-Pierre is a Canadian citizen and travels to the U.S. as a member of a professional hockey team. His first visit was in 2010. His visits usually last between one and two weeks. If Jean-Pierre was present in the United States for 100 days in 2012, 270 days in 2011, and 36 days in 2010, what is his residence status for 2012?
He does not satisfy the substantial presence test because he was not present in the United States for 183 days in 2012.
XXHe met the substantial presence test in 2011 and his residency, unless abandoned or revoked, continues in 2012.
He satisfies the substantial presence test and is considered a U.S. citizen in 2012.
He does not satisfy the substantial presence test because he was not present in the U.S. for 183 consecutive days between 2010 and 2012.
8,
Whenever the aggregate value of a taxpayer's foreign accounts exceeds $10,000, the taxpayer must:
Report the excess on Form 1040.
Report the excess on Form 1040NR.
XXReport this information to the Department of the Treasury on Form TD F 90-22.1.
Report this information on Form 8898.
9,
What is the purpose of Form 8833? It is used by:
Non-Citizens to report scholarships and fellowships.
XXTaxpayers who benefit from a treaty provision to disclose the provision.
A U.S. citizen married to a nonresident alien to file a return with married filing joint status.
Taxpayers to report foreign-source income.
10,
U.S.-source income and gains that are not effectively connected to a U.S. trade or business are subject to taxation:
XXAt the rate of 30%, unless the rate is reduced by a treaty.
At graduated personal income tax rates.
At the rate of 35%, unless the rate is reduced by a treaty.
Taxed at the same rate as effectively connected income if the taxpayer makes a timely election for this treatment.
11,
Marie is a resident of Belgium. For the year, a U.S. company paid her for 200 days of work, 140 in Belgium and 60 in the U.S. How is her U.S.-source income computed?
All of her income for the year is U.S.-source income.
Her U.S.-source income cannot be determined.
XXHer U.S.-source income is her total compensation for the year multiplied by 60/200.
Her U.S.-source income is her total compensation for the year multiplied by 60/365 (or 366 if the tax year is a leap year).
12,
All of the following aliens are exempt from counting days for the substantial presence test EXCEPT:
A foreign professional athlete participating in a charitable sporting event.
XXAn individual in transit between two foreign points and in the U.S. for more than 24 hours.
A regular crew member of a foreign vessel engaged in transportation between the U.S. and a foreign country.
An individual who regularly commutes to work in Detroit, Michigan, and returns home to Windsor, Ontario, the same day.
13, (incorrect)
Counting days of presence in the U.S. is a method used to determine U.S. residency:
XXFor each year the taxpayer lives in the U.S.
For the last year the taxpayer lives in the U.S.
For the first year a taxpayer meets the substantial presence test; residency continues until it is relinquished.
For students with F-1 visas.
14,
For tax purposes, a foreign national who satisfies the requirements of the green card test is considered:
XXA U.S. resident for tax purposes.
To have permission to enter the U.S.
A U.S. citizen.
To have permission to leave the U.S. and return to their country of origin.
15,
Which of the following is an example of a dual-status alien?
Ian is a citizen of Ireland and was present in the U.S. for 14 days in 2011.
Maria was a resident alien for 2010 and a nonresident alien for 2011.
Hildegard was a U.S. citizen and a citizen of Austria for all of 2011, but she resided in Austria for the entire year.
XXUmberto was a resident alien until May 31 and a nonresident alien for the remainder of the year.
16,
When is a nonresident alien subject to self-employment tax? The nonresident alien is:
Always subject to SE tax if the self-employment earnings were earned in the U.S.
XXOnly subject to SE tax if a treaty allows for it.
Subject to SE tax when self-employment income is less than 25% of total U.S. income.
Subject to SE tax when self-employment income exceeds $400.
17,
A nonresident alien in which of the following situations is required to file an income tax return, Form 1040NR, or Form 1040NR-EZ?
Unable to leave the U.S. due to a medical condition.
XXEngaged in a trade or business in the U.S. during the tax year.
