Thanks for all the useful information that you all have posted here. I have a question. My statius changed from OPT to H1B in August 2005 and I am thinking of filing as a non-resident as per Atlanta Tax Expert's advise. My employer has also been deducting social security and medicare taxes since Feb 2005. If I file as non-resident do I have to request a refund of all the SS and medicare taxes that were withheld from my paycheck or only ask for a refund of the SS and medicare that was withheld while I was on OPT?I have used a software called CINTAX to calculate my taxes but it says that I need to PAY some amount ot the IRS even though my taxes have always been withheld by my employer. Am I missing something? Please advise. Thanks.

ExtraAapace:

The fact that you have to pay means you did not have enough withheld from your salary. I cannot tell you if you missed something without some salary figures and withheld tax amounts.

You can request a refund of the Social Security and Medicare taxes withheld while under the OPT, as long as you were on F-1 visa for less than five years. The form you use is Form 843. Download the form and IRS Pub 519 and read pages 45-47 for process and forms needed.

Thanks for the reply. Appreciate it.

My salary as calculated by the software is 47788, before the deductions, and the tax I have paid is 6509. This does not include the SS and medicare (2848+666) taxes that were withheld by my employer with whem I have been working since Feb 2005.

My calculations show you owe $50. That's assuming you are authorized to claim both the $3,200 personal exemption and the $5,000 standard deduction.

That, BTW, is what you want. Getting a refund is bad money management, since you are giving the U.S. government use of your money interest-free.

While moving for my new job I had also donated furniture, TV, utensils. clothes etc. to Goodwill and I have a form which says what I had donated ad the date (Feb 2005). The form/receipt does not show the value of the stuff that was donated. Can I put that down as a charitable donation? Where in the form would I put it?

Also as you mentioned, how would I know that I am authorized for the personal exemption and the standard deduction? I am a single Indian who was a student from Jan 2003 to Aug 2005 when my status changed to H1B. Is there anything else I need to make sure of?

Thanks for your advise. Its amazing how helpful and prompt you are.

You can claim the deduction for the donation only if you itemize your deductions.

It is likely that your $5,000 will be much greater than your state and local income tax withholdings, plus the charitable donation.

Thanks for that Atlanta Tax Epert. So you are advising that I should just take the personal exemption ($3200) and standard deduction ($5000) under the US-India tax treaty, and not mention the donation? I live in TX so I do not have any state Taxes.

Thanks for your help. You've really sorted out my confusion.

That is exactly what I recommend!

What does local income tax include?

Some cities and counties have income taxes.

That is what is meant my "local" income tax.

Hi again Atlanta Tax Expert!

To claim the $5000 standard deduction under the US-India tax treaty, do I have to file any other form besides 1040NR-EZ? Do I also have to file form 8833 to claim the exemption under the tax treaty? I am filing as a non resident alien as my status changed from OPT to H1 last year and I do not have enough days as H1 B employee in 2005 to file as a resident alien.

Thanks very much for your help.

If you file as a non-resident alien, the only form you have to file is Form 1040NR-EZ. You just need to state that the exemption is the standard deduction authorized under the U.S.-Indian Tax Treaty.

Do I have to file form 1040 NR-EZ or form 1040 NR? I read somewhere I may need to file form 1040 NR if I want to claim the exemption under the uS -India tax treaty. Please advise. Thanks a lot!

I had $71 in interest income last year which is not taxable I guess, which means I should be filing 1040 NR-EZ, not for 1040NR I guess. Please confirm if I am correct. Thanks.

If the interest is from a U.S. bank, then you need to claim it on Form 1040NR.