I participated as a student exchange visitor in Work&Travel Program.
I was on a J-1 visa during 2004.
I am not a student working on a degree.
My taxable income consist only W-2 forms. All of the income which I had generated is from personal services?

Can I deduct travel expences "away from home" on form 1040NR?
I thing i can use IRS Section 162 and Publication 519 for my case.
Is that right?
Any answer will be appreciated.

AtlantaTaxExpert

Runaway:

You can claim your travel expenses "away from home" as an itemized deduction, but only to the extent that they exceed 2% of your adjusted gross income.

Example: Your income is $10,000. You have total travel expenses "away from home" of $550. Two percent of $10,000 is $200, so your itemized deduction is $550 - $200 = $350.

You will need to use the special Schedule A that comes with the Form 1040NR plus Form 2106 to properly document your deductions.

runaway

Thank you for your quick Respond.
I heard many different opinions about this tax issue.
Some of my friends told me that I am NOT ALLOWED to take these expences because this is WORK& TRAVEL PROGRAM.
Actually I came form Europe on J-1 visa just for 4 mouths to work and visit USA.
Is there any special Publication or rule which I can use in this case?
I know only about Publication 519 which allow me to deduct airfare,lodging and 50% of meals expences.Is that right?
Can I deduct also and my Program fee (fees for the Work&Travel progam I paid in Europe)?
Thank you for your time.

AtlantaTaxExpert

Runaway:

If the work expenses are valid expenses for which you are not reimbursed, then, as a rule of thumb, they are deductible as noted earlier. That includes the program fee. These expenses are incurred while earning an income.

runaway

Hi Atlanta Tax expert,
I have a big problem.
I received a letter CP 11 from IRS which says that they adjusted my refund amount and now I am tax DUE for the amount of 210$.( 110$ taxes + 100$ penalty for late filing return)
I filed form 1040NR and itemized deductions for travel “away from home” on form 2106EZ.
IRS reason to disallows my deductions is :

“We did not find connection between your expenditure and your occupation in the USA.
The deductions you took are not necessary and ordinary expenses for the conduct of a trade or business in the US.”

Can you help me please?
I have only 21 days to respond to this letter.
I read Publication 519 and Revenue rule 73-578 and I thing IRS are wrong about my case.

According to Publication 519,
"all students who are temporary present in the United States as non immigrant on “J” status are considered engaged in a trade or business in the USA"

According to Rev.rule 73-578 :
A citizen of a foreign country, who comes to the U.S. under a six-month visa to work for a U.S. employer with the intention of resuming his regular employment in his native land after this period, is a nonresident alien whose "tax home" remains in his native country and may deduct necessary traveling expenses including meals and lodging under section 162(a) of the Code”hat they

How to protect myself?
What to do now?
The letter sayd that if I don't pay in this 21 days IRS will impose more Penalties against me

Any help will be appreciated
Thank you

AtlantaTaxExpert

Runaway:

The citations you use below are excellent.

Draft a rebuttal letter to the IRS and request a review of your case. Use these same citations (especially the Rev.rule 73-578) as justification for claiming the travel expenses. The auditor may not have been aware of the cited ruling.

Also, ask under a separate paragraph that the IRS waive the $100 late filing penalty. Cite your unfamiliarity with the U.S. tax codes and deadline and the need to properly research your tax options. Further, state that you will file on time henceforth. If you are not a repeat offender, the IRS will normally waive late filing fees if you can provide a good reason for filing late.

Mail your reply certified mail return receipt to the address provided on the letter. That provides proof that you have responded expeditiously.

You may still owe the $110 in taxes, but at least you should be able to avoid the late fee.

runaway

Thank you for you response.
I send a letter to IRS yesterday which describing my case.
Do I have to call them or to visit their nearest office to check personally what is going on?
I did not mention anything in my letter about my penalties, may be this is a mistake.
What do you think?
Do I have any chance to protect myself and get my money back?
I read this Revenue Rule 73-578, one more time and I think I am right.
Correct me if I misunderstood something about my case?


Good luck.
Thanks for your help again.

AtlantaTaxExpert

Runaway:

Assuming you made a copy of everything before you mailed it, call them on Wednesday to confirm they got the letter. If not, call back on Friday, then Monday. If they do not have your rebuttal letter by Monday, 3 October 2005, you may have to mail it a second time.

Other than that, all you can do it wait for a decision.

runaway

Hi Atlanta tax expert,

Two days ago I've spoke to IRS representative and they told me that my request was DENIED. They did NOT tell me any reason. Actually I thing that the IRS representative was very route with me like I am waisting her time.
They told me that now I own them $340.
How this is possible?
I own them $210 and after a mounth is $340.

They did not even answer on my LETTER.
I have to call them few times to get any answer on my request.

How to proceed from now on?
They DID NOT send me any notice or paper where it says that I own $340.
I get this info over the phone from the IRS representative.


something else:
I filed my VA state return before I knew than IRS dissallowed my deductions.
I send them a copy(Va tax state autorities) of my FEDERAL RETURN and they never get back to me.

How can I amend my VA state return ( from 763) ?
Do I have to file a new return with no itemized deduction?


I am asking all these questions because I am leaving USA soon. I am going back to Europe very soon.

I want to autorize my cousin to represent my before IRS .
I know that he will need singed Form 2848 from me.
Where he need to send this form? What to write in this form?

Thank you very much for your help.
You are doing a great job with your advices here in this forum.

AtlantaTaxExpert

Runaway:

You may need to call the Taxpayer Advocate to look into your case. An additional $130 penalty for not paying while you are appealing the decision is rather unreasonable.

When you call the Taxpayer Advocate's Office, have a copy of all the paperwork you submitted to the IRS available to fax to them so that they can use it to investigate your case. Be sure to include the mail return receipt you should have gotten back that shows you mailed the appeal within the time limit specified on the original IRS letter.

As for Virginia, you can wait until the IRS situation is resolved before you amend the Virginia return. Virginia will eventually get around to contacting you about any additional tax that results from this IRS adjustment, but that may take years.

Follow the instructions on how to fill out the Form 2848. If you trust your cousin, you can authorize him to negotiate in your stead with the IRS. Otherwise, you can deal with the IRS representative at one of the local US consulates located in most European cities.