Below is our complete 1-page SOP and a clean visual diagram that House of Bookkeepers team follow for every client who holds U.S.-based MLP stocks and needs ITIN + 1040-NR preparation.

 

VISUAL DIAGRAM 

            +----------------------------+
            |   CLIENT RECEIVES          |
            |   • K-1 (always)           |
            |   • 1042-S (usually)       |
            |   • 8805 (rare)            |
            +--------------+-------------+
                           |
                           v
         +--------------------------------------+
         |   STEP 1: REPORT INCOME              |
         |   Use Schedule E (Part II)           |
         |   Input K-1 ordinary business income |
         +-----------------+--------------------+
                           |
                           v
         +-------------------------------------------+
         |   STEP 2: MOVE INCOME TO SCHEDULE 1       |
         |   Schedule 1, Line 5 = income from Sch. E |
         |   Schedule 1, Line 10 = total             |
         +------------------+------------------------+
                            |
                            v
         +--------------------------------------------------------+
         |   STEP 3: FILL FORM 1040-NR                            |
         |   Line 8 = income from Schedule 1                      |
         |   Line 16 = calculate tax                              |
         |   Line 25g = withholding from 1042-S                   |
         |   Line 25e = withholding from 8805 (if any)            |
         +---------------------+----------------------------------+
                               |
                               v
         +--------------------------------------------------------+
         |   RESULT: Refund or Amount Due                         |
         |   Refund = Payments – Tax                              |
         |   Amount due = Tax – Payments                          |
         +---------------------+----------------------------------+
                               |
                               v
         +--------------------------------------------------------+
         |   STEP 4: ASSEMBLE ITIN PACKAGE                        |
         |   W-7 + 1040-NR + Schedules + Withholding forms        |
         +--------------------------------------------------------+

 

MLP CASE SOP

1. Collect Required Documents From Client

Ask the client for:

Income Forms

✅ Schedule K-1 from the MLP partnership
✅ Form 1042-S from broker (common)
✅ Form 8805 from MLP (if any — rare)
✅ Form 8288-A (only if units were sold under 1446(f))

Identity

✅ Passport (for CAA certification)

 

2. Prepare W-7

  • Tick Reason b – Nonresident alien filing a U.S. tax return
  • Enter legal name and foreign address
  • Attach CAA COA form + passport certification

 

3. Prepare Schedule E (Form 1040)

Purpose: Report partnership income from K-1.

Fill Schedule E – Part II:

  1. Enter MLP partnership name + EIN
  2. Enter Ordinary Business Income (K-1, Box 1)
  3. Total net income = carry this amount forward

 

4. Prepare Schedule 1 (Form 1040)

Purpose: Carry Schedule E income to 1040-NR.

Fill:

  • Line 5: Partnership income from Schedule E
  • Line 10: Total additional income (same number)

This total will automatically go to Form 1040-NR Line 8.

 

5. Prepare Form 1040-NR

Page 1 – Income

  • Line 8: Income from Schedule 1
  • Line 12: Usually 0 (nonresidents don’t get standard deduction)
  • Line 15: Taxable income
  • Line 16: Tax (use IRS tax tables)

Payments and Withholding

  • Line 25g: Report withholding from Form 1042-S
  • Line 25e: Report withholding from Form 8805 (if received)
  • Line 25f: Report withholding from 8288-A (if received)

Final Amount

  • Refund = Payments minus Tax
  • Amount Due = Tax minus Payments

 

6. Attach Required IRS Forms (Correct Order)

Top / Front of Return

  1. W-7
  2. Form 1040-NR
  3. Schedule 1
  4. Schedule E
  5. 1042-S forms (attach here)
  6. 8288-A (attach here, if any)

Back of Return

  1. 8805 (attach here only if received)

CAA Documents

  1. COA certificate
  2. Passport copy (CAA certified)

 

7. Submit Package

Mail the full package to:

Internal Revenue Service
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342
USA