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Aug’ 02 - Oct’ 04 F1
Oct’ 04 – Oct’ 05 F1 OPT
Oct’ 05 – Present H1B
I have filed my taxes with H&R block and they filed my return under dual-status and did not take the standard deduction (under US-India tax treaty). They charged me $300+. When my friend suggested your website I browsed through the threads and found out that I don’t fall under dual-status. Then I went to H&R block and explained my situation. They did not agree with me and asked me to contact IRS. I did so and even the IRS said that I don’t fall under dual-status.
Then I again contacted H&R. This time they were rude and also said that IRS was wrong. I don’t know what to do. If I don’t fall under dual-status how can I prove them? Can I still claim standard deduction of $5000 under US-India tax treaty even when I’m on H1B by the end of the year? Any help is highly appreciated. Thank you again for your service.
I'll let ATE answer this since you have directed this to him but I would like to add my own thoughts.
First, note that the is nothing particularly special about "dual status" -- it really just means that you're non-resident for part of the year and resident for the other part.
In your case, assuming you have not been in the US prior to 2002, it seems to me that you are a non-resident for the full 2005 period (ie you do not qualify for the substantial presence test and you have no green card). Thus you could file NR.
On the other hand, if you want to, it appears that you will be a resident in 2006 and thus you could elect the First Year Choice for the second part of the year. Thus, you would be a NR for the first part of the year and a Resident for the later part of the year.
If you want to combat HR Block you need to ask them why they think that you are a resident for the last part of the year because you do not meet the substantial presence test (remind them not to count days while you were on F1 status).
If they tell you that you are making the first year election for 2005, you might like to mention that you have not quite yet satisfied the substantial presence test for 2006, as at April 18.
These are my thoughts. I'll look forward to reading ATE's points.
IMHO, you are clearly NOT a dual-status alien. You could file as a non-resident alien for 2005, or wait until June and file as a resident alien for 2005 under the First Year Choice option. First Year Choice is not for just part of the year.
You will clearly qualify to file as a resident alien in 2006.
Now, as for convincing H&R Block that this is the correct way to file, I have citations from the Internal Revenue Code that Dr. Gary Carter provided to me. I can e-mail them to you. Contact me at .
I believe that the first year choice is for just part of a year. You need to be non-resident in 2004, not qualify for substantial presence in 2005 and then qualify in 2006. If you also have the 31 days presence in 2005, then you can commence residency in 2005 from the start of the 31 day period. Here's something from the IRS site (note that it refers to being a resident for PART of 2005):
First-Year Choice
If you do not meet either the green card test or the substantial presence test for 2004 or 2005 and you did not choose to be treated as a resident for part of 2004, but you meet the substantial presence test for 2006, you can choose to be treated as a U.S. resident for part of 2005. To make this choice, you must:
Be present in the United States for at least 31 days in a row in 2005, and
Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of 2005. For purposes of this 75% requirement, you can treat up to 5 days of absence from the United States as days of presence in the United States.
When counting the days of presence in (1) and (2) above, do not count the days you were in the United States under any of the exceptions discussed earlier under Days of Presence in the United States.
If you make the first-year choice, your residency starting date for 2005 is the first day of the earliest 31-day period (described in (1) above) that you use to qualify for the choice. You are treated as a U.S. resident for the rest of the year. If you are present for more than one 31-day period and you satisfy condition (2) above for each of those periods, your residency starting date is the first day of the first 31-day period. If you are present for more than one 31-day period but you satisfy condition (2) above only for a later 31-day period, your residency starting date is the first day of the later 31-day period.
Thanks for your help I really appreciate that. I need a small clarification. If I file under 1040 NR can I still take the $5000 standard deduction under India-US treaty since I'm on H1 by the end of the year 2005.
HI,
I am not a professional tax expert, just a person who has his taxes prepared by a CPA in our local small town, for about $150.
I would like to add that H&R Block has been, and is currently, in Class Action Lawsuits for one thing or another. Even I received a letter, from many years ago, when my wife had HR do our taxes one year, to determine if we wished to be in the lawsuit, in Court in WV. No, I don't want to be in it, due to only receiving about $25 possibly, since there are so many involved.
I suggest that the next time you have your taxes done, to check with a CPA in your local area, ask for the cost for both Federal and State (if you have State taxes). My own CPA figures taxes both ways, standard and itemized, and uses whichever one is the best.
Yes, you can claim the standard deduction of $5,000 if you file as a non-resident alien.
I'm on a conf. call with H&R and IRS. The IRS rep. says that since I'm on H1 by the end of the year (so I can't be considered student for the tax year) and I can't be eligible for the treaty (which is for students and business apprentice). So are we wrong?
Even the rep. agrees that I should file 1040NR but he says that I can't take the standard deduction provided by the treaty since I'm not a student by the end of the year.
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