Hello Atlanta Tax Expert,

My background:
I am student from Atlanta GA in 2005.
1. I am Indian
2. I was on F-1 whole last year 2005 (although H1 was approved)
3. Started H-1 from 1/feb/2006
4. I was a graduate assistant(TA) from Jan-May 2005, hence I have a W-2 from college.
5. Then I was working on OPT until Jan 31st 2006, hence I have 1099 Misc.

My Questions:
1. I read your posting and I think I have to file 1040NR and Schedule C-EZ. is this right?
2. Can I show $2,500 as "student loan interest deduction" (Form 1040NR line 32) as I paid the amount to my parents in India(in the form of check, direct transfer to bank and some in cash)?
3. Do I qualify for $3,200 and $5000 standard deductions according to the treaty?
4. I am currently a resident in Atlanta, so wanted to know if I could have your contact number so that I could ask you some more questions if I have?

Thank you and hope to read your reply soon,
Ash

Ash:

1) Yes, that is correct.

2) No, you cannot. Payment of student loan interest to a family member is not deductible.

3) Yes, you do.

E-mail me at dpmtax@<hidden>.

Thank you Atlanta Tax Expert

Glad to help!

Hello Atlanta Tax Expert,

I have another question:

1. An Indian student on F-1; Works in college has got W-2; which form should she fill? 1040NR-EZ or 1040NR?
2. I guess she also has to also fill 8843 and 500EZ(for GA state tax), am I right?
3. Does she qualify for exemption deduction(line 13 of 1040NR-EZ)? If yes then how much would it be? Her Wages and tips are $5414.00; Federal$306.70 and State $87.96

Hope to hear from you soon,

Thank you

She can file Form 1040NR-EZ. She qualifies for both the $5,000 standard deduction and the $3,200 personal exemption, which means she will get all of her federally withheld taxes ($306.70) back.

Yes, she should file GA Form 500-EZ. I believe she'll get all of her withheld state income tax back as well.

Yes, she should also file Form 8843.

Hello Atlanta Tax Expert,

Thanks for the quick reply, but as we did the taxes, it comes out that her taxable income comes around $2126 [after doing $5414 - 87.96(state income tax)-3200(exemption)]. And the tax on that income is $214.

So finally we get $92.70 [after 306.70(federal withheld) - 214.00]. Just want to ask you if this procedure we are doing is it right? If yes then it means she will not get $306.70 which is withheld.

Hope to receive your reply soon,

Thank you once again,
Ash

No, you forgot to subtract the $5,000 standard deduction (Indian nationals on F01 visa status can claim the stnadrd deduction under the U.S.- India Tax Treatym Article 21(2).

Thank you Atlanta Tax Expert, it helped me to figure out where I was going wrong.

I read Pub.910 page25 and 26 and then Pub.901 page 22(table7). I guess the 5,000 std deduction is applicable to me also as I was on F-1 the whole last year although I did OPT.

Thank you once again,
Ash

The $5,000 standard deduction is applicable to all Indian nationals who are on F-1 visa status, regardless of whether they were students, on OPT or CPT.

Atlanta Tax Expert - thank you for all the advice given here. Its been very helpful. I have a few questions i was hoping you could answer.
I was on OPT from March to Oct, Had my H-1 approved in Oct but stamped only in Feb 2006.

1. I am living in CA, i assume all the information given above about Federal Taxes applies to me as well?
2. I tried looking in Pub 901 (tables and India section) but could not find reference to $5000 standard decduction. Where can i find this information? Also - where in the 1040 NR EZ should i apply this amount? (Next to itemized deductions?)

thanks and hoping to hear from you soon!

I am plagiarizing another post, but he said is so well, so...

Report as a standard deduction in line 11, enter $5000 in line 6 and report it on page 2 (section j), citing IRS Pub 519.

Thank you Atlanta Tax Expert for the confirmation.

I have to ask another question.

I have worked as student in college and my medical and social security taxes were withheld in 2004 and 2003. I did not file any return in 2005 as I did not know. But now as I read your posts I understand I should have filed 843.

1. Can I file 843 for last year 2004 and 2003?
2. What are the documents required to file them (I still have a copy on my W-2 for 2003 and 2004)?
3. Do I need to amend my last year taxes(also I think I have filed then wrongly)If so, how can I amend them?

Thank you,
Ash

Ash:

If you filed as a resident alien, you must amend your return to convert back to non-resident alien status. Note that the IRS does NOT have to approve this, but they will if it is clear you filed as a resident alien in error.

Once they approve your conversion back to non-resident status, then you can file Form 483. Download ITS Pub 519 and read pages 45 - 47 for the filing process.