# US tax for a e-3 visa holder



## BlackMagic111 (Jul 4, 2021)

Hi all hoping to get some advice, I am trying to get a second opinion on my USA tax return. I was in the USA for 13 months on a E-3 visa. I left in March 2020 when covid got real. After I left I called up my pension fund and closed it, asking for a check to be sent to Aus. Now trying to do my 2020 USA tax return they(pension fund) have provided me a 1042-S form. However I thought I was considered an American resident for tax purposes so I should have gotten a 1099-R. 

"you become a US tax resident if you are physically present in the US for at least 183 days in one calendar year. You can also be considered a resident under the Substantial Presence Test (SPT) if you spend, based on a special formula, at least 183 days in the US during the past three calendar years. " Which i was as I was working in the usa for nearly all of 2019 and the first 2 months of 2020. 

They are adamant though they have it right no matter how many times i call them. I have been filling out my return as a usa tax resident so I don't even know where I would attach the 1042-S. This is the only item left on my return to do but I am honestly quite stuck.


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## 255 (Sep 8, 2018)

BlackMagic111 -- From what you wrote, you were a dual status tax resident for 2020. See Chapter 6 of IRS Pub 519, 2020 Publication 519 (irs.gov) and any relevant tax treaties AUSTRALIAWEB.PDF (irs.gov) .

In general, your filing status, as of midnight 31 December is what counts, but your 2020 "dual-status" will supersede that rule.

As far as your pension distribution goes, your statement: "After I left I called up my pension fund and closed it, asking for a check to be sent to Aus.," indicates you were already an NRA when you "cashed-out" your pension, so those rules apply. If you would have cashed it out, while you were still in the USA, you would have received a 1099-R.

It doesn't really matter though -- you pension distributions go on line 5 of your 1040. Neither a 1099-R nor your 1042-S would be forwarded with your tax return. Your status as a NRA really only effects your "withholding" and since you are filing, that will all sort itself out. Normal pension withholding is 20% vice 30% for NRAs.

Normally, an IRS form 5329 would also be submitted, if you took your withdrawals early (deeming a 10% penalty.) 2020 Form 5329 (irs.gov) However, since it was 2020, you may have full or partial relief of the penalties, because of the CARES Act: Coronavirus-related relief for retirement plans and IRAs questions and answers | Internal Revenue Service (irs.gov) 

If you do have an early withdrawal penalty (or a partial one,) that goes on line 17 of Schedule 1 to IRS form 1040. Cheers, 255


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## Moulard (Feb 3, 2017)

Don't forget the Australian tax considerations. US private pension plans don't meet the definition of a foreign superannuation plan and thus are treated as ordinary income from an Australian tax perspective.

If you closed the account within 6 months of returning to Australia, then the distribution would be tax exempt, but if not you may want to read on....

According to written advice from the ATO in 2015 (Advice number 1051218124123 ) on the matter of Income derived while beneficiary was a non-resident, it was found..

"...that there is no apportionment of the amount included in assessable income by reference to the residency status of the beneficiary as at the time the income was derived by the trust."

In light of Baker v FCof T 2015 ATC 10-399 this means that while the corpus would be considered the return of capital, the entire growth portion of the distribution would be subject to Australian tax in accordance with section 99B of the ITAA.

The only (rather tarnished) silver lining is that you would be able to claim a Foreign Income Tax Offset on your Australian return for the US income tax paid. 

Whether or not an early withdrawal penalty can be considered an income tax for the purposes of the Australian FITO may well depend on how and where in the IRC that penalty is defined.

Food for thought if you closed the account after Sept 2020... given the Australian tax filing season has just opened.


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## BlackMagic111 (Jul 4, 2021)

255 said:


> BlackMagic111 -- From what you wrote, you were a dual status tax resident for 2020. See Chapter 6 of IRS Pub 519, 2020 Publication 519 (irs.gov) and any relevant tax treaties AUSTRALIAWEB.PDF (irs.gov) .
> 
> In general, your filing status, as of midnight 31 December is what counts, but your 2020 "dual-status" will supersede that rule.
> 
> ...


Thank you for your very detailed reply, so what you are saying is as I had left the USA when i closed i could no longer receive a 1099-R. Even though I was a resident for the first 3 months of the year and I am trying to get the tax docs for that period? When I called them up last time they said maybe I could get a 1099-R if I faxed them a completed W-9 with my American address and SSN. Though I was confused if this was correct or not.


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## BlackMagic111 (Jul 4, 2021)

Moulard said:


> Don't forget the Australian tax considerations. US private pension plans don't meet the definition of a foreign superannuation plan and thus are treated as ordinary income from an Australian tax perspective.
> 
> If you closed the account within 6 months of returning to Australia, then the distribution would be tax exempt, but if not you may want to read on....
> 
> ...


I cashed it a month after i came back so I should be fine, i hope.


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## 255 (Sep 8, 2018)

BlackMagic111 -- Yes to your question, but bottom line it doesn't matter. The tax and placement on the 1040 are the same. Cheers, 255


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