Client worked in the US under a TN visa (Professional from Canada). He never applies for Green Card or citizenship.
He has been filing 1040 for the past 10 years based on substantive test.
He worked and stated 5 months in 2017 in the US and moved to another country for good.
So I think he should terminate his U.S. residency status by the end of May (prior to December 31) and claim dual status residency for that year. Based on this situation, he would have to file 1040NR as a return and use 1040 as a Statement.
I am confused as to preparing the Dual Status Returns.
He has a W-2 for the work he performed in the US And a 1099 for dividend from US companies.
On 1040NR (as a return), should I just report the dividend earned in his nonresident period and calculate the tax owe and sign it. And also prepare a Statement of Residency Termination (instead of Form 8840). He may need to make payment because there is no estimate tax payment or FWT towards that dividend.
On 1040 (as a statement), should I report W-2 income while in the US, and dividend and earned during the first five months. Calculate the tax, and ask for a refund (tax less FWT) and not signing it. He will still entitled to deduct medical expenses on Schedule A.
Please let me know if I am correct. In another words, is it preparing two separate returns for the resident period and the nonresident period. File both and use 1040NB as the returns and 1040 as the schedule. Please help.