Hi,

I'm desperate in preparing my tax. Here's my situation:

I started to work from Jan 2006 to October 2006 as F1 status (OPT), then from October 15th, I got H1B visa and worked under H1 status. My wife changed her status from F2->F1 and started school from Fall 2006 and didn't have any income (nor do I have a social security number now). We have been married for 3 years. We are all Chinese citizen.

From Jan 15, the first pay period of January, my employer started to withhold my federal tax and state tax using a W4 assuming a married/resident status. And starting from October 15th, by the request of IRS, I had to file another W4 saying I was non-resident and file as a "single", then my company started to withhold far more federal tax and state tax, and additionally, social security and medicare tax.

After doing quite a lot research, we found that non-residents only are able to file as single and can not take any deductions while residents of course are able to file as married jointly and take huge amount of deduction off. So I decided to file an extension first and file our tax as residents in June. Then I have some questions about social security tax and the tax treaty I may be entitled with.

1. If we file as resident/married file jointly in June, do I have to pay back all the social security tax from January 2006 to October?

2. If we file as non-residents, am I supposed to get a refund of the social security tax withheld from October to December? (I think I can't get the money back)

3. I think I can deduct 5000 dollars off from the treaty whether I file as resident or not. Am I correct?

4. Can I also deduct 5000 dollars from my state tax return? I reside in Arkansas.

5. I can file as resident/married jointly on state tax return no matter what status I file on federal tax, is it correct?

6. If I choose to extend my federal return, can I extend my federal tax return only and file my return on state tax before April 17?

Thank you very much. I really hope I can get your answer before the deadline.

Quote:

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Originally Posted by xymxy

Hi,

I'm desperate in preparing my tax. Here's my situation:

I started to work from Jan 2006 to October 2006 as F1 status (OPT), then from October 15th, I got H1B visa and worked under H1 status. My wife changed her status from F2->F1 and started school from Fall 2006 and didn't have any income (nor do I have a social security number now). We have been married for 3 years. We are all Chinese citizen.

From Jan 15, the first pay period of January, my employer started to withhold my federal tax and state tax using a W4 assuming a married/resident status. And starting from October 15th, by the request of IRS, I had to file another W4 saying I was non-resident and file as a "single", then my company started to withhold far more federal tax and state tax, and additionally, social security and medicare tax.

After doing quite a lot research, we found that non-residents only are able to file as single and can not take any deductions while residents of course are able to file as married jointly and take huge amount of deduction off. So I decided to file an extension first and file our tax as residents in June. Then I have some questions about social security tax and the tax treaty I may be entitled with.

1. If we file as resident/married file jointly in June, do I have to pay back all the social security tax from January 2006 to October?

2. If we file as non-residents, am I supposed to get a refund of the social security tax withheld from October to December? (I think I can't get the money back)

3. I think I can deduct 5000 dollars off from the treaty whether I file as resident or not. Am I correct?

4. Can I also deduct 5000 dollars from my state tax return? I reside in Arkansas.

5. I can file as resident/married jointly on state tax return no matter what status I file on federal tax, is it correct?

6. If I choose to extend my federal return, can I extend my federal tax return only and file my return on state tax before April 17?

Thank you very much. I really hope I can get your answer before the deadline.

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1. Technically you could be held liable for social security tax. The IRS appears not to follow this up when an election is made. Once you make the election your wife will be potentially subject to social security tax. She will be OK as a student (there's an exemption for campus work) but not if she goes OPT.

2. Once you are on H1B you are liable for social security tax. No refund is available.

3. You can use the Treaty allowed amount but only for the period in which you were a student. You cannot use it to reduce any H1B income.

4. I don't deal with Arkansas state tax returns but I believe that they are one of the states that does not honor the tax treaties -- you need to double check.

5. You cannot file MFJ on a 1040NR. You would have to be electing residency for the full year for both of you.

Quote:

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Originally Posted by The Texas Tax Expert

1. Technically you could be held liable for social security tax. The IRS appears not to follow this up when an election is made. Once you make the election your wife will be potentially subject to social security tax. She will be ok as a student (there's an exemption for campus work) but not if she goes OPT.

2. Once you are on H1B you are liable for social security tax. No refund is available.

3. You can use the Treaty allowed amount but only for the period in which you were a student. You cannot use it to reduce any H1B income.

4. I don't deal with Arkansas state tax returns but I believe that they are one of the states that does not honor the tax treaties -- you need to double check.

5. You cannot file MFJ on a 1040NR. You would have to be electing residency for the full year for both of you.

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Thanks so much! My mind is crystal clear now. Oh... about the last question, can I file State tax on time even I extend the federal tax return to June?

TTE covered it all.

You need to wait to file your Arkansas tax return until the ITIN is returned to you.