[studfromhawaii]

AtlantaTaxExpert:

Thanks for your quick response once again. I JUST got a reply from Hawaii Taxpayer Services (to the email which I had sent to them on January 24, 2006 copy of which is attached below) stating:
"You will need to continue to file the form N-15, Hawaii Nonresident and Part-Year Income Tax return".

I was in Hawaii for all of 2005 except for the period between August 19, 2005 - September 28, 2005 (I was in India to get my H-1B visa stamped on my passport then).

I would really appreciate it if you could please analyze and let me know when I would be eligible to file my 2005 Federal and State Tax Returns as a Resident Alien since filing as a Resident Alien would be the most beneficial in my situation because I'm really confused. Thanks for your time.

--------------------------------------------------------------------------
Body of email sent to Hawaii Taxpayer Services on January 24, 2006:

Dear Sir,

Aloha! I'm a 24 year old single male from India. I came to USA on
April 19, 2000 on an F-1 Student Visa and have consecutively since
filed the N-15. My H-1B Work Visa got approved effective October 1,
2005 and I went to India on August 18, 2005 to get my visa stamped on
my passport, which was stamped on September 22, 2005 and I returned to
USA on September 29, 2005. What form(s) do I have to use this year to
prepare my State Tax Return?

Correct me if I'm wrong, but my guess is that sometime around 4 April
2006, I would have effectively been under my H-1B status and
physically present in the U.S. for 183 days which would allow me to
file Form 1040 and I will need to add the statement specified on page
9 of IRS Pub 519 and would also need to file Form 8863 for whichever
education credit I qualify. As for accounting for my F-1 status, I
would claim income earned during the F-1 status on the Form 1040. I
would also need to file Form 4883 one last time for 2005.

This would take care of my Federal Tax Return, but as far as the State
Tax Return is concerned, I would appreciate it if you could please
explain which form(s) I should use and where I should mail the
form(s). Thanks.

Stud:

You have to file the Hawaii state tax return as if you were a resident, regardless of how you file the federal return. If you were in Hawaii for all of 2005, file as a full-year resident. Otherwise, file as a part-year resident.

BTW, I made an error of your First Year Choice computation. I counted your entire 2005 H-1B time on a day-for-day basis. You must count 2005 time on a 3-day-for-day basis (you can only count one-third of your 2005 days for the Substantial Presence Test), which pushes your 2006 filing date to early June instead of early April. So you will have to file an extension after all.

Still, IMHO, filing as a resident alien is the way to go!

[AtlantaTaxExpert]

Stud:

Apparently, your month+ absence triggered the need to file as a part-year resident of Hawaii.

[studfromhawaii]

AtlantaTaxExpert:

I was advised by someone on the http://www.thetaxguy.com/ Tax Discussion Forum that:

For 2000-2004, your days as an F-1 student were "exempt." For 2005, all of the days you are here (both as an F-1 and as an H1B) count towards the substantial presence test. You appear to have 183 days in the US, so you would be a resident alien for the entire year.

(http://pub33.bravenet.com/forum/2786.../fetch/640526/)

Does this mean I don't need to file an extension? Please advise.

Stud:

You have to file the Hawaii state tax return as if you were a resident, regardless of how you file the federal return. If you were in Hawaii for all of 2005, file as a full-year resident. Otherwise, file as a part-year resident.

BTW, I made an error of your First Year Choice computation. I counted your entire 2005 H-1B time on a day-for-day basis. You must count 2005 time on a 3-day-for-day basis (you can only count one-third of your 2005 days for the Substantial Presence Test), which pushes your 2006 filing date to early June instead of early April. So you will have to file an extension after all.

Still, IMHO, filing as a resident alien is the way to go!

[AtlantaTaxExpert]

Stud:

If, in fact, you were in country for all of 2000 through 2004, then they are correct. The F-1 time in 2004 does count for the Substantial Presence Test. There is a five-year time limit for the exemption under the F-1 visa program. Once the sixth year starts, it counts towards the Substantial Presence Test regardless of your visa status.

[studfromhawaii]

AtlantaTaxExpert:

Thanks for your help. I have been in the US since April 19, 2000 but I did travel while I was on F-1 status and later went to India to get my H-1B stamped on my passport when my change of status was approved. I don't have access to the exact number of days that I was physically present between 2000 through 2004 in the US at the moment. I have that information at home and will post tonight. Until then, here's what thetaxguy forum advisor triad had to say:

1) Can I also deduct interest on my U.S. Credit Cards?

No.

2) Federal Tax Return:
I need to file form 1040, add the statement specified on page 9 of IRS Pub 519, and file Form 8863 for whichever education credit I qualify for and Form 8843 one last time for 2005. Right?

