Hi A.T.E,
Thanks for your advice and time. Let me keep it as straight as possible:
1. Can I claim US-India treaty benefits while filing state taxes in Mass.
2. Can I claim my brother as dependent if I am paying his tuition fee for undergrad education in US? If yes, where do I reflect it in 1040NR form? (This is assuming that I am and was always on F-1)
3. Can I put tuition paid for my own graduate studies as deductible in taxes?
4. Is there any other deduction apart from personal exemption and standard deduction that I can or could take in last/this year tax return as a student from India?
5. (This is not inline with point 2, but please consider points 2 and 5 on case by case basis, thanks) Being on H-1 from October 2005, would you suggest filing just non-resident 1040NR or employing complicated first year resident's election by filing for extension and filling 1040 later? (I do not own a house or pay mortgages and do not anticipate taking any benefits that I can not take as a non resident). I want to do it right more than get more return back.

Thanks,
Amit

Amit:

1) No, but you can claim the personal exemption and standard deduction that is authorized by Massachusetts.

2) Yes. Claim him in Box 7 of Form 1040NR.

3) No, not if you are filing as a non-resident alien.

4) Not that I know of.

5) If you paid tuition in 2004, it makes sense to wait and file as a resident alien, because then you can claim one of the Education Credits or deduct the tuition on your return.

Thanks ATE, it was fabulous. Really appreciate your help. I have a few more specific questions, answers to which will be of great help.

Before that let me give some more information:
I came in US in Sep 2003 on F-1.
Worked on CPT (F-1) in 2004 and also got stipend as research assistantship and Teaching assistantship as a student from University. I did not pay any tuition for entire year in 2004.
I continued working on CPT in 2005 for a few months and then worked on campus in the university hourly basis. I started working on H-1 from October 2005. I paid tuition for one semester in 2005.

I understand that my earnings on CPT are definitely taxable. Does US-India treaty allow me to take deductions for stipend and on campus earnings? My friend was in similar situation and went to H&R Block for his taxes. They have put his entire stipend as tax exempted earnings under US-India tax treaty and quoted Article 21(1). If I'm not wrong Article 21(1) is for students from Netherlands and for students from India it is Article 21(2). But, does US-India treaty exempt my stipend (for teaching and research) from taxes?

Thanks and regards,
Amit

Amit:

Yes, the stipend is exempt from taxes, but the article is 21(1) (see IRS Pub 901).

ATE,

What about earnings from on campus jobs for living expenses?

I did not know about tax exemption for the stipend, so I have to file an amendment for last year too. What will be the procedure for filing amendment for last year?

If I am filing 1040NR-EZ, Line 6 will have stipend amount, right?

I asked you a question about dependent for whom I paid tuition. I write the name of the dependent in box 7 of 1040NR form, but where do the tuition amount goes? Line 45? Does it matter if the dependent is here for graduate studies, can I still claim tuition credits for that if I paid for his tuition expenses?

I am on H-1 now since oct 2005. The only way to take exemptions for my own tuition expenses in 2005, is to file first year option, right? If I don't file that option this year, will I still be able to take this exemption next year?

Thanks a ton for your help.

Amit

You cannot claim tuition expenses for either yourself or your dependent if you file Form 1040NR or 1040NR-EZ.

The earnings for the on-campus job is liable for income taxes.

Yes. Line #6 is where you put the stipend.

It seems there's a Treaty entry in Schedule Y of mass tax forms, in which you can claim treaty benefits. Is it correct?

My expertise in MA tax process is too slim to properly comment. A call to the Massachusetts Department of Revenue should get you an answer.

If you can claim tax treaty benefits, then the line is #4 on Sched Y for MA taxes.
It says :" amounts excludible under... or US tax treaty ...".

Remember that the amount has to be included in your income ( line 3 for R , and line 5 for NRPY)

Quote:

---

Originally Posted by AtlantaTaxExpert

Amit:

Yes, the stipend is exempt from taxes, but the article is 21(1) (see IRS Pub 901).

---

The stipend from a permanent establishment in USA / US citizen is not exempt.

No comment

Quote:

---

Originally Posted by AtlantaTaxExpert

Amit:

Yes, the stipend is exempt from taxes, but the article is 21(1) (see IRS Pub 901).

---

Hey ATE!

I understand the thread is pretty old.. I actually came across it while googling 21(2)..

I am a student from India on F1 and get teaching assistantship. I am in a NY state government institute. Can I still exempt from my income for tax purposes?

Thanks!

Negative.

Student on F-1 visas who earn money are exempt from Social Security and Medicare taxes, but they MUST pay federal and state income taxes.

Quote:

---

Originally Posted by AtlantaTaxExpert

Negative.

Student on F-1 visas who earn money are exemp from Social Sceurity and Medicare taxes, but they MUST pay federal and state income taxes.

---

Thanks! Since I know that now.. should I fill form 1040nrez or 1040ez? I have been around since July 2005. Article 21(2) of us-india tax treaty gives me privileges of New York resident for tax purposes.. I think the real question is - what will give me back more? Nrez or ez?

Thanks again!

It does not matter which gives the most back!

As a student under the F-1 visa, you MUST file Form 1040NR or 1040NR-EZ, unless you came to the U.S. before 2003, in which case you have used up your five-year student exemption and must file as a resident alien.

Hi A.T.E.

I came to US in aug '07 on F-1 and now I am on F-1 OPT and working in mass since jan '09. Can I claim US-India treaty benefits while filing state taxes in Mass. In the schedule Y form?

Also, Will be a resident or non-resident of mass? I moved here in jan '09.

Thanks in advance for your advice!
Sowmya.

Negative.

Like most states, Massachusetts does NOT honor the tax treaties between the U.S. and foreign countries.

However, you are a non-resident of Massachusetts under commonly-accepted tax law that treats students (be they U.S. or international) who originate OUTSIDE of the state as non-residents for the duration of the stay in Massachusetts as long as they maintain student status.