I'm a citizen of India. I have some money in IRA and 401K account that I have to withdraw in 2009. I will loose my resident alien status next year. I'm not planning to roll this 401k money into IRA since I need the money very dearly next year. I must withdraw money in both 401K and IRA.

If I have to file the taxes for US as non-resident alien for this early withdrawal amount,

(a) can I take personal exemption on this amount? I know I'm not allowed standard deduction.
(b) will I be allowed to follow the same tax table as US citizens or 30% flat rate? Not sure what the tax treaty between India and US says on this.
(c) Do I need to pay 10% penalty on top of this?

Thanks in advance for the reply from experts on this field.

1. On nonresident tax return, you don't get standard deduction. You get itemized deductions.
2. The withdrawal will be subject to early withdrawal penalty of 10%. Then the withdrwal will be treated as ordinary income, so tax as per your tax return.
3. Yes.
Read about IRA: Your U.S. Tax Return: Traditional IRA and Roth IRA (http://taxipay.blogspot.com/2008/05/traditional-ira-and-roth-ira.html)

Thank you for the reply. My questions remain unanswered.

[1] Are non-resident aliens allowed to claim personal exemptions? I think this amount is like $3400 for 2007 and it will be $3500 for 2008.
[2] Are non-resident aliens (from India) allowed to follow the tax table as given by IRS for US citizens/resident aliens? Or it will be a 30% flat rate? I understand tax rate will be based on the treaty for some of the countries.

Thanks again for the reply and for the anticipated replies.

1) Yes, non-resident aliens ARE allowed to claim ONE Personal exemption.

2) You will follow the tax tables.

AtlantaTaxExpert:

Thanks for the reply.

[1] I can follow the tax table because of the US treaty with India?
[2] I hope tax table can be followed for 401K early withdrawal as well.

Also, please let me know if you are a CPA and you file taxes for non-resident aliens. How can I contact you? I want to speak to you before I leave the US. Is there an email or phone number?

I am NOT a CPA, just a tax consultant that specializes in tax for foreign nationals, both as resident aliens and non-resident aliens.

My email address is taxexpert@<hidden>.