# Andorran lady a bit nervous



## crisvic (Jan 25, 2020)

A NRA lady with no u.s. source income living in Andorra married to a green card holder who is living currently in the states and files separately. This lady never filed taxes in the states as she has no income there. But she just remembered that in 2013 she had some $200 dividend and sold a u.s stock with a little gain. Looks like her husband is making her a little nervous about it.
Would like to know how long it takes for tax returns to prescribe in the u.s., and if she should backfile that year 2013. In Andorra she says it,s 3 years. What should I tell her? Thanks for your help


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## 255 (Sep 8, 2018)

crisvic -- Tell her not to worry about it; just relax. The IRS has "bigger fish to fry." From a practical perspective, if that was her only income (assuming she lived in the U.S. in 2013,) then she wouldn't owe any tax (the standard deduction for 2013 was $6,100.00 for single or married filing separately,) and one exemption was worth $3,900 -- so unless the gain in the stock plus the dividend were over $10,000.00, she would owe zero tax. I suppose, if she wanted to file a back tax return, "to let her sleep at night," she could (the back returns are readily available on the IRS web-site,) but she lives in Andorra, and she owes zero tax, so the IRS isn't interested. Cheers, 255


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## crisvic (Jan 25, 2020)

Thanks


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## Moulard (Feb 3, 2017)

Have they made an election under s6013(g) for her to be treated as a US person?

Setting that one aside for the moment...

Shares are basically treated as the sale of personal property for income sourcing purposes, and if the US Company share was sold while a tax resident of Spain, it would be Spanish sourced.

Dividends are considered a payment from the company, and thus a dividend from a US company would be considered US sourced and technically US taxable.

There is no standard deduction for a non-resident alien with US sourced income.

Given the dividends were less than $1500 the company would not have been required to provide a 1099-DIV

Without a 1099-DIV, the IRS will know nothing about it.

If a 1099-DIV was issued, and she still has it she can check if federal income tax was withheld.

I would not recommend filing.


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## crisvic (Jan 25, 2020)

thanks so much


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## crisvic (Jan 25, 2020)

Moulard...

if I understand you right...if this lady, NRA with a US Social Security card (not valid for employment) resident of Andorra through her andorran broker sold 1000 shares, for example, at the NYSE, of General Electric with a 5000$ capital gain..wouldn,t the IRS know nothing about it? thanks


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## Moulard (Feb 3, 2017)

crisvic said:


> Moulard...
> 
> if I understand you right...if this lady, NRA with a US Social Security card (not valid for employment) resident of Andorra through her andorran broker sold 1000 shares, for example, at the NYSE, of General Electric with a 5000$ capital gain..wouldn,t the IRS know nothing about it? thanks


My understanding is that all* capital gains except for real property are sourced to where they sellers tax home is located. 
Given you say it was an Andorran broker, the chance of them making an information return of one form or another to the IRS would be, I assume, negligible.
Even if the IRS knew about it, it would not be considered US sourced income and thus not taxable.

So unless there is some clause in the US-Spain tax treaty that would re-characterise gains as US sourced, in whole or in part, then there would be no US tax liability.

* OK, there is a big asterisk on ALL here, but I am confident that the sale of shares in a US Company sold when the owner is not a US taxr-esident is considered foreign sources as this is a specific example in an IRS knowledge base item dealing with income sourcing rules.

If you are keen... here it is.



https://www.irs.gov/pub/int_practice_units/ftc_c_10_02_05.pdf


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## Bevdeforges (Nov 16, 2007)

If she has a US SS number marked as "not valid for employment" then it means that the SSA is aware that she is a non-citizen. Normally the payer should be withholding any tax due on the payment (usually 30% for an NRA) before they remit the payment (or credit her account for the payment).


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## crisvic (Jan 25, 2020)

Thanks so much to both of you.


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