I am preparing to file 1040-NREZ, and the relevant information is as below:

I joined grad school in Aug 2004. I graduated in May 2006, and I was working on CPT between Jan and May 2006 and OPT after that. My OPT is active till May 2007, and my I-797 petition for H1 assumed validity from 30th November 2006. However, I have not had my H1 visa stamping yet.

My query is with regard to itemized / standard deduction (Entry 11 in 1040-NREZ). According to the 1040-NREZ instructions and IRS Pub. 519, students and business apprentices from India can take standard deduction if they do not take itemized deduction.

Can I take standard deduction on the basis of the fact that my I-797 work permit gained validity only from December?

Thanks for your time and patience in responding to my query.

Since your H-1B takes effect on 30 Nov 06, you have NOT met the Substantial Presence Test.

This allows you to file as a non-resident alien for 2006. Hence, you can claim the Indian Student-eligible Standard Deduction.

In 2007, you will file as a resident alien.

Hi AtlantaTaxExpert, Thanks a lot for your response! Helped me in finishing up my 1040-NREZ :)

Glad to help!