Hi,

Can someone please help me with my below question?

To start with, here is a brief explanation of the issue I am facing,

My Social Security and Medicare Taxes was wrongly withheld by IRS for a period of six months (Apr '06 - Sept '06) for which I had a filed a refund with Form 843 as required by IRS in Sep '07. A few months back, IRS got back to me stating that I have already filed my 1040 so they could not process my request until I furnish more documents like a letter from my employer. I also got a letter from my employer that they didn't refund any of my tax withholds and submitted it to IRS. But this time, they are asking me to file 1040NR to claim myself as a Non-Resident as I had filed 1040 during the tax year 2006.

Now, my question is since I had already filed my 1040 for 2006 and had gotten my refunds for that year would it be OK to file 1040NR to claim myself as a Non-Resident as requested by IRS now. If Yes, how would I do that because my understanding is I will be claiming for a refund from IRS if I file 1040NR. So, do I need to send a cheque back to IRS for the refunds I had got through 1040 in 2006 and claim back the refund through 1040NR now? As far as I compared both 1040 and 1040NR has the same fields and I am not sure why IRS wants me to file my 1040NR now for 2006 to claim myself as a Non-Resident.

As you can see I have more questions than answers, so could someone please please help me with my questions above. I would greatly appreciate comments/thougths that you may share.

Thanks in advance.

If appears that in 2006 you were nonresident and filed resident tax return.

For 2006, you must first file amended tax return Form 1040X with properly done nonresident tax return (Form 1040NR or 1040NR-EZ) and Form 8843. You must pay all the due taxes (as per amended return) with interest and penalty. It will happen if there are more deductions on the resident form than the nonresident form.

After that you will file Form 843 for refund of SS and Medicare taxes. Read about filing Form 843: Your U.S. Tax Return: Social Security and Medicare (FICA) Taxes for Non-resident Exempt Individual

Thanks Mukat for your reply. I did a quick math on the refund that I will get after filing 1040NR for 2006 as required by IRS now and it looks like the refund amount is the same as that of 1040. So, should I still file 1040NR as the amount looks to be the same as I got from 1040 in 2006? Also, do I need to pay any penalties this time? From my part, I don't owe anything to IRS in 2006 but still do I need to pay a penalty? If you have some advise on this, please reply.

Thanks in advance.

As long as you don't owe any tax, you will not pay any interest or penalty.