Tax treaty germany usa.2 year counting
I am a research associate employed by a university to work at NASA. I am on a J-1 visa in the category research scholar/associate. I am now lost how to get the most out of my tax return.
I entered the US on Aug 2006 to do research at a different university. This was on a J-1 visa as well in the category research scholar. I received no money for that position from the US side, since I was still enroled in a UK university on a postgrad program which financed me completely during this year. In Aug 2007 I accepted a postdoc employment at my current university to work in an agreement with NASA. So the university pays, I work at NASA. From Aug 2007 on I got paid a salary/wage from which federal and state taxes were withhold (filed as single, tax exemptions for federal and state: 1, although I am married (german wife, no income,J-2 visa) with child (us citizen,baby)). Now I found out that as german resident there is a tax treaty between the US and Germany, which obviously exempts me from federal tax if I stay no longer than two years in the US. But I will stay till August 2009 for sure. So my first question is from which point on do the 2 years count? (You see, if only the time I work counts I get the 2 year period with my leaving in 2009)
Depending on the outcome of this question I am then totally lost what to do... thinking the answer will be: it counts from day of entry: Aug 2006
A) Claim the tax treaty federal tax exempt until Aug 2008? But what happens then after Aug 2008... Of course here I would get the most money out of it. Can I stay longer and claim just the first 2 years?
B) Try to smuggle myself through the substantial presence test for 2007 and file as resident, since I am married (german wife, no income, J-2) with child (us resident since born in the US,baby)?. here I would think to get the most taxes back. Smuggle since J-1 researcher... not teacher, trainee or student as necessary for exempt individual...
C) Swallow the bitter pill to file as non-resident in single status with no child since I am not allowed to claim dependents as german resident?. thats horrible since I'd pay the most here I guess... Isnt there a way around it if this is the only solution that's left?
Thank You