Form 8805
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(copied from other forum)
I don't deal with much foreign stuff, so I'm hoping somebody can help me out. New client, originally from Germany, has been living in US and filing Form 1040 as resident alien for several years. He presented me with a final partnership K-1, including Form 8805 which has a line 10 entry "Total tax credit allowed to partner under sec 1446" in the amount of $15K (line 9 has $43K as income allocable to partner).
From what I've read about Form 8805 and from Lacerte input, it looks like he can only get credit for the $15K when filing Form 1040NR. I see no place for it on Form 1040. Unfortunately, he files Form 1040 as a resident alien. Has anyone ever dealt with this situation or have an idea how to handle it?
Thanks much,
Ron
Comment
I hear what you're saying, but the $15K appears to be US tax w/h at source by the partnership (my take). If he were filing Form 1040NR it would show up in the "payments" section along with his other US w/h and estimated tax payments. Obviously I don't want him to lose this.
Comment
If it was withheld, It should show up on the K-1 line 15-O (Backup withholding). It might be worth your time to call the partnership and ask them if this was withheld. I have seen a lot of strange things lately on K-1’s that were not prepared correctly, and this is how we resolved some of the issues we ran into.
Comment
Here is my take (but I’m not an expert in this area)…
Form 8805 is used for Foreign Partners. If the client is using form 1040 then he is not “foreign.†and not eligible for the credit. He doesn’t need it anyway, as he is not paying tax in another country (the reason for the credit). Does that make sense?