Dear all,
My status in US changed from F1 to H1B in mid Nov 2004. I was on F1 from Sep 2002-Nov 2004.[OPT from May 2004-Nov 2004]
Will I be able to take the standard deduction ? If so will it be under the US-India treaty?
Please help.
Regards.

AtlantaTaxExpert

Jayeshb:

In the late 1990s, I did quite a few 1040NRs and I knew the rules pretty thoroughly. However, since 9/11, I have had to cut back my tax practice due to military commitments, so I am a bit rusty when it comes to the 1040NR.

I need to ask some questions:

Based on your post, I assume you are from India. If so, did you earn any income while under the F1 visa? While under the H1B visa? If so, how much under each?

Are you married? If so, what is the status of your spouse?

I ask these questions because I went through a question-and-answer routine with another Indian citizen last week which, had I asked these questions up front, I could have answered him with one post instead of six.

I await your answers!

jayeshb

Salary approximations for 2004
F1 - 2004 - $44K
H1 - 2004 - $5K

I am currently single.

Thanks for your help in advance

AtlantaTaxExpert

Okay, IMHO, you can take the standard deduction under provisions allowed in the Indian Tax Treaty.

However, double-check to be sure that your itemized deductions do not exceed the $4,850 standard deduction. This is very possible if you live in a high-tax state like New York, California or Massachusetts (in such states, the state and local income tax by themselves would probably exceed the standard deduction). If you own a house on which you are paying a mortgage, then for sure the itemized deductions exceed the standard deduction.

AtlantaTaxExpert

See my posting on this issue!

Tax04F1toH1

I have a similar situation like him. I am from india. I was on F1 from Aug2002 to Oct 2004, on OPT from May 2004 to Oct 2004 and on H1 from Nov 1 2004. I earned approx. $5000 on F1 as a Graduate Research Assistant, $20,000 on OPT and $ 4000 on H1B with the same company as an OPT. I have received 2 W2s. One for $5000 from my college and the other one for $20000+$4000=$24000 from the company. They deducted around $400 under social security and medicare taxes since Nov 1 - Dec 31 2004.

My questions:

1. Am i supposed to file 1040NR-EZ with $4850 as Std. ded amd $3100 as personal exemption.

2. Do i have to add all the earnings and the taxes from both W2s and fill out only one 1040NR-EZ?

3. If I am considered as NR, Am i supposed to get the FICA taxes back for the year 2004 when I was on H1B?

I am really looking forward for this response.

Thanks a lot in advance

Deepa

I have a similar situation.

I was on F1-OPT from June 26th 2003 till june25th 2004 and
on H1 from june 26th 2004 to now.

my husband was on H1 all through this time.

What form should i be filing.Can we file a joint return ? which one would be best. I am from india too

thanks in advance
Deepa

AtlantaTaxExpert

Deepa:

You may want to change your "handle". There is another Deepa on this board and I thought you were her.

Your husband is a resident alien. Due to this fact, you have two choices:

1) You can choose to be treated as a resident alien and file jointly with your husband. You would file Form 1040/1040A/1040EZ. This will probably be the easier of the two options.

OR

2) You can file dual-status and file separately from your husband. He would file Form 1040/1040A/1040EZ. You would prepare Form 1040NR/1040NR-EZ as a "DUAL-STATUS Statement" for the part of the year you were under F-1 visa status and attach it to Form 1040/1040A/1040EZ. Since you are an Indian citizen, you would be allowed to claim the standard deduction on the Form 1040NR/1040NR-EZ or the itemized deductions on Form 1040/1040A/1040EZ, but not both. See my other thread (with bold red and bold green writing) as to the procedure you must follow to file dual-status.

As to which one would be best, I cannot answer that without actually the preparing the returns in question and comparing the end result.

Bottom Line: The best way to determine which is best is to prepare your returns both ways, then file the one which produces the least amount of tax.

If you have more questions, but do not wish to reveal details of your finances on this public forum, contact me at .

Deepa

Thank you very much for your guidance.

1. I have already done the first option, but i was not sure if i can use the second one and you cleared me on this.

2. I will try doing the second option this weekend.

3. but last year i filed together with my husband will this be of any issue in filing the present year taxes

4. If in this year i file separately form my husband and if he files 1040 EZ will he be able to claim me on his return as a dependent.

i think the answer is no and he will have to claim the standard deduction amount for married filing separately. ( because both of us are working).

Can you please say if i am right or wrong in this thinking.

5.Lastly i have another question. I am trying to help my brother also filing taxes. he has been on F1 from 01-01-2001 to 08/20/04 and then on H1 the rest of the year.
his marital status is single.

so according to your answer for my yesterday's question he should be filing a dual status or should he be filing like a non resident since for tax purposes he has been in the country only for 133 days.

Your help would be really appreciated
thank you once again

AtlantaTaxExpert

Deepa:

Okay, I did not realize that you filed jointly with your husband for 2003. Looking at your original post, I should have anticipated that possibility.

IMHO, you are now considered a resident alien and the second option is not available to you unless you choose to revoke the resident alien option (read pages 10 - 11 on IRS Pub 519 on how to revoke your resident alien status). Now, that is your choice, but unless you and your husband's combined income exceeds $178,000, it is likely filing jointly using Form 1040/1040A/1040EZ will result in less tax being owed than filing a Form 1040NR. You may also file married filing separately as a resident alien (using Form 1040/1040A/1040EZ ) if that option results in less tax than filing jointly.

BOTTOM LINE: Compute the taxes all three ways: #1 - Resident alien filing jointly, #2 - resident alien filing separately, and #3 - husband filing resident alien filing separately and you filing non-resident alien using Form 1040NR and claiming the standard deduction under the Indian-U.S. income tax treaty. All things being equal, I would bet my tax preparation fee that #1 results in the least amount of taxes owed.

As for your brother, he does not meet the Substantial Presence Test, so he should file Form 1040NR or Form 1040NR-EZ as a nonresident alien. For 2005, he should file as a resident alien, using Form 1040/1040A/1040EZ.