I am an Indian National and I have been in US on F1 since Aug 2001.
My F1 expired on June 2006 and I was on OPT till my H1 began in Oct 2006.
I had filed 1040NR for the past five years but read that after 5 years, I should start filing as a resident. I also read a contradictory statement elsehwere that if I was on F1 then I should still consider myself as a non-resident alien. Even then I am not sure if the change of my status to H1 during the year makes a difference. So I would appreciate any clarification on this matter as to whether I should file as resident or a non-resident.

The other question is that I had been on an internship from Jan-Mar 2006 in UK while I was still on my F1. I don't know if I should report this income in my taxes. I was taxed in UK anyway and I don't know if I should present that income again here to be taxed?

Any help to both these questions would be really helpful.

Thanks!

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Originally Posted by ram chandru

I am an Indian National and I have been in US on F1 since Aug 2001.
My F1 expired on June 2006 and I was on OPT till my H1 began in Oct 2006.
I had filed 1040NR for the past five years but read that after 5 years, I should start filing as a resident. I also read a contradictory statement elsehwere that if I was on F1 then I should still consider myself as a non-resident alien. Even then I am not sure if the change of my status to H1 during the course of the year makes a difference. So I would appreciate any clarification on this matter as to whether I should file as resident or a non-resident.

The other question is that I had been on an internship from Jan-Mar 2006 in UK while I was still on my F1. I dont know if I should report this income in my taxes. I was taxed in UK anyways and I dont know if I should present that income again here to be taxed?

Any help to both these questions would be really helpful.

Thanks!

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Complicated one! You have been too long on an F1 to be exempt. For 2006 you are a resident and need to file a 1040. Report your worldwide income (including the UK income) and claim a foreign tax credit.

Thanks for your response. A couple of follow ups...

1. Do I go for the 1040 plain one or the EZ one. I guess, to report the foreign income I might have to go for the 1040?

2. When you say, report foreign income: Should I report it in the "other income" question?

3. Also, in that case it would become part of my gross income in 1040 and I would be taxed for it again, right? Will applying for a foreign tax credit take care of this double taxation?

4. When I left for the internship while on F1, I was told at school that I was allowed a maximum absence of 5 months from US while on F1 to maintain my status; so my doing an internship for 3 months outside was not a concern. Does this mean that I can also choose not to report the income from this intership?

That was quite a lot of question. But as you pointed out, this turned out to be more complicated that I thought. I really appreciate any help in this regard.

Thanks again!
Karthik

1) To claim the Foreign Tax Credit on Form 1116 as recommended by Tax Searcher, you MUST file Form 1040.

2) I report foreign income on Line #21, as that allows me to identify to the IRS where the income is from. You CAN add it to the wage amount on Line #7 as an alternative, however.

3) The Foreign Tax Credit should deal with the double taxation issue.

4) Because your F-1 exemption expired on 31 December 2005, you must report as a resident alien, which means you MUST report the internship income.