Hello!

I just arrived to US from Poland to do some research at the University. I have a yearly contract with the possibility to extend it up to 3 years depending on my performance (on a yearly basis). I got a J-1 visa for 3 years. The University started to tax my incomes claiming that there is a Prospective Loss clause and I have visa for 3 years. However my contract is for a year.
Should I pay the taxes for my whole stay in US?

Best regars
Anna

Below is the extract from the U.S.-Poland Tax Treaty (Article 17 (1)) (link below):

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

(1) Where a resident of one of the Contracting States is invited by the Government of the
other Contracting State, a political subdivision or a local authority thereof, or by a university or other recognized educational institution in that other Contracting State to come to that other
Contracting State for a period not expected to exceed 2 years for the purpose of teaching or
engaging in research, or both, at a university or other recognized educational institution and such
resident comes to that other Contracting State primarily for such purpose, his income from
personal services for teaching or research at such university or educational institution shall be
exempt from tax by that other Contracting State for a period not exceeding 2 years from the date
of his arrival in that other Contracting State.

You seem to qualify for income tax exemption for twenty-four consecutive months, with no retroactive tax clause.

You will be exempt from FICA (Social Security and Medicare) taxes for 2011 and 2012. That is a matter of U.S. tax law and is NOT dependent on the tax treaty. If the University is withholding FICA taxes, tell them to STOP and refund what has already been withheld; the link below is the IRS website that provides definitive guidance on this.

http://www.irs.gov/businesses/small/international/article/0,,id=129427,00.html

If the university refuses to stop withholding on the INCOME tax issue, you can claim a complete refund when you file your 2011 tax return (Form 1040NR with Forms 8833 and 8843).

If you need professional help when it comes time to file, email me at [email protected].

Many thanks for the answer.
Unfortunately the University refuses to stop on a ground that my visa is for 3 years and in the treaty it is stated that "is invited (...) for a period not expected to exceed 2 years". However my contract and DS-2019 is valid so far only for a year.
Is there any way I can convince them that they are wrong in their understanding?
Best regards
Anna

If it JUST the income tax, do NOT worry about it; you will get the money back when you file the 2011 tax return.

If it also FICA taxes, this link should convince them to stop the FICA tax withholding:

http://www.irs.gov/businesses/small/... 129427,00.html

Many thanks for your answers!!

Glad to help!