This forum is a real great help! I appreciate any advice I might receive!

I decided to file for an extension and wait until mid June (until I meet substantial presence test) and then file as a dual status alien for 2007


I've just calculated my taxes (I'm using form 1040 as a dual status return and 1040NR as a statement)...
... and it turns out I owe about $246
I was wondering how it could be possible? I know my employer withheld the right amount of tax (I checked with paycheck calculator). I don't have any other income than my wages.

Anyway, if I filed as non-resident for the whole year 2007 I would also owe the same amount of money! Isn't it a little unfair to pay tax all year out of my paycheck and then still owe more at the end of the year.


Nationality: polish
Single
visa: h1b since 1 Oct, 2007
visa: for the rest of the year (before Oct. 2007) J1 non-resident alien
Wages: $29,811
Social security wages: $9,100
Federal income tax withheld: $3,326
I used $3400 personal exemption
State: Tennessee


The only advantage of filling a dual status return for me is to become resident for tax purposes as soon as possible. I would like to obtain a certificate of tax residency. Otherwise Poland may require me to pay taxes on my income in the US.

PolishGirl:

The reason you owe is simple: you cannot claim the $5,350 standard deduction (the paycheck calculator assumes you CAN claim that standard deduction).

However, since you converted to H-1B on 1 October 2007, I assume that you were a student prior to 1 October 2007. If so, then you FAILED to factor in the treaty exemption that the U.S.-Poland Tax Treaty allows for students. It is at least $2,000 and may be as much as $10,000, depending on your specific circumstances.

Check out IRS Pub 901 for details.

Atlanta Tax Expert:

Thank you very much for your response.

I have not filed my taxes yet. I only filed an extension and I paid the amount of tax I thought I owed. Now I am preparing the paperwork for filing as a dual status alien – first-year choice.

Thank you for your advice, I did not know I could claim a tax treaty exemption. I was on an 18-month professional training J1 visa until the 15th of September. So it looks like I can claim a $2000 exemption. Can I still use the whole amount even though my J1 visa was not for an entire calendar year?

I assume I can claim a personal exemption, a tax treaty exemption and certain itemized deductions (i.e. charity donations). I am going to use form 1040 for my taxes. I found your previous post about tax treaty exemption:
“The treaty exemption is debited off the annual income on Line #21 of Form 1040 as a NEGATIVE number, with the entry "U.S.-_____ Tax treaty exemption" neatly printed on the dotted line to the left of the negative $_____entry”
That is the way I am going to do it.

And I will use form 1040NR-EZ as a statement. I assume I do not have to calculate any tax on it, I only report the information of my income while non-resident. I guess I also have to fill out all the other fields on the 1040NR-EZ related to my visas and the length of stay in the US etc.

Thank you,
PolishGirl

There is no advantage of filing dual status tax return. You should file as nonresident. On J1 income, you will get treaty benefits.
If you file Dual status, then your 1040NR-EZ is dual status statement, where you report all income and deductions you have during non resident period.
For 1040, dual status return, you will report all income and deductions. You will not get standard deduction.

I agree with MukatA; file as a non-resident alien and claim the $2,000 treaty exeption, plus whatever allowable itemized deductions you have.

Thank you. I agree. I will file as a non-resident alien. Why make things more complicated than they need to be!