Ask Me Help Desk - Taxation for Non resident alien with dividend income from US stocks and bonds

Hi all,
I was on F1 from 2001 to 2004 and left back to my country (India) in 2004. I have a stock trading account in the US managed by my US stock broker. I filled 1040NR while I was a student, but when I returned to my country I didn't know that I still need to file the tax returns. I get dividend income which I now know is taxable. I need to file 2007 and 2008 tax returns. How to I make it clear to IRS that I am not longer residing in the US and that only my dividend income is taxable and all other capital gains are not. I am not in US and nor am I planning to go there. Do I need to file the 1040c form stating that I am no longer in the US. I don't want to pay taxes on my capital gains in 2007.

Please help

Thanks

If your income in 2007 is more than $3400 you must file tax return. File nonresident tax return.
How did you conclude that capital gains is not taxable?

You need not file any tax returns but you may have some work to do.

1. If you have not already done so download Form W8-BEN
http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
If you have not sent this to your broker yet the company will withhold 30% on your dividends and probably the gross amount of your stock sales.

2. Fill in your name and check individual. On line 6 put in your SS or ITIN number

3. In part II check boxes a and b

4. On line 10 you will write Article 10 and write 25% for the withholding amount and type of income "dividend". Get another W8-BEN do all the same stuff as before but on line 10 you write Article 13 and 0% for the withholding amount, type of income "capital gains".

Now, sign and date it and send it to your BROKER not the IRS. Your tax obligations to the US are complete; there is no need to file a return.

If too much tax was withheld in error you will file a 1040 NR, go to page 4, fill out that part and correct the error.

Agree with Five Rings. However, if broker did not withhold tax at all on the dividends, you need to file Form 1040NR and pay the appropriate level of tax. For future years when the tax is withheld, no U.S. tax return is necessary.