Ask Me Help Desk - OPT to H1B Tax benefits?

OPT to H1B Tax benefits?

Hi I was on OPT from Jan to Oct'06 and H1B from Nov to Dec'06

I did receive social security and medicare tax exemption benefit when I was on OPT.Now, given the tax exemptions under law based on US India tax treaty for OPT how do I go about filing the taxes so that I get maximum benefits?

Thanks,
Vik

Vik:

File as a non-resident alien using Form 1040NR-EZ. If you are Indian, you get to claim the $5,150 standard deduction and the $3,300 personal exemption.

Hi,

Thanks for your quick reply! Just wanted to get a frank opinion:
Will I be benifited more apart from these standard deductions if I choose to use professional tax service or this is the best anyone can do?

Thanks,
Vik

Hi,

I had a CPA telling me that only the last two months of your Visa status actually count towards your Resident/Nonresident status in US.Since I was on H1B since Oct'06 hence I can file 1040 as a Resident Alien and claim itemized deductions which will yield me better returns than filing as a Non Resident with just the tax treaty benefits.
To what extent is this true? I don't believe this myself because this negates the SPT.

Please Advice.

Thanks!

Your CPA is right but you are misinterpeting him/her. If you began your F1 in 2002 or later, then you are still an exempt individual until you began your H1B. Once you begin your H1B then you start counting the days of presence.

You've had such a short time on H1B that you do not meet the SPT. However, the treaty benefits for students that were mentioned apply only in regard to your period as a student. I don't believe that the standard deduction can shield your post-H1B income.

If claiming the itemized deductions works out better, choose that. But you are still a non-resident.

Wasn't he a trainee during the earlier part of year 2006?

Doesn't it depend on how many tax years he was in the US before 2006? (If more than 2 means he will need an exemption otherwise the number of days as trainee will be applied as presence.)

Am I right?

Hi Texas Tax Expert,
Thanks a lot for the answer.

Vikram

I was in US on F1 from Aug 2003 to Nov 2005 and F1-OPT from then on until OCT 2006

Quote:

Originally Posted by student2worker

Wasn't he a trainee during the earlier part of year 2006?

Doesn't it depend on how many tax years he was in the US before 2006? (If more than 2 means he will need an exemption otherwise the number of days as trainee will be applied as presence.)

Am I right?

As per my earlier answer, this depends on the taxpayer being on F1 no earlier than 2002. If the F1 began, for example in 2001, the taxpayer would be a resident in 2006. You don't count days on F1 (including OPT days) unless you have had 5 years already.

vdarbhe, if a person on OPT is regarded as a trainee then you are a resident.

Otherwise non-resident.

Even I am confused but Atlanta Tax Expert did seem to base a reply on that though I might have misunderstood him.

If you are on OPT, you are STILL under the F-1 visa and those days are exempt days for the SPT.

Hi, I am in a very similar situation. H1B from Oct 2006 and on F1(OPT) before and I am Indian. So I am sure I have to file as a non resident as the period presence is just 3 months.

My question is about the deduction that I can take...

Quote:

Originally Posted by AtlantaTaxExpert

File as a non-resident alien using Form 1040NR-EZ. If you are Indian, you get to claim the $5,150 standard deduction and the $3,300 personal exemption.

Quote:

Originally Posted by The Texas Tax Expert

You've had such a short time on H1B that you do not meet the SPT. However, the treaty benefits for students that were mentioned apply only in regard to your period as a student. I don't believe that the standard deduction can shield your post-H1B income.

Almost 2/3 of my income was from the H1B period. If I go by TexasTaxExpert's post, I think I can not take the standard, right?

I calculated both ways and if I take the itemized deduction, I pay around $350 more in taxes than if I were to take the standard deduction. What do you think, AtlantaTaxExpert?

Thanks a lot!

If your income during your F-1 visa status was AT LEAST $5,150, you can claim the standard deduction. If not, you can claim what your F-1 visa income in lieu of the standard deduction (but ONLY IF your F-1 visa income was LESS THAN $5,150).