[CoolASR]

Hello all,

I am currently living in US as a foreign employee. So that would automatically put me as a non-resident alien for tax purposes.

I received a letter from the IRS that I have not filed form 1040 for year 2006 and 2007. I called them and told me to file 1040NR instead.

I have bought and sold stocks, mutual funds, options, and futures contracts in year 2006 and 2007. Both years resulted in a loss in terms of net total.

My questions are:
1. I am 90% sure I am being taxed at 30% for capital gains. This may sound dumb but I have to ask it anyway to make sure. The 30% tax is on per transaction that resulted on a profit or gross amount in the year? If it is a loss, I assume I don't owe any taxes?

2. Which form do I have to fill for Futures Contracts/Options/or Stocks? Or is just 1040NR? And I shouldn't worry about schedule D (stocks) or form 6781 (for futures contract/options)?

3. The interest from my bank is not taxable. Do I still have to report it on 1040NR?

Thank you for your help in advance!

[MukatA]

"I am currently living in US as a foreign employee. So that would automatically put me as a non-resident alien for tax purposes."
Your statement is not correct. Your resident status in the U.S. depends upon your visa and number of days in the U.S.

[CoolASR]

"I am currently living in US as a foreign employee. So that would automatically put me as a non-resident alien for tax purposes."
Your statement is not correct. Your resident status in the U.S. depends upon your visa and number of days in the U.S.

Thanks for replying,

I am on an A1 visa and since I stayed more than 183 days in the US any income connected with US business is taxable, so I am a non-resident alien. This is what I understood from the IRS website as well as on the phone with them.

Please if anybody has an idea on how to answer the questions above, please reply.

Thanks in advance!

[MukatA]

You have diplomatic visa. Your days in the U.S. are exempt from residency so you are non-resident.

[AtlantaTaxExpert]

I believe that I have answered your email regarding this issue.

I agree that your A-1 diplomatic visa makes your salary as a diplomat exempt from income taxes, AND you are considered to be a non-resident alien, but NET income earned for the stocks, mutual funds, options, and futures contracts transactions must be properly reported using Schedule D to determine your annual net income.

If there is NO net income, then no taxes are due. Even if you have net income, your personal exemption ($3,300 for 2006 and $3,400 for 2007) may offset that net income on your 2006 and 2007 tax returns.

However, you MUST file the returns with the Schedule D, or else the IRS will prepare the returns for you and ASSUME any money received in each sales transaction of stocks, mutual funds, options, and futures contracts was ALL net income.

That would have MOST UNFAVORABLE tax consequences.