No, you would only file the 1040 and the 8863. The form 8843 is only filed for the first 5 calendar years as an F-1 student. The pub 519/page 9 letter isn't required since you aren't making the "first year choice." (See below.)

3) Someone on another forum advised me that...

That person missed the fact you were in the 6th calendar year as an F-1 student. There is a huge difference between the 5th and 6th year.

In the 6th calendar year (2005), *all* of your days in the US counted (both F-1 and H1B) and since you were here on January 1, 2005, you were a resident for *all* of 2005...you can file at *any* time. (By the way, on December 31st, you already had roughly 120 days towards your 2006 substantial presence test.)

Had you been in your 5th calendar year, you would have been unable to count the F-1 days. Converting to H1B in October of the 5th year would have left you missing the substantial presence test. You would have been considered a non-resident for the entire year. For someone who converted in their 5th calendar year, who wanted to be a resident (say they were married or had bought a house and wanted to be able to itemize mortgage interest), there is a thing called the first-year choice. That would allow the person to become a dual-status alien (NRA through September, RA for October thru December), but this cannot be done until the 2006 substantial presence test is met.

Replying to:

Triad,

I appreciate your quick response.

Yes, the N-15 is the Hawaii Nonresident and Part-Year Income Tax return. I checked with the Hawaii Taxpayer Services and was told that I would need to continue to file the form N-15.

I would appreciate it if you could please clarify the following:
1) Can I also deduct interest on my U.S. Credit Cards on the 1040 form?
2) Federal Tax Return:
I need to file form 1040, add the statement specified on page 9 of IRS Pub 519, and file Form 8863 for whichever education credit I qualify for and Form 8843 one last time for 2005. Right?
3) Someone on another forum advised me that I must count 2005 H-1B time on a 3-day-for-day basis (because I can only count one-third of my 2005 days for the Substantial Presence Test), which pushes my 2006 filing date to early June which means will have to file an extension. But as per your post, I already meet the substantial presence test that would allow me to file my federal taxes as a resident alien. Are you sure about this?

Please advise. Thanks.
--- --- --- --- --- --- --- --- ---
Replying to:

For 2000-2004, your days as an F-1 student were "exempt." For 2005, all of the days you are here (both as an F-1 and as an H1B) count towards the substantial presence test. You appear to have 183 days in the US, so you would be a resident alien for the entire year.

Is N-15 the Hawaii NR return? If so, since you have now accepted a job on an H visa in Hawaii, you will be considered to be non-transitory. You will file, I think, a part year return. Check with a preparer in Hawaii.

Resident aliens can file a 1040EZ/1040A or a 1040. You will be required to report your worldwide income for the entire year. Eligible student loan interest can be deducted on either the 1040A or 1040 form.

Stud:

If, in fact, you were in country for all of 2000 through 2004, then they are correct. The F-1 time in 2004 does count for the Substantial Presence Test. There is a five-year time limit for the exemption under the F-1 visa program. Once the sixth year starts, it counts towards the Substantial Presence Test regardless of your visa status.

[studfromhawaii]

AtlantaTaxExpert:

FYI, the actual number of days I was present in the United States on F-1 during:
2000: 227, 2001: 316, 2002: 351, 2003: 245, 2004: 366.
2005: H-1B got approved effective October 1, 2005 & I left for India on August 18, 2005 (until which I was on F-1) and returned on September 29, 2005 with the H-1B stamped on my passport.

AtlantaTaxExpert:

Thanks for your help. I have been in the US since April 19, 2000 but I did travel while I was on F-1 status and later went to India to get my H-1B stamped on my passport when my change of status was approved. I don't have access to the exact number of days that I was physically present between 2000 through 2004 in the US at the moment. I have that information at home and will post tonight. Until then, here's what thetaxguy forum advisor triad had to say:

1) Can I also deduct interest on my U.S. Credit Cards?

No.

2) Federal Tax Return:
I need to file form 1040, add the statement specified on page 9 of IRS Pub 519, and file Form 8863 for whichever education credit I qualify for and Form 8843 one last time for 2005. Right?

No, you would only file the 1040 and the 8863. The form 8843 is only filed for the first 5 calendar years as an F-1 student. The pub 519/page 9 letter isn't required since you aren't making the "first year choice." (See below.)

3) Someone on another forum advised me that...

That person missed the fact you were in the 6th calendar year as an F-1 student. There is a huge difference between the 5th and 6th year.

In the 6th calendar year (2005), *all* of your days in the US counted (both F-1 and H1B) and since you were here on January 1, 2005, you were a resident for *all* of 2005...you can file at *any* time. (By the way, on December 31st, you already had roughly 120 days towards your 2006 substantial presence test.)

