[mon_eur]

Hello,

I am an H-1B visa holder and currently employed as a post-doctoral researcher at a university in the state of Mississippi, since Dec. 1, 2008. I am a Romanian citizen, however the H-1B visa was issued by the US Embassy in Athens, Greece. I lived in Greece the last 7 years - doing my PhD - before moving to the US, and I hold a Greek residence permit with unlimited duration (no expiration date).

I was unaware of any tax treaties between US and Romania/Greece until recently. Hence, I filled the 1040NR-EZ tax form (I got one full salary in December 2008), as single - without any dependents-, and filed it as a nonresident alien, without claiming any tax treaty benefits. Reading both treaties between US and Romania, and US and Greece respectively, I believe I am eligible for Federal Tax on US income exemption (I still have to pay FICA and MS state tax).

1. What country is considered to be my residence? Publication 901 defines a "resident of a Treaty country" as someone who has been given residence in that particular country, without necessarily being a citizen of that country. Does this mean I can claim Greece as my country of residence?

2. If I claim any tax treaty benefits, do I have to leave my current position (and hence the US) after 2 years (if I use the US-RO treaty) or 3 years (if I use the US-GR treaty)?

3. What forms should I fill and where, in order to claim treaty benefits (federal tax income withholdings)? Is there a deadline for amending my status?

Thank you so much!

[MukatA]

H1-B visa is work visa. Your income is subject to FICA taxes, and federal and state income taxes. You will not get any treaty benefit on H1-B.
Read about H1-B tax filing: Your U.S. Tax Return: The U.S. Visas

[mon_eur]

I understand that my income is subject to FICA and state income taxes. However, both treaties between US-Romania, and US-Greece, under code 18 (Teachers or Researchers) and article 19 (US-RO) or article XII (US-GR) state that if the alien is under code 18, then his income is exempt from federal taxes for up to 2 (for Romania) or 3 (for Greece) years, assuming no immigration status change

Neither the above articles, nor the IRS publications p515, p519 or p901 say that a non resident alien can claim federal income tax treaty benefits, only if the NRA is not on a H1-B visa. Hence, I am left wondering whether this is true, beyond any reasonable doubt or not?

[moniquetx]

I understand that my income is subject to FICA and state income taxes. However, both treaties between US-Romania, and US-Greece, under code 18 (Teachers or Researchers) and article 19 (US-RO) or article XII (US-GR) state that if the alien is under code 18, then his income is exempt from federal taxes for up to 2 (for Romania) or 3 (for Greece) years, assuming no immigration status change

Neither the above articles, nor the IRS publications p515, p519 or p901 say that a non resident alien can claim federal income tax treaty benefits, only if the NRA is not on a H1-B visa. Hence, I am left wondering whether this is true, beyond any reasonable doubt or not?

This is a really good question. My case is very similar. Anybody knows whether switching to H1B automatically cancels any tax treaty benefits for exemption from federal income tax?

Espcially in the US-GR tax treaty which is valid for 3 years since date of entry in the US the language is very inconclusive, see below:

"A professor or teacher who is a resident of Greece and who is temporarily in the United States to teach at a university, college, or other educational institution for a maximum of 3 years is exempt from U.S. income tax on the income received for teaching during that period."

Basically I think everything depends on how one interprets the word temporarily in the treaty. In principle being in the US on an H1B visa implies no permanent residency since H1B is still a visa so the treaty should still apply. This is also implied in the IRS Publication 517 which says "in some circumstances you may still be considered a nonresident alien under an income tax treaty between the U.S. and your country."

Any tax expert out there willing to help. Thanks in advance!!

[AtlantaTaxExpert]

Generally, persons claiming the treaty income tax exemption for teacher and researchers must have J-1 visa. The H-1B visa is a work visa and this not eligible for treaty exemptions.

Mon Eur filed correctly for 2008, because he had not yet met the Substantial Presence Test, but, for 2009 and beyond, he will file as a resident alien, paying all the taxes that a U.S. citizen pays.

I suppose you could TRY to claim the treaty exemption, but I doubt you would be successful due to your H-1B visa status.

[johncleeut]

The differences between J-1 and H-1B do not matter for treaty purposes. What matters is what the treaty states and the specific requirements. The visa codes are for US laws on immigration, residency, and other things. Treaties override US laws.

[AtlantaTaxExpert]

Actually, the visa status DOES matter, because the IRS judges eligibility based on a variety of documents, primary being the visa.

That said, WHY are you contesting this THREE years after the fact?