Hi Tax Expert,

I was on F1 OPT from 01/01/06 to 02/15/2006 with my employer. Returned to home country China on 04/13/2006. I came back to work with the same employer on H1B since 11/14/2006. (I originally entered the US in 08/2006 as F1)

1. I don't think I met the physical presence test. Should I just file 1040NR and 8843? Or should I elect to file as a dual-status or as a resident alien? Will that maximize my tax return?

2. I had some legal fee($2500), local moving expenses($100), travel (to/from China) expenses($1125), all because my employer delayed my H1b petition and I couldn't legally stay in the US during the months 04-11/06, and I also had one month of COBRA health insurance ($425). They all seemed to be connected to producing my income in the tax year. Can I deduct them all?

3. Since I am no longer a student after I returned. But the majority of my income (1.5 out of the total 2.5 month that I worked) was made as a F1 student. Am I eligible to claim the $5000 US China tax treaty at all?

Thank you in advance. I really look forward to your answers!

Julan (searched all over internet, dying for an answer to these questions)

1) Yes, file Forms 1040 and 8843.

2) You can deduct the moving expenses, the legal fees and the travel. Probably NOT the insurance.

3) Yes, In my opinion, you CAN claim the $5,000 treaty exemption.

Contact me if you have further questions or of you need professional tax help.

Thank you very much for your answers, Tax Expert! When you said form 1040, I think you meant 1040NR?

A couple of more questions:

1. Do I have to attach form 8830 for my tax treaty exemption? (I do not seem to have that "treaty-based return position", not sure what that means)

2. Can I claim the $3300 exemption (line 39) on top of the $5000 treaty exemption AND the itemized deductions? All together they seem to deduct my tax to only $114 (I only worked 3 months last year though). Seems too good to be true...

Thank you again!

Julan

Julan:

Yes, I meant 1040NR.

1) No, the Form 8830 is probably not needed; just cite the treaty article on Page 5 of the Form 1040NR.

2) Yes, you get to claim the $3,300 personal exemption PLUS the itemized deductions in addition to the $5,000 treaty exemption. Sometimes, life is good! :-)

Wow! Life IS good! Thanks for making my day! You have saved me a lot of time.

Glad to help!

Hello Tax Expert,

Now the tax season is over and I already received my refund. :) Thanks for your great help.

But I am still trying to get another refund - Social Security and Medicare tax that was errorneously withheld when I worked as a F-1 student. I have been pushing my employer on this for the past 6 months, but they have never given me a word nor have then denied my request. My questions are:

1. Can I skip my employer and request the refund from IRS directly? If yes, should I file form 843 or 8316 or both?

2. Since the tax overpayment (all together over $3,200) has been withheld for over a year now (my last day as a student was 02/15/2006), any chance that I can request interest on the tax $? If yes, how should I calculate the interest? Or should I leave that to IRS to calculate?

Thank you again. Looking forward to your reply,

Julan

Julan:

1) You CAN skip the employer, but it makes it a LOT harder to get the IRS to issue the refund. The pivotal support document is submitting the Form 843 is the resfusal letter from the employer. Keep trying to get that letter.

2) The IRS will pay you interest on the withheld taxes automatically. You need not even ask; it is done as a matter of law.