[virinchi]

Hello, I am from India, currently on a j1 visa. I started my postdoctoral research fellow position on Feb 1 2013. I do understand that I need to file my taxes by April 2014. I have few questions

1) Under the tax treaty between India and US, are J1 applicants waived for just a) FICA, medicare and SS or b) FEDERAL INCOME TAX, FICA, medicare and SS

2) if the answer for above question is b and let's say I chose to get federal tax exemption for 2 years. Now, I don't have the 2 year residency rule and if I convert to H1B towards the end of my second year, will I have to retroactively pay tax for the 2 years I was on j1? I do understand that once am on h1b, I need to pay federal, state, city, FICA, medicare, SS taxes

Thank you

[AtlantaTaxExpert]

You may or may NOT qualify for the INCOME TAX exemption, but if you do qualify, but stay beyond two years, you LOSE the exemption and must pay the income tax retroactively for 2013 and 2014.

You are exempt from FICA (Social Security and Medicare) taxes for 2013 and 2014, with NO retroactive tax penalty.

[virinchi]

Dear Atlanta tax expert, thank you for your quick reply. If I claim tax exemption for 2 years while in USA on j1, how long do I have to spend outside USA, before I can start working on h1b, and not activate the retro active payment of federal taxes. Thank you for your valuable advice

[AtlantaTaxExpert]

The normal return time is ONE year, or enough time to pay taxes on a annual tax return in your home country.