Had you been in your 5th calendar year, you would have been unable to count the F-1 days. Converting to H1B in October of the 5th year would have left you missing the substantial presence test. You would have been considered a non-resident for the entire year. For someone who converted in their 5th calendar year, who wanted to be a resident (say they were married or had bought a house and wanted to be able to itemize mortgage interest), there is a thing called the first-year choice. That would allow the person to become a dual-status alien (NRA through September, RA for October thru December), but this cannot be done until the 2006 substantial presence test is met.

Replying to:

Triad,

I appreciate your quick response.

Yes, the N-15 is the Hawaii Nonresident and Part-Year Income Tax return. I checked with the Hawaii Taxpayer Services and was told that I would need to continue to file the form N-15.

I would appreciate it if you could please clarify the following:
1) Can I also deduct interest on my U.S. Credit Cards on the 1040 form?
2) Federal Tax Return:
I need to file form 1040, add the statement specified on page 9 of IRS Pub 519, and file Form 8863 for whichever education credit I qualify for and Form 8843 one last time for 2005. Right?
3) Someone on another forum advised me that I must count 2005 H-1B time on a 3-day-for-day basis (because I can only count one-third of my 2005 days for the Substantial Presence Test), which pushes my 2006 filing date to early June which means will have to file an extension. But as per your post, I already meet the substantial presence test that would allow me to file my federal taxes as a resident alien. Are you sure about this?

Please advise. Thanks.
--- --- --- --- --- --- --- --- ---
Replying to:

For 2000-2004, your days as an F-1 student were "exempt." For 2005, all of the days you are here (both as an F-1 and as an H1B) count towards the substantial presence test. You appear to have 183 days in the US, so you would be a resident alien for the entire year.

Is N-15 the Hawaii NR return? If so, since you have now accepted a job on an H visa in Hawaii, you will be considered to be non-transitory. You will file, I think, a part year return. Check with a preparer in Hawaii.

Resident aliens can file a 1040EZ/1040A or a 1040. You will be required to report your worldwide income for the entire year. Eligible student loan interest can be deducted on either the 1040A or 1040 form.

[AtlantaTaxExpert]

Stud:

Have checked with several sources. Because you were in country for parts of five years, your F-1 status for 2005 is not exempt for the Substantial Presence Test. File Form 1040 and drive on.

[studfromhawaii]

Vrooooooooooooooooooooooooooooooooooom

Stud:

Have checked with several sources. Because you were in country for parts of five years, your F-1 status for 2005 is not exempt for the Substantial Presence Test. File Form 1040 and drive on.

[AjitBhat]

Hi Atlanta tax Expert,

I saw that you have helped a lot of people here, so hoping that you will help me too. I am originally from India on F1 from October 12th 2000 - to October 21st 2005 (including OPT period) and on H1B since October 21st 2005 to date. SSN and Medicare was withheld for me from April 12th 2005 to date. I have been filing 1040NR-EZ. MY questions are:

1) What forms do I need to file?
2) Can I get back the SSN and Medicare paid from April 12th to October 21st 2005 by claiming to be NR?
3) What deductions can I claim?

Cordially,
Ajit.

[AtlantaTaxExpert]

Ajit:

I answered your questions on the other post.

[hoppalah]

Hi Atlanta Tax Expert:

I am on H-1B since Apr 15 2005: transferred from F-1 (been on F1 since 2002: no OPT). I've been in the US the entire year of 2005 so I guess pass the Substantial Presence test.

I have two W-2s for my H-1B (two jobs since April '05). I also have a 1042-S (fellowship income statement for aliens) that was my fellowship income prior to Apr 15, 2005. Complicating the situation is that one of my W-2s reflects income earned on both F-1 and H-1B status (since my university where I worked part-time before April 2005 was also my full time employer).

My wife was on F-1 OPT but transferred to H-4 on Apr 15, 2005. She has a W-2 for her OPT period income, but (obviously) has no income since being on H-4.

My questions: (both of us are Indian citizens)
1. Is it better for me to file a resident alien return using 1040/1040EZ, rather than a dual-status return ? (I've seen in your previous posts that you advice against filing the dual status return... )
2. Will I be able to file a "married filing jointly" return, although my wife was initially on F-1-OPT and is now on H-4? (In other words, does she need to file a separate return? Her income was <2K in 2005)
3. How much and what would be the deductions (standard or itemized) that we could claim ?
4. Should I attach the 1042-S to my 1040 along with the W-2s?

Thanks in advance for your help!
hoppalah

[AtlantaTaxExpert]

Hoppalah:

1) File as a resident alien. It's easier and there is no advantage to file as a dual-status alien.

2) Yes, you can file jointly with your wife.

3) You can claim $10,000 in standard deduction and $6,400 in personal exemptions.

4) Yes, that income is taxable and needs to be reported.

