[Maverick104]

Hi
I worked from January 15 2006 till December 16 2006 on my OPT and I changed my status to H1 from 18 December 2006 onwards.
I wanted to know when I file in Tax return, which forms shall I use and under which status I file my tax return.

[AtlantaTaxExpert]

Because you switched over to H-1 in mid-December 2006, you cannot qualify for either dual-status or resident alien.

That's why you will file as a non-resident alien, and file Form 1040NR or 1040NR-EZ.

[Maverick104]

Hi
I worked from January 15 2006 till December 16 2006 on my OPT and i changed my status to H1 from 18 December 2006 onwards.
I wanted to know when i file in Tax return, which forms shall i use and under which status i file my tax return.

Thanks for your reply, can you if possible explain the reasoning behind your answer.
And do I still need to file Form 8843 along with 1040NR/1040NR EZ?

[AtlantaTaxExpert]

Maverick:

Yes, you must file Form 8843 one last time. For 2007 and beyond, yopu will be a resident alien and will no longer have to file Form 8843.

As for my reasoning, see below. Note the item in red. This will be posted as a STICKY NOTE this evening.

I just got off the phone with the International Tax representatives at the IRS. I was not satisfied with some guidance I had received regarding the requirements of dual-status tax reporting. Here is the new guidance direct from the IRS:

Dual-status is required if the person meets all three of the following conditions:

1) They are in residency status at end of the calendar year.

2) They have been in the United States in residency status (normally on a H-1 or H-1B visa) for at least 31 consecutive days.

3) They meet the Substantial Presence Test completely during the calendar year.

If you fail Item #2, you CANNOT be a dual-status alien. You must file as a non-resident alien.

If you meet Item #2, but fail to meet either Item #1 or Item #2, then your default status is that of a non-resident alien. You CAN file as a dual-status alien if you meet other criteria and wait a set period before filing your tax return, but that is YOUR CHOICE! It is NOT MANDATED BY LAW!

As a practical matter, you meet all three items if you convert from a J-1 or F-1 visa to an H-1 or H-1B visa on or before 1 July 2006.

In your case, since you converted to H-1B status on mid-December, you failed Item #2 and cannot file as a dual-status alien. Your only choice is to file as a non-resident alien.

[Maverick104]

That cleared all my doubts. Thank you for all your help.

[AtlantaTaxExpert]

Glad to help!

[Floridian]

I converted directly from F-1 to H-1 starting October 9, 2006. I came to US in Aug 2003. I meet all the conditions for Dual -status. I am not sure how to file the faxes in Dual-status, can I still use the benefits from US-India tax treaty for the period January to September ?. I appreciate your help.

Dual-status is required if the person meets all three of the following conditions:

1) They are in residency status at end of the calendar year.
2) They have been in the United States in residency status (normally on a H-1 or H-1B visa) for at least 31 consecutive days.

3) They meet the Substantial Presence Test completely during the calendar year.

[AtlantaTaxExpert]

Yes, the tax treaty benefits still apply for your non-residency status.

However, if you converted on 9 Oct 06, you do NOT meet Item #3. If you want to wait and file in mid-June 2007 as a dual-status alien, be my guest.

However, you would probably pay the same amount of tax if you file as a non-resident alien.

[Floridian]

As per substantial presence test listed on instructions for 1040 NR,

"You are considered a U.S resident if you meet the substantial presence test for 2006. You meet this test if you were physically present in the United states for at least:

1. 31 days during 2006. And TRUE
2. 183 days during the period 2006, 2005, and 2004, counting all the days of physical presence in 2006, but only 1/3 the number of days of presence in 2005 and only the 1/6 the number of days in 2004.

365 + 1/3(365) + 1/6(366) definitely > 183 TRUE

As per you, I don't meet these criteria ! Please correct me if I am wrong.

[AtlantaTaxExpert]

The time while you were under the F-1 visa is EXEMPT time and cannot be counted towards the SPT.

Hence, your 2006 SPT time only 83 days, 100 days short of meeting SPT.

[Floridian]

Thanks for the clarification. I guess, I would go ahead with 1040 NR instead of waiting another 3 months to file under dual-status.

I appreciate your help.

[AtlantaTaxExpert]

File as a non-resident alien.