Hi,

I am a citizen from India. I am currently on H1 visa. i have been on H1 since 2003.

Which tax form should I file? Am I allowed to be treated as non resident under tax treaty and file NR form?

Last year I was a dual status but instead filed 1040 EZ. I think I could have filed 1040 NR EZ form then. Is there a way to amend that return?

Your help is appreciated.

Thanks!!

AtlantaTaxExpert

Coolblue3k:

If you are on a H-1 visa, I suspect you are neither a business apprentice or student. If so, you have met the Substantial Presence Test and should be treated as a resident alien.

For this reason, you should file Form 1040/1040A/1040EZ for 2004.

As for 2003, if you arrived in the United States prior to 2 July 2003, you met the Substantial Presence Test for 2003 as well, in which case your filing of Form 1040-EZ was correct.

If not, then you can file Form 1040X to amend the return. Complete Form 1040NR/1040NR-EZ and attach it to the Form 1040X. Remember that, as a dual-status alien, you cannot claim the standard deduction. As a result, you may owe income taxes. However, as a dual-status alien, you are exempt from Social Security and Medicare taxes. To claim a refund for those taxes, you must file Form 843 with the 1040X amendment.

coolblue3k

Great!! Thanks for the help.

But I was just reading this thread

http://www.askmehelpdesk.com/taxes/f1-h1-dual-staus-1040-nr-8509.html

where you said I could have claimed standard deduction on my 1040 NR EZ form for last year's tax.

WHen filing last year, I met substantial presence test hence a resident alien. But before that I was on F1 so I am non-resident alien making me dual status.

I had actually filed 1040 EZ. So should I have filed 1040 NR-EZ instead? Because according to treaty with India I could have claimed the standard deduction under dual status.

Now the social security and Medicare taxes were levied on me when I was working on H1. It doesn't matter when you are a dual-status right?

Thanks in Advance.

AtlantaTaxExpert

Coolblue3k:

Under a special rule for students and business apprentices from India (such as those under OPT programs on F-1 visas), such Indian citizens can claim the standard deduction. This provision is covered in IRS Pub 519, pages 24-25.

Now, later in Pub 519 (In Chapter 6), they specifically state that duel-status aliens cannot claim the standard deduction. They cited special instructions regarding the students and business apprentices from India for exemptions, but not for the standard deduction. Also, in the Question and Answer section of the Pub 519, they reiterate that dual-status aliens cannot claim the standard deduction.

Based on these facts, and after reviewing the Pub 519 most of yesterday evening, I concluded last night that students and business apprentices from India who are also dual-status aliens cannot claim the standard deduction. If they were permitted to claim it, it would have been spelled out somewhere in Pub 519. It was not.

For this reason, disregard my previous thread to Deol. I believe he has a thread waiting on this forum, and I will answer him shortly.

The Substantial Presence Test takes precedence over the dual-status alien test.

The dual-status alien test takes precendence over your F-1 visa status (and the right for students and business apprentices from India to claim the standard deduction).

I am a bit confused as to when you were on H-1 status, when you were on F-1 status and when you converted. Since the timing is important, give me a precise timeline as to when you arrived in country, on what visa status, and when you converted to H-1, and I will specify my guidance.

coolblue3k

Thanks for nice explanation. Here's the case

I came to US in August 2001 on F1 Visa.
I converted to H1 on June 1, 2003.

AtlantaTaxExpert

Coolblue3k:

Okay, now it is clear.

A modification to my earlier guidance, in which I said:

"However, as a dual-status alien, you are exempt from Social Security and Medicare taxes. To claim a refund for those taxes, you must file Form 843 with the 1040X amendment."

My reading showed Pub 519 did not address this matter very well, so I queried the National Association of Tax Professionals. Their answer stated that aliens on a H-1 visa are immediately subject to Social Security and Medicare taxes regardless of their status. For this reason, you cannot file Form 843 to request a refund of your Social Security and Medicare taxes for 2003.

coolblue3k

Thanks for the help so much.

I think then my filing of 1040EZ last year and this year is correct. Thanks again.

AtlantaTaxExpert

See my separate posting on this issue!