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Home > Yippee, my form 1042S arrived!

Yippee, my form 1042S arrived!

April 3rd, 2007 at 01:15 pm

There's nothing wrong with giving each form a unique ID number, after all the names of some forms like the "Foreign Person's U.S. Source Income Subject to Withholding" form don't exactly roll of the tongue. What amazes me is that even common forms (equivalent to our Australian annual "tax summary" statement) seem to get referred to by their "code name" eg/ "W2" or whatever.

Anyhow, back to the topic of this post - my 1042S arrived in the post today. It's really just of academic interest to me. As a non-resident I don't have to do a US tax return (as far as I know). The information provided is also of no practical use in filling in my Australian tax return (due after June 30). Even though there's a tax agreement between the US and Australia so I can claim a tax credit on my Australian return for any US tax already paid on my US dividends, the Australian system requires me to report all transactions in the Australian tax year (1 July - 30 June), so a Calendar year statement from the US isn't really much help. Also, the Australian return must list each individual transaction converted to the equivalent AUD value applicable at the time of the transaction. Theoretically this would mean looking up the exchange rate for the date each dividend was paid into my US broker account. But I'll probably just use the exchange rate that was applied to the funds I transferred each month to make my stock purchase - the variation in exchange rate will not have a material impact on the calculated amounts, as the totals for Jun-Dec 06 are only USD$60.25 in dividends and USD$9.04 US Federal tax withheld. As the Australian tax return often only requires whole dollar amounts for many items, the rounding error is likely to be much larger than any difference in exchange rate that occurred during a month.

I haven't quite worked out what my US broker is doing with my US dividend amounts - the first dividend sat in the cash account, and then was deducted from the amount due for the next stock purchase I made. However, subsequent dividends have simply accumulated in the cash balance of my US stock account for several months, and weren't credited against the amount due for subsequent monthly stock purchases. The amount is trivial, but it's still annoying to have a cash balance sitting in my US account unused and not earning any interest, when I then have to borrow that amount in Australia to pay for my next stock purchase in full! Hopefully when I start selling my first US "Little Book Portfolio" stock purchases at the end of the year (once they've been held 18 months) the amounts will be added to the current cash balance and be used to fund subsequent monthly stock purchases.

Enough Wealth

1 Responses to “Yippee, my form 1042S arrived!”

  1. Gerard Says:
    1175738357

    Yea... The US guys love their tax form numbers... Does help though when working through the US returns and you know exactly what to ask for as opposed to saying the interest statement from xyz bank, you just ask for their 1099 Big Grin

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