I am a nonresident alien in the US on a student visa since 1998. Due to the substantial presence test I have been applying as a resident alien for tax purposes since the 2003 tax year. I got married in 2005, so for 2005 I filled the form 1040EZ as "married, filing jointly". I intend to do the same this year. However, I came to know from a friend that even though I am a resident alien for tax purpose, I can still choose to claim tax treaty benefits, since the treaty between Pakistan (my home country) and US allows for an unlimited benefit of $5000 (Treaty article XIII(1)). This is contrary to most other countries that have a limit of 5 years, in which case the treaty benefit generally expires at the same time as the ability to file as a non-resident alien.

I was particularly intrigued because while I have been filing federal return as a resident alien, I have been filing my MA tax return as a non-resident alien (living in a dorm on campus leads to the nonresident alien claim). In doing so, I have been able to successfully claim the $5000 exemption (line 4 of Schedule Y).

Does anyone know if I can claim the $5000 exemption on the federal forms in addition to the $16900 federal exemption?

Fugacity:

I have just reviewed IRS Pub 901, and I found the $5,000 treaty exemption of which you speak.

It applies only for those who are either studying or training, typically reflected with a F-1 or J-1 visa.

Check page 23 and 42 of IRS Pub 901.

A.T.E.

I am on a F-1 visa right now. So is there a way to use this treaty while filing as a resident alien (1040/1040EZ, etc.)?


Fugacity:

I have just reviewed IRS Pub 901, and I found the $5,000 treaty exemption of which you speak.

It applies only for those who are either studying or training, typically reflected with a F-1 or J-1 visa.

Check page 23 and 42 of IRS Pub 901.

No, I do not believe so. Once you started filing as a resident alien, you forfeit all treaty exemptions.

However, I am NOT the pre-eminent expert on all such issues. You can, if you want, post to the U.S. Tax Solutions for resident alien and nonresident alien foreign nationals (http://www.thetaxguy.com) forum and propose this option to Dr. Gary Carter, who IS a pre-eminent expert.

Kindly refer to the site below:

res.html (http://www.utexas.edu/international/taxes/res.html)

From what I understand, you can file Form 8833 with your return and still claim the treaty benefits under article XIII (1) as long as you are a student. Refer to the treaty below:

http://www.irs.gov/pub/irs-trty/pakistan.pdf

I haven't been able to find anything in the treaty that says you cannot. AtlantaTaxExpert, comments?

What Longhorn says is partly true. Some treaties will permit you to claim the benefits of certain articles even if you become a resident. This does not apply to all treaty benefits and it depends on how the treaty is written.