Optional Practical Training and Tax Exemptions
Hi Tax Expert,
I am writing you because I need to file my taxes for the year 2006 and have an important question about foreign trainees exempted from paying taxes while in the US.
This is my situation:
I was a resident of Venezuela on the date of my arrival in US (01/15/2002). I am not a US citizen. I was present in the US for the primary purpose of studying from January 2002 to December 2005. After completion of my studies, I started working in NY for a financial services company after I received the Optional Practical Training Card, which is provided to foreign students after receiving a degree to work in the US for a year. My OPT expired in October 1, 2006. After that, I was granted an H1-B Visa to continue working in the US for three more years. So, for most part of the year 2006 I was considered a trainee.
I read on the IRS website under Publication 901, U.S Tax Treaties, that the US has a treaty with Venezuela for students and trainees under article 21.
Article 21 for Venezuela states that “an individual who is a resident of a Contracting State [Venezuela] at the beginning of his visit to the other Contracting State [US] and who is [in my case] ii) securing training required to qualify him to practice a profession or professional specialty, shall be exempt from tax by that other Contracting State [US] with respect to the amounts described in subparagraph b) of this paragraph for a period not exceeding 5 taxable years from the date of his arrival in the other Contracting State [US], and for such additional period as is necessary to complete, as a full-time student, educational requirements as a candidate for a postgraduate or professional degree from a recognized educational institution.
b) The amounts referred to in subparagraph a) of this paragraph are:
iii) [in my case] income from personal services performed in that other Contracting
State [US] in an aggregate amount not in excess of five thousand United States dollars
($5,000) or its equivalent in Venezuelan bolívares for the taxable year concerned.”
My question is the following: according to my situation, am I able to be exempted from tax for the first $5,000 of my income during 2006?
Please let me know.
