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I have a trade account at schwab.com and I own a small number of ESPP shares from a previous employment with a US company.

I was sent three copies of 1042-S form (https://www.irs.gov/pub/irs-pdf/f1042s.pdf) partially compiled and I have no idea what I should be doing with them. It is stated:

Generally every nonresident alien individual, nonresident alien fiduciary and foreign corporation with United States Income, including income that is effectively connected with the conduct of a trade or business in the US must file a US income tax return. However, no return is required to be filled by a nonresident alien individual, nonresident alien fiduciary or foreign corporation if such person was not engaged in a trade or business in the US at any time during the tax year and if the tax liability of such person was fully satisfied by the widthholding of US tax at the source.

I didn't buy or sell shares in my portfolio in the last year but I suppose the stock price went up in that period.

Does this mean I was engaged in a trade or business in the US? If so: what should I report as gross income?

  • Does the 1042-S you received show income received and if so, what type? Also, was any federal withholding shown on the form? – mikeford Mar 14 '17 at 18:02
  • @mikeford no, nothing on gross income nor on federal withholding. Empty fields. – Dean Mar 15 '17 at 8:03
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As you have indicated, the 1042-S reflects no income or withholding. As such, you are not required to file a US tax return unless you have other income from the US. Gains on stocks are not reported until realized upon sale.

FYI, your activity does not fit the requirements of being engaged in a trade or business activity. While the definition is documented in several places of the Code, I have attached Publication 519 which most accurately represents the application to your situation as you have described it.

https://www.irs.gov/publications/p519/ch04.html#en_US_2016_publink1000222308

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