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quin · Mar 28, 2006, 09:26 PM

Hi, I am a international student from India. I was working on OPT from Oct 01 2005 till end of year. I filled for my H1 on 18August2005 and it got approved sometime in Nov2005 with the start date for H1 as 12 Feb 2006. Now which form do I need to fill?? Can I still fill the 1040NR-EZ and take both the standard deduction of $5000 and personal exemption of $3200?? Would appreciate if you could answer this.

Also I got a bank interest from my savings account around 300. Do I need to mention this either in federal or state taxes??

Thanks in advance.

AtlantaTaxExpert · Mar 29, 2006, 10:42 PM

Your question:

Can I still fill the 1040NR-EZ and take both the standard deduction of $5000 and personal exemption of $3200??

The answer is YES. You can file as a non-resident and use Form 1040NR-EZ. Also, you report the $300 in interest as well.

quin · Mar 30, 2006, 07:58 AM

Thanks Atlanta Tax Expert but some where here in this forum I read you said that in F1 we don't have to report interest earned through banks? I remember you said in one of the posts that : report that portion of interest that was on H1... Little confused... Actually I also thought that we don't have to report it... The instructions for line 3 of form 1040NR-EZ says something about it but I can't understand fully. Will really appreciate if you can help me understand what it means there in instructions for line 3.

"Tax-exempt interest:
Certain of interest income from investments in state and municipal bonds and similar instruments are not taxed by the States. If you received such tax-exempt interest income, enter “TEI” amount of your tax-exempt interest on the dotted line next to line 3. Include any exempt-interest dividends from a mutual fund or other regulated investment company.But do not include interest earned on your IRA or Coverdell education savings account, or interest from a U.S. bank, savings and loan association, credit union, or similar institution (or from certain deposits with U.S. insurance companies) that is exempt from tax under a tax treaty or under section 871(i) because the interest not effectively connected with a U.S. trade or business. Do not add any
tax-exempt interest to your line 3 total.
"

Thanks a lot

AtlantaTaxExpert · Mar 30, 2006, 11:37 PM

Your interest from a U.S.-based bank is not exempt from taxation under the U.S.-India Tax Treaty.

quin · Apr 2, 2006, 05:55 PM

Thanks AltantaTaxExpert, I have some more questions...

My company is based in NJ, But I was woking (on OPT) from 1oct to 31DEC in NC. Now I have the taxes deducted for NJ so I need to fill NJ form and have nothing to do with NC taxes... My question is Can I get some other deductions such as temporary living expenses in NC( In addition to standard deduction of 5000, and personal exemption of 3200 that I am entitled to being on OPT)

Also I am filing form 760PY for VA state and it has some lines for "FIXED DATE CONFORMITY" Any idea what does this mean and if I need to enter anything in this??

Thanks in Advance..

AtlantaTaxExpert · Apr 2, 2006, 09:21 PM

Quin:

You can claim living expenses as an itemized deduction (which means it replaces the $5,000 standard deduction) if the work in NC is deemed temporary AND you do not get reimbursed for those expenses (either with your company paying for them direct or them paying you for the actual expenses or with per diem payments). Generally, if the work assignment is less than one year, it is considered temporary.

quin · Apr 8, 2006, 05:27 PM

Hello again AtlantaTaxExpert, Going back to my question about bank saving bank interest... This is what I got from the IRS websit ( http://www.irs.gov/businesses/small/...129229,00.html )

Certain Types of Nontaxable Interest Income

Nonresident aliens are not taxed on certain kinds of interest income as follows.

Subsections 871(h) and (i) of the Internal Revenue Code provide that interest income that is not effectively connected with a U.S. trade or business shall not be included in the gross income of a nonresident alien, provided that such interest income arises from one of the following sources:

1. A U.S. bank
2. A U.S. savings and loan association
3. A U.S. credit union
4. A U.S. insurance company
5. Portfolio Interest (Described in section "Exclusions From Gross Income" – "Interest Income" – "Portfolio interest" of Publication 519, U.S. Tax Guide for Aliens)

If the nonresident alien individual uses Form 1040NR to report his income, then such nontaxable interest income shall not be reported anywhere on Form 1040NR except in response to question L on page 5 of Form 1040NR. If the nonresident alien individual uses Form 1040NR-EZ to report his income, then such nontaxable interest income shall not be reported anywhere on Form 1040NR-EZ. The erroneous reporting of such interest income on Form 1099 by one of the institutions listed above shall not cause such interest income to be included in the gross income of the nonresident alien recipient if such recipient has filed the proper income tax return.

A nonresident alien individual should not deliver Form W-9 to a U.S. bank, U.S. savings and loan association, U.S. credit union, or U.S. insurance company. Instead, he should deliver Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding to such institutions in order to put them on notice that he is a nonresident alien and that the interest income accruing to his account at such institutions is not reportable to the IRS, except in the case of U.S. bank accounts held by residents of Canada.

Does not this mean that while I am on F1 and filing as a NON Resident Alien that is form 1040NR-EZ or 1040NR, I don't have to report this?? Please do answer this question... Thanks in advance

AtlantaTaxExpert · Apr 9, 2006, 02:53 PM

Okay, don't report the interest.

quin · Apr 10, 2006, 10:49 AM

Do you think that it means that or you are irritated and so are saying so?? I want your genuine advice please. Let me know if I am wrong.
Thanks,

AtlantaTaxExpert · Apr 11, 2006, 08:31 AM

I apologize if I was a bit short; it has been a hectic week and I am behind in answering the forum.

Your research clearly indicates that normal interest is not taxable for non-resident aliens. For this reason, you have a firm basis for NOT reporting the $300 interest you have earned.