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My situation is as follows: In 2017 I've received an ~$18k income from US sources while living in Ireland (also I'm not a US citizen and was not a US resident at that time).

I have moved to US since (2019) and filed US tax returns for 2019 and 2020.

I have just received the notification from IRS that I have a "missing" tax return from 2017. Was in my situation I supposed to file a return in US even though I was not a US tax resident?
If so, do I need to file a 1040NR form now for 2017? What is a good software to do that? (TurboTax, FreeTaxUSA don't seem to support filing 1040NR =)

Also looking at the form 1040NR now - how do I answer questions about residence/etc. Do I specify the information that was true as of 2017 or information that is true now?

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    What exactly did they say? Was any income reported on your SSN in 2017? Did you even have a SSN?
    – littleadv
    Commented Apr 16, 2022 at 6:10
  • Yes, on both counts: I had SSN from doing an internship in the US in ~2013 They sent me letter 725 (meeting invite) and request me to file a return for 2017 before that. They also seem to request a form 1040 without any suffixes which seems wrong to me. Specifically the Form 9297 lists "Form 1040 period 2017" as missing.
    – Stvad
    Commented Apr 16, 2022 at 17:24
  • In 2017 when you had this income, was it reported to the IRS on 1099-MISC or a similar form? Did you submit W9 to that employer?
    – littleadv
    Commented Apr 16, 2022 at 19:31
  • What was the income from? How did you determine that the income was "from US sources"? Did you perform work while you were physically in the US in 2017?
    – user102008
    Commented Apr 16, 2022 at 22:02
  • "Did you perform work while you were physically in the US in 2017" - no. Income is from US company for which I did coaching for, I did sign W9 for them, I believe.
    – Stvad
    Commented Apr 16, 2022 at 22:43

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Since you got a letter 725 ("Meeting Scheduled with Taxpayer"), you should take this seriously and find a licensed tax advisor who can help you prepare to that meeting or attempt to resolve it with the Revenue Agent before the meeting.

In the US, people who are licensed would either be Attorneys or CPAs (licensed by the State where you live), or Enrolled Agents (licensed by the IRS, on a Federal level).

From what you described, it seems like the IRS doesn't know that you're a non-resident for the year 2017, but does know that you have received income and was able to determine that you received it but didn't file a tax return to report it. It is likely that the person who paid you reported it to the IRS using form 1099. I'm guessing they did that because when asked you for your SSN - you gave them one, and either did that on form W9, instead of filing form W8 with them to certify your non-resident status, or they just messed up.

Either way, you now need to explain your situation to the Revenue Agent, since you're under audit. If you were in fact non-resident in 2017 and can show all the evidence for that (including showing that you didn't pass the substantial presence test), you should be off the hook, but just dealing with this mess now may cost you.

Ideally a good tax professional would be able to resolve it on the phone with the Revenue Agent, or maybe through written communication, without appearing for the physical meeting.

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  • Thanks for your answer! Trying to find a CPA now 😅. Does letter 725 constitute a formal "initiation of audit" if that's a thing ?
    – Stvad
    Commented Apr 18, 2022 at 21:32
  • Also as a reference for being off the hook apparently if I'm not a us person and perform work outside of the use that should be considered non-us source: irs.gov/individuals/international-taxpayers/…
    – Stvad
    Commented Apr 18, 2022 at 21:33
  • @Stvad right, but you need to figure out how and to whom present this, since apparently the IRS is unaware that you were a foreigner at that time
    – littleadv
    Commented Apr 18, 2022 at 21:38
  • Before engaging an expensive agent I would at least try a) talking to the IRS and explaining the situation b) making an official statement that you were not resident and/or filing a tax return for that year.
    – DJClayworth
    Commented Oct 9, 2023 at 20:58

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