i was on f-1 opt from 1/1/2008 - 10/1/2008 at which date my h1-B status became valid. it is still less than 5 years since I have been in the us. my questions are:

1) am i correct in asuming that i can to file 1040nr-ez, 540nr(short) and 8843 for 2008?

2) also, can i still claim $5000 from my wages exempt from taxes (under us-pakistan tax treaty) even though i was not a full-time student throughout 2008 but was working for a us company?

3) i have been filing 1040nr-ez in previous years too except 2007 where i erroneously filed 1040 and am filing amendment. After I file the amendment for last years error, do I list 1040 or 1040nr as the form used in 2007's taxes in the space on 2008's 1040nr-ez?

thanks,

IntlTax

1. Yes.
2. No.
3. select 1040NR but attach a statement to the return explaining what occurred.

capkguy

Thanks IntlTax, just a couple of follow-ups/confirmations:

1) Are state residency requirements the same as federal ones, i.e. even though I resided in California the entire year (in F-1 OPT status), I would still be considered a non-resident for state taxation pruposes?
2) By virtue of the same F-1 OPT status, won't I be considered a student to invoke the tax treaty? (Sorry, I really like that $5000! :-)

Thanks again!

MukatA

Yes, you you have income during F1 or OPT, you will get treaty deduction. Read: Your U.S. Tax Return: U.S. Tax Filing Requirements for Non-Residents

IntlTax

Article 13, paragraph 1 of the Pakistan-U.S. Income Tax Treaty provides in part:

Because you are not in the U.S. solely as a student for 2008 (you were also here under H-B), you do not qualify for this exclusion.

You need to look at the California residency rules to determine your California residency status. Some states follow the federal rules but others do not.

capkguy

I guess to be safe, I ought not to. But the instructions form 8843 state that a student may be considered exempt. And a student is defined therein as

A student is an individual who is
temporarily present in the United States
under an “F,” “J,” “M,” or “Q” visa and
who substantially complies with the
requirements of the visa.

If you were a student under an “F,”
“J,” “M,” or “Q” visa, you are considered
to have substantially complied with the
visa requirements if you have not
engaged in activities that are prohibited
by U.S. immigration laws and could
result in the loss of your visa status.

Under these provisions I would be considered a student (for 2008) and do not have to meet the substantial presence test which is why, I guess, I will be filing 1040NR vs 1040. Technically, working on OPT is still as a "student", I think. But the question is: is this same definition valid for claiming income exempt under the tax treaty?

However, something else interesting:

The definition in 8843 continues:

Even if you meet these requirements,
you cannot exclude days of presence in
2008 as a student if you were exempt as
a teacher, trainee, or student for any
part of more than 5 calendar years
unless you establish that you do not
intend to reside permanently in the
United States. The facts and
circumstances to be considered in
determining if you have demonstrated an
intent to reside permanently in the
United States include, but are not limited
to:

1. Whether you have maintained a
closer connection to a foreign country
than to the United States (for details,
see Pub. 519) and

2. Whether you have taken affirmative
steps to change your status from
nonimmigrant to lawful permanent
resident.

Now I did take affirmative steps to change my status to a lawful permanent resident in 2008. And both 8843 and 1040NR-EZ ask me this. But is the answer to this question only relevant to the IRS if I were here for more than 5 years?

Thanks,
Ahmad

IntlTax

I don't disagree with anything you included. All of the information in your most recent post deals with U.S. statutory rules. You are an exempt individual until you received your H1-B visa. Of course, this all has nothing to do with the $5,000 exemption provided by the treaty. You must meet the treaty requirements to get treaty benefits. You do not meet the requirements under the treaty.

capkguy

I see. That makes it clear. Thanks IntlTax.

Now for 2007's amendment, can I claim the treaty benefits? Because then I was a full-time student from 1/1/2007 - 5/1/2007 at which date my OPT status became valid. But I was on OPT (working for a US company) the remainder of the year and did not take H1-B status until 10/1/2008 as noted earlier.

Thanks,

capkguy

Also just read the treaty. It says:
(1) A resident of one of the contracting States, who is temporarily present in the other
contracting State solely
(a) as a student at a recognized university, college or school in such other State, or [...]
shall be exempted from tax by such other State (i) on all remittances from abroad for the
purposes of his maintenance, education or training, and (ii) with respect to an amount not in excess of 5,000 United States dollars for any taxable year, representing compensation for personal services.
Now I was a student at a recognized university (hence my valid F-1 status). Nowhere does it say "taking a full course load". And OPT is "training" which is stated to be exempt.

So does it seem that I can claim treaty benefits under the text of the treaty?

Thanks,

IntlTax

Were you in the U.S. "solely" (e.g., "only") as a student during the year?

Since you were here part of the year under H1-B, I don't believe that you were here solely as a student.