Dear Atlanta Tax expert:


I was F1 in Jan 2005,
Start OPT on Feb 1,
Changed to H1-B on Oct 1.
But lived in the U.S. for only 20 days after I got H1-B, taking business trip in China in the rest of the days.

I do not meet substantial presence test. I should be in Non-residence status for the entire year 2005, but not dual status.

I am from China, I qualify for treaty benefit when I was in F1 and OPT. The tax withheld was $33.1 per month when I was in F1 and OPT.

But, after I changed to H1-B, my company still withheld $33.1 per month for Oct. Nov. and Dec. I only lived in the U. S. for 20 days in this period. I am still in non-residence status but not dual status.
Do I owe any taxes? If I owe, how do I calculate the taxes to be paid from Oct 1 to Dec 31 in H1-B?

WWJiang:

Since your visa status is F-1, the treaty exemption is $5,000. Exactly how much did you make under the F-1 visa and while under the H-1B visa?

I make $60,000. The pay rate was the same while I was in F1(OPT) and H1-B.

Okay, it looks like $45,000 was paid while under F-1 status, and $15,000 was paid while under H-1B status.

All you will owe is income taxes. If the Social Security and Medicare taxes were not withheld from your pay once you converted to H-1B, that is not your problem. The IRS holds the employer ultimately responsible to withhold and pay these taxes, and if he fails to do so, the IRS goes after the employer, not you.

Assuming you only qualify for the $5,000 treaty exemption mentioned earlier, along with your $3,200 personal exemption, and further assuming only $397.2 was withheld from your salary, you owe about $9,592, which includes a $368 late payment fee.

Dear Atlanta Tax Expert,

I meet my university tax expert on Jan. 5, 2005. She gave me substential presence test result with form 8233 and form W-4. It clearly state that any additional amount(in excess of 5000 examption), I need to pay $33.10/month as federal withheld. The treaty benefit between China and the U.S. should have special tax rate in addition to $5000 examption. I am sure this withheld applies to the period I was still in F1/OPT( Jan. ~ Oct 30).

My question is whether this withheld still applies to the period when I was in H1-B? If not, how can I calculate the right withheld during Oct and Dec?

WWJiang:

I am unaware of the special tax treaty exemption of which you speak.

May I suggest you access www.thetaxguy.com and query Dr. Gary Carter. He is both a CPA and a Doctor of Taxation who teaches at the University of Minnesota. He is probably the better person to ask about your situation.