1099 INT for Non resident Ailen
Seeking inputs on handling tax return for nonresident alien who used to be a U.S. resident but now is canada resident and received a 1099-INT for interest from a U.S. bank account because no W-8BEN was submitted. This is the only U.S. income. The IRS portal shows that a tax return is missing. Would it be better to proactively file a nonresident return (Form 1040-NR) to confirm nonresident status, instead of waiting for the IRS to send a notice?
According to the IRS website, this type of income should be reported in Line L of Schedule OI, but that line specifically asks for a treaty country. Since U.S. bank deposit interest for nonresidents is exempt from U.S. tax under domestic law (not just by treaty), should this interest instead be reported under Schedule NEC, line 2b, with a tax rate of 0% instead of Question L
