Hi,

I am a citizen from China. Now, I am preparing my tax form. There are two questions:

1) If I am filing my tax form with my husband who is a U.S. citizen, could we still claim 5000 tax income exempt based on Treaty Exempt Income between China and U.S. Since my husband is a U.S. citizen, we are using 1040 (NOT 1040NR) form to report tax. In that case, does Treaty Exempt still work? If we could report it, where and how to do it?

2) I have tuition cost last year. It seems to me that we could choose to report it on two items. First, in deduction category, there is an item named "Deductible education" which is for job-related education. Second, we could claim it as credits on "Tuition expenses". I am a full time MBA student now and we could argue that this MBA program is for my future job. Where should we put this tuition expense?

Thanks a lot.

1) If you are a student who qualifies for the $5,000 treaty exemption, you CAN (in my opinion) claim the exemption on the Form 1040, even if you file jointly with your husband.

2) You can claim either the Lifetime Learning Credit (up to $2,000), or the tuition deduction (up to $4,000), but NOT both.

I agree with ATE. The treaty technical explanation states:
ARTICLE 20
Students and Trainees
This article provides that a resident of a Contracting State who goes to the other
Contracting State for the purpose of education, training or obtaining technical experience shall be exempt from tax in that other State on payments received from abroad for the purpose of his maintenance, education, or training, grants from a tax-exempt organization, and up to $5,000 per
Year of income for personal services performed in that other State. These exemptions may be claimed only for the period reasonably necessary to complete the education or training. In some cases, the course of study or training may last less than year. For most undergraduate college or
University degrees the appropriate period will be four years. For some advanced degrees, such as in medicine, the required period may be longer, e.g. seven years.

This article is excepted from the "saving clause" of paragraph 2 of the Protocol, so its
Benefits are available to persons who otherwise qualify even if they become U.S. residents.