I am currently doing an intern holding F-1 visa and on CPT in New York state.
My employer didn’t withhold any tax from my paycheck. She said I am treated as an independent contractor. My income in the CPT period will be $4800, according to 1040-ES (NR), the tax will be $4800*10%=480, which is less than $1000. According to the instruction of 1040-ES, “Generally, you must make estimated tax payments if you expect to owe at least $1,000 in tax for 2005.”
My questions are:
1.I don’t need to pay estimated-tax using 1040-ES (NR) now, but I have to file and pay the tax at the tax return date of 2006, am I correct?
2. I have to file 8843,1040NR and Schedule C (for tax exempt purpose between US and China) for federal tax return, am I correct?
3. What kind of forms should I file for the New York State tax return,IT203 and IT203ATT?
Have read a lot of former threads answered by the warm-hearted AtlantaTaxExpert, but can’t find the similar case.
Thanks in advance!


Andrea

Andrea:

1) It is correct that you do not have to pay estimated taxes. If your total taxable income for the year is $4,800, due to the U.S. – China tax treaty, the first $5,000 is exempt because Chinese nationals can claim a standard deduction of $5,000 plus a personal exemption of $3,150 (I think). BOTTOM LINE: Though you DO have to file a tax return, you will owe ZERO income taxes,

2) Because you are a student on F-1 status, you have to file Form 8843, Form 1040NR with a Schedule C. Since you are on F-1 visa status, you are exempt from self-employment taxes.

3) Offhand, it looks to me like you can file Form IT-201. However, if you go to this website (www.tax.state.ny.us), then click on General Filing Information, then click on Income Tax Form Selector, they will lead you through a series of questions which eventually will tell you exactly which form to file. The fact that you are a Chinese student on F-1 status is irrelevant as the state of Ny will treat and tax you just like a NY state citizen. BTW, if your income is only $4,800, you will owe NO state income tax and may be entitled to a small state Earned Income Credit.

I didn’t expect your reply so fast at all!
Thank you AtlantaTaxExpert!
I still have three questions though; hope I can get some clues from you:
1. How can I pay my estimated state tax (1040-ES is for the estimated federal tax)? Have searched http://www.tax.state.ny.us/ , but couldn’t find out any information.
2. I ‘ve changed my visa status from F-2 to F-1, does it mean that $5000 exemption (Publication 901,20(c)-study or training) couldn’t apply to me because my initial purpose was dependent(F-2) instead of study (F-1)?
3. I’ve just asked some of my friends, they said I can file as resident only after I was in New York State for over 5 years, which means I should file IT-203 instead of IT-201 because I was in New York State for less than 5 years. I don’t know if it's true or not because I couldn't find it out anywhere. The definitions of resident and non-resident in the instruction of IT-203 are very confusing.

Have a nice day, AtlantaTaxExpert!
Andrea

Andrea:

1) If your income is only $4,800, then you do not have to pay estimated taxes to New York. It is likely you will owe no taxes at all. If you do owe some taxes, the amount will be so small that you can pay it when you file with no penalty.

2) I suspect the change makes little or no difference. However, when did you change your status?

3) Your friends are misinformed. You can claim resident status for filing NY income taxes if you lived in NY state for the entire tax year (in your case 2005).

It’s been one year since I changed my status.
Atlanta Tax Expert, Thank you very much for your kind help!

Andrea:

If you changed your status last year, and the income in question is being earned in 2005, then the fact that you changed your status should not be an issue for the 2005 tax return.

Claim the $5,000 exemption allowed under the U.S. - China tax treaty.

I will stop by an IRS office and ask them.
Thanks a lot!Atlanta Tax Expert!

Andrea:

If you are going to ask the IRS, go to www.irs.gov and submit the question by e-mail.

That way, the question will be routed to the non-resident alien experts at the Philadelphia IRS Center. It's likely the local office may not have the expertise on hand.

Regarding the choice of using IT-201 vs IT-203, I think AtlantaTaxExpert is right here. I have a similar situation. I have been living the whole 2008 in NYS on F-1 student visa, but the NYS Dept of Taxation and Finance website doesn't have answers on that. Neither their hotline nor their instructions have anything related to this scenario. I will say, just to use form IT-201, which is apparently more easy to fill out. Form IT-203 is really about reporting your income from other states, so that your NYS income and other state income equal to the income on federal return.