Received a Form 1042-S reporting gambling winnings upon which 30% was withheld for taxes.
Received Form 1042-S from U.S. employer for wages paid and taxes withheld.
18,
Which of the following aliens IS required to obtain an exit or sailing permit before departing the U.S.?
Representatives of foreign governments who hold diplomatic passports.
Aliens with a border-crossing identification card.
Aliens with a B-1 visa in the U.S. for business for 61 days.
XXAliens with a passport but no visa working in the U.S. for 91 days.
19,
James, a U.S. nonresident, received $3,333 (effectively connected) in 2011 for work he did in 2010. Which statement best describes the situation? The payment is considered:
To not be effectively connected, because it was received in 2011.
To be effectively connected only if he is still employed in the U.S. in 2011.
To not be effectively connected because of his residency status.
XXTo be effectively connected, because it would have been had it been received in 2010.
20,
Under §871, for a nonresident alien, U.S.-source interest income that is not connected with a U.S. trade or business is excluded from income if it is from:
XXPortfolio interest.
Interest from security deposits from U.S. rental real estate.
Interest earned by a U.S. partnership.
Interest earned as a beneficiary of an estate or trust that is engaged in a trade or business in the U.S.
21,
How do aliens departing the U.S. request an exit or sailing permit? By filing:
XXEither Form 2063 or 1040C with the IRS.
A request with a Foreign Service Officer at their country’s embassy.
Form 1040NR with the IRS.
Form 8843.
22,
Taxpayers (except for students from India) who filed dual-status returns:
XXNever claim the standard deduction.
Claim the standard deduction on the Form 1040 but not on Form 1040NR.
Claim a proportional share of the standard deduction based on AGI and deduct that portion on Form 1040 and on Form 1040NR.
Claim the standard deduction only if they are U.S. residents on the last day of the tax year.
23,
Effectively connected income of a nonresident alien engaged in a trade or business in the U.S. is:
Taxed at 30% or at a lower treaty rate.
XXTaxed at graduated rates.
Only for small businesses or for sole proprietorships.
Not the place to report taxable U.S.-source scholarships and fellowships.
24,
A totalization agreement allows:
A U.S. citizen married to a nonresident alien to file MFJ.
A nonresident alien to total all worldwide income and pay tax to only one country.
An alien who has U.S. resident status to bring their immediate family to the U.S. as U.S. residents.
XXA nonresident alien to avoid dual social security coverage and double social security taxation for the same income.
25,
A nonresident alien who derives income (that is otherwise not effectively connected) from real property located in the U.S. and held for the production of income may elect to treat:
XXAll income from the real property as effectively connected with a U.S. trade or business.
All income from the real property as foreign-source income.
All income from the real property as capital gain.
Part of the income as effectively connected and part as capital gain.
26,
According to Publication 901, what is the maximum presence in the U.S. during which Indian teachers receive special treaty benefits for their income earned at a U.S. educational institution?
XXTwo years.
No limit.
Five years.
183 days.
27,
Which of the following actions does not constitute being engaged in a U.S. trade or business?
Living temporarily in the U.S. under an F, J, M, or Q visa.
XXDepositing funds in a U.S. bank account.
Being in a partnership that is engaged in a trade or business in the U.S.
Performing services in the U.S. (with some exceptions).
28,
How are conflicts between the Code and a treaty resolved?
XXEvery attempt is made to reconcile the two. If a Code provision is to override an existing treaty, Congress will express a clear intent to override a treaty.
The provision of the Internal Revenue Code prevails.
The one enacted first prevails.
XThe treaty provision prevails.
29,
Which of the following factors prevent a U.S. nonresident alien married to a U.S. citizen from making the election to file a joint return? The nonresident alien:
Meets the terms of an F-1 visa.
Has U.S.-source income.
Has no U.S.-source income.
XXNone of these prevent a U.S. nonresident alien married to a U.S. citizen from making the election to file a joint return.
30,
Which of the following visas permit counting days of presence in the U.S. to determine the substantial presence test?
J-1
XXB-2
Q-1
M-1