美股退稅 ----from 資深,熱心(1990年代美國留學)網友的來信

ＯＯＯ：

Dear friends,  
         I don't know whether you invest in US stock with brokerage in US or not.  If you do, I will share with you what the right way is to fill the 1040NR form. But anyway, no matter what, be sure to file the 1040NR form.  

       In US tax law, if you file the tax form, even if there are some mistakes, IRS (the US tax collecting agency) will ask you to correct it and pay the difference in taxes with some interests. However, no filing tax form is treated as having intentionally breaking the tax law. Not only the violator has to pay correct tax and interests, but also a penalty that is very severe. 

      In US system, government does not check every tax form.  IRS only selects some tax form to check. Most of the cases, IRS will pay you what you claim in tax refund. However, in practice, they are people who are audited 7 years after they filed their tax and got refund.

        There is no statue of limitation in tax law.  IRS can always audit you even though it is very rare to audit a person after 7 years. 20 plus years ago, I filed my first 1040NR when I was a graduate student in US. I got my refund about $10. the IRS called me and asked me to fix one error. The refund was reduced to about $5. I had sent in ~$5. however, this was 1990s, the long distance call costed me more than $20.

         let me know if you need help.

Allan:
thanks for sharing
but i have no us tax to refund

OOO:
I think you are doing it using Taiwanese borkerage so probably no need to file a tax form.  In general, US tax law is such that even if one does not have "refund,"  he or she still need to file a tax return form (such as 1040NR, 1040EZ(easy) or 1040), just to declare that there is no refund.  I know this sounds "crazy" but it is US tax law... :)

Allan:
so, you are a real expert .

OOO:
The problem  is that for the kind of investment income, you really should be using page 4 of the 1040NR form to declare income not page 1. Page 4 is for "tax on income not effective connected with a US trade or business."  Page 1 is for "income effective connected with US trade/ business"
There is a link for an easy explanation here.http://www.form1040nr.com/thetaxreturn.php
For a detailed original IRS document check IRS publication 519 , page 21 in the 30% tax section.


Allan:
IRS對ECI的定義如下：
1. You are considered to be engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant on an "F," "J," "M," or "Q" visa. The taxable part of any U.S. source scholarship or fellowship grant received by a nonimmigrant in "F," "J," "M," or "Q" status is treated as effectively connected with a trade or business in the United States. 
2. If you are a member of a partnership that at any time during the tax year is engaged in a trade...

似乎要取回30%預扣股利，可能是不行的

會不會是IRS收到`1042-s表，會先設定是可以退稅，但後來若被查稅發現不能退，就要面臨罰款追繳，是這樣子嗎?
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do you mean , the message from Matthew is correct?


OOO:
Dera Allan,

        Exactly, IRS firstly  likely will send the refund check first until they start checking later.  In my own experience, I got my refund check first and received a notice to correct about 6 months later.  Now, this is a statistical thing, since IRS does not check 100% of all tax return forms from all supposedly tax payers. So, I guess some people may take the chances and actually be lucky.  However, since US tax law does not have a statue of limitation as far as I know, once IRS figures out a tax payer made a mistake for say 2012, they will check 2011, 2010, .... The longer they check, the worse for the tax payer since he/she may not have all the documents any more and then IRS will assume the worst case for the tax payer. Also, there will be interests charge since IRS is owed money for many years in this case...

From IRS Publication 519. page 19. Middle column, "asset use test" section
         "Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States."

From IRS publication 519 page 19, middle column, "business activities test" section, this section is what enables foreign students in US to use page 1of 1040NR and not page 4 of 1040NR.  For people live in Taiwan just invest in US stocks or bonds, they don't meet this test and the asset use test put them in page 4 of 1040NR.

        I hope my explanation is understandable.  I know these details sound a bit complicated and they are complicated to a first time tax return filer. 

        best regards,

Allan:thanks for your kindness and generosity.