Hi there,

I am a resident of Greece and I work as a teacher/professor for a US University on a J1 visa. I was under the understanding that I am exempted from paying federal taxes for 3 years (pub 901) since the day of my arrival. One and a half year later (I arrived here end of July 2012), the University has started regularly withholding taxes, since, according to their tax specialist, I cannot be considered a non-resident for tax purposes (I thought that both pub 901 and IRC 7701 (b) (5) covered me from that and allowed me full tax exemption for my 3 years appointment in the States). The opinion of a local (independent) tax specialist that I consulted is that I should definitely get the full 3 years. I understand that Greece (tax treaty) is a bit of a special case due to the 3 year period of exemption for teachers/professors and the problems it could create with the presence test (I still think I should not be considered for that) -the tax specialist of the University didn't have a similar case in the past, but still holds that I should be paying regular taxes (they started withholding them since January 31, 2014). I am at a loss here.

Any advices on the issue would be greatly appreciated,
Nikos

Nikos,

I agree with the tax professional. The exact wording of the U.S.-Greece Tax Treaty (Article XII) is below:

A professor or teacher who is a resident of one of the Contracting States and who is temporarily present within the other Contracting State for the purpose of teaching, for a maximum period of three years, in a university, college or other educational institution within the other Contracting State, shall be exempt from taxation by such other Contracting State on his remuneration for such teaching for such period.

The university tax specialist is relying on the general rule that a J-1 visa holder is exempt for a maximum of TWO calendar years, but treaty provisions over-ride U.S. law when they conflict.

If you cannot convince them to stop withholding, you can file Form 1040NR-EZ with Form 8833 and request a refund under the treaty.

By the way, you DO need to file Form 8843 each year even if you do NOT file a tax return AND I doubt that the state where the university is located honors the treaty, so you are likely liable for STATE income taxes.

Thank you for your prompt response!
A little added drama, the University tax specialist claims that the Greek tax treaty (for 3 years) does not contain a "saving clause" and so according to the presence test, I ought to be considered resident for tax purposes (in which case US law overrides the treaty). That's the big question, am I a resident for tax purposes, or does the treaty by default absolves from any taxes for the full 3 years?

In my opinion, the lack of a savings clause is irrelevant. The treaty clearly states that you income is exempt for three years.

However, it does NOT say from date of arrival, so the three years covered would be 2012, 2013 and 2014.

You received exemption for 2012 and 2013, so the only year of contention is THIS year, and you have the filing of Forms 1040NR-EZ and 8833 in January 2015 as your back-up position should you not convince the university that your interpretation is correct.

Thanks!

Glad to help!

Please keep me in mind if you have to claim the exemption on your 2014 tax return.

I am sorry to intervene on this thread, as I am not sure whether I would have to create a new one, and if I did, I wouldn't know how to.

As in nikospoulop's case, I am a resident of Greece and I work as a teacher/professor for a US University on a J1 visa. I believe that I am exempted from paying federal taxes for 3 years (pub 901) since the day of my arrival. I arrived in the U.S. on October 2011, making 2013 my third calendar year in the U.S. This means that starting Jan 1, 2013, I pass the substantial presence test and meet the residency requirement. Unlike nikospoulop's case, the university did not withhold federal taxes for 2013 (although they did for medicare and fica, but that's irrelevant), because they agree that I am exempt for three years. The university's tax specialist told me that I need to submit forms 1040 and 8833 for tax year 2013, although they were not really helpful in what I need to fill in the form 8833.
So the facts are that I am considered resident (which means that I would have to fill in form 1040) and I can still be exempt (under article XII of US-Greece treaty). I have never filled out a form 8833 before (I used form 8843 the previous years to substantiate my non-resident status along with my 1040NR-EZ). The statement in Appendix B of Pub.519 concerning Greece does not cover me, as I am a resident now. Moreover, I don't know whether I am disclocing a treaty-based position as required by section 6114 or section 301.7701(b). The tax specialist told me to not check any of the two boxes in the upper part of 8833 and not write anything in boxes 2,3, 4 and 5. I checked what people have been doing online, and I saw China's example (with a 3-year exemption as well), but that one is covered by a savings clause over IRC 61:871(b), whereas Greece does not have one. I am at a loss here.

Could someone please help?

Thank you for your time!

I am sorry to intervene on this thread, as I am not sure whether I would have to create a new one, and if I did, I wouldn't know how to.

As in nikospoulop's case, I am a resident of Greece and I work as a teacher/professor for a US University on a J1 visa. I believe that I am exempted from paying federal taxes for 3 years (pub 901) since the day of my arrival. I arrived in the U.S. on October 2011, making 2013 my third calendar year in the U.S. This means that starting Jan 1, 2013, I pass the substantial presence test and meet the residency requirement. Unlike nikospoulop's case, the university did not withhold federal taxes for 2013 (although they did for medicare and fica, but that's irrelevant), because they agree that I am exempt for three years. The university's tax specialist told me that I need to submit forms 1040 and 8833 for tax year 2013, although they were not really helpful in what I need to fill in the form 8833.
So the facts are that I am considered resident (which means that I would have to fill in form 1040) and I can still be exempt (under article XII of US-Greece treaty). I have never filled out a form 8833 before (I used form 8843 the previous years to substantiate my non-resident status along with my 1040NR-EZ). The statement in Appendix B of Pub.519 concerning Greece does not cover me, as I am a resident now. Moreover, I don't know whether I am disclocing a treaty-based position as required by section 6114 or section 301.7701(b). The tax specialist told me to not check any of the two boxes in the upper part of 8833 and not write anything in boxes 2,3, 4 and 5. I checked what people have been doing online, and I saw China's example (with a 3-year exemption as well), but that one is covered by a savings clause over IRC 61:871(b), whereas Greece does not have one. I am at a loss here.

Could someone please help?

Thank you for your time!


**not resident of Greece anymore, I meant citizen..! ***

I suggest you get professional help with the Form 8833. It CAN be tricky as to how you claim the treaty exemption in your case.

I AM available, and this IS what I do! If interested, email me at the email address in my profile.

**not resident of Greece anymore, I meant citizen..! ***
I face a similar situation, so any help would be greatly appreciated.

12MONKEYS,

What exactly do you want?

I'm in the same situation as nikosbio, i.e. I'm a J-1 resident alien (for tax purposes) from Greece. This is the 3rd year, I'm filing taxes. My employer returned to me a 1042-S form indicating the tax treaty exemption between US and Greece. I was also asked in 2014 to fill out a W-9 form. So clearly, they respect the tax-treaty for the 3rd year as indicated in the article 12 of the treaty. The problem I have is how exactly to fill out the 8833. The tax treaty is pretty old and does not explicitly indicate an exception to the saving clause but rather implicitly under the elimination from double taxation.

Again, completing the Form 8833 is somewhat of a art form. You have to properly cite the tax treaty and explain WHY you think thing you are exempt for the third year, even though you filing as a resident alien.

By the way, if ALL of your earned income is on the Form 1042-S, and that Form 1042-S shows you to be tax-exempt due to treaty considerations, and that university paycheck is your ONLY source of income, you probably do not even have to file.