[hoppalah]

Thanks ATE for the quick reply!

Follow-up questions, if you don't mind:

1. Please advise if I should use 1040-EZ versus 1040 ? (This may sound silly, but any help is appreciated in the interest of saving time)

2. Also, in your opinion, will e-filing my return work in my case, even though I have a kind-of complicated return (with 3 W2s and 1042-S)?

Thanks in advance !
Hoppalah

[AtlantaTaxExpert]

Hoppalah:

If you use tax software, just enter the data and the tax software will print out the appropriate form. I believe that you do qualify to use Form 1040EZ.

Your return is not that complicated. If the software lets you efile and you have a good-sized refund coming, e-filing will expedite the refund. Example: If you efiled today, you would probably get the refund on 17 Feb 06.

[sarab376]

Hello,
Wanted to get some Expert Insight for my taxes!

My case:
Completed MS in December 2004, On OPT from 12/20/2004 to 12/19/2005
Started H1 on 12/20/2005
Was working with same employer for all of 2005

I guess I file as a Non-Resident Alien

My Doubt:
1. Wat all Deductions do I Qualify for? ( I guess somethins specific to being Indian Citzen? )

2. I paid part of my Tuition fees for my Masters(Completed in 2004) in 2005 -- does that give me any deductions?

3. My employer has taken off only State and Federal taxes.. What is the general approximation as how much % of Federa should I get as refund.. given that I was on H1 for mere 12 days in 2005.

Hope to get some Nice advice and guidance!

Thanks!

[AtlantaTaxExpert]

SaraB:

1) Since you are an Indian citizen, you may claim the standard deduction ($5,000) and the personal exemption ($3,200). Depending on how much you have paid in state and local income taxes, it may make sense for you to itemize if the state and local tax withholding exceeds $5,000.

2) If you file as a non-resident alien, you may not deduct your tuition and fees nor claim any education credit. If the tuition and fees were substantial, it may make sense to wait until late June to file as a resident alien (under the First Year Choice), in which case you can either deduct the tuition and fees or claim one of the Education Credits.

3) Since you did not tell me how much you made, I can give you no estmate.

[sarab376]

Thanks a lot ATE!

Well, Just to add more details to my Info..
Total Earnings for me is around $35 K
Federal Taxes $5.5 K
State Taxes $800
Tuition paid for year 2004 studies : $6K


Now... Will there be any Major Change in my refunds if I file as Resident Alien in June Rather then Non-Resident Today?
( Am assuming that if I file today.. I can file as NR rather then dual-status.. is that true? )

And.. Can I have your expertise and services for my tax file preparations?

Thanks!

[vramamu]

Hi,
I think I have a strange question/ rather dumb question. [since this is the first time I am filing with H-1]

Facts:
I have been on H-1 starting Jan 11, 2005.
Was on F-1 opt earlier.
Went to India for three weeks in Sep, 2005 [if it matters]

As soon as I received my approval, I had asked my employer to deduct medicare/SS taxes, but there was a delay and deductions started only after a month.

1q) Do I have to do anything about it?
2q) what are the forms that I use to file my federal income tax/
What are my deductions?





Other facts:
I was on F1 starting Dec 25,2000 to Jan 10,2005.
Out of that Sep 18, 2004 to Jan 10, 2005, I was on OPT. Never been out of the country in that period.


Thanks and any help us really appreciated.

THanks
Vijay

[AtlantaTaxExpert]

SaraB376:

E-mail me at [email protected] to discuss your tax situation and my fee structure. BTW, was the $6K in 2005 (instead of 2004). If so, then it will make a significant difference in your taxes if you file as a resident alien.

Vijay:

You must file as a resident alien, as you clearly meet the Substantial Presence Test.

1) If you promptly informed your employer about your change in status, then you did all that was required of you. The responsibility to collect and pay the Social Security and Medicare taxes rests with the employer, not you. The IRS will not hold you responsible if the employer delayed in collecting these taxes from you.

2) If you are single or married with no children, you can file Form 1040EZ. If you have children, you need to file Form 1040A, but will also get a Child Tax Credit ($1,000 per child). If you ran a business or did outside investment which must be reported, you need to file Form 1040. You will get a $3,200 personal exemption and a $5,000 standard deduction regardless of which form you file.

[vramamu]

Thanks ATE for the response.

Just one more thing.

Since I clear the sub. Presence test, is that I why don't file 1040NR-EZ?
and the 10 days that I was in F-1 OPT [Jan 1 - Jan10] does not affect in any manner.

So in 1040EZ
my annual income + taxable interest from bank [<1500] - 8200 = AGI
and for this AGI I find the tax rate from the tax tables and find out if I get a refund or if I have to pay ; am I rite?

Thanks
Vijay