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ken99 · Mar 23, 2008, 05:29 PM

Hi.

I'm a British J1 research scholar at a university in California, where I started work at the beginning of 2007. The university withheld taxes from my wages but I believe as long as I don't stay longer than 2 years I am eligible for a tax treaty refund under article 20A. It's most likely that I will leave the US before the end of this year.

My question is, am I supposed to claim now for the taxes I paid in 2007 on this years tax return, or should I wait until I leave and then claim all taxes back for my time in the US? Is there any difference in claiming back multiple years back taxes, as opposed to just from the previous financial year?

Also, I'm having trouble finding the correct form in order to apply for this refund, so any help would be appreciated!

Thanks

The Texas Tax Expert · Mar 23, 2008, 05:46 PM

If you qualify under the treaty, they probably should not have withheld tax. You should file a return and claim back the tax you have paid (1040NR).

One thing to note is that you are in CA. I'm unfamilar with CA taxes but I seem to recall that CA is one of the states that does not follow the US tax treaties. Perhaps Int'l Tax will know this for sure and add to this answer.

ken99 · Mar 23, 2008, 06:19 PM

Originally Posted by ken99

Hi.

I'm a British J1 research scholar at a university in California, where I started work at the beginning of 2007. The university withheld taxes from my wages but I believe as long as I don't stay longer than 2 years I am eligible for a tax treaty refund under article 20A. It's most likely that I will leave the US before the end of this year.

My question is, am I supposed to claim now for the taxes I paid in 2007 on this years tax return, or should I wait until I leave and then claim all taxes back for my time in the US? Is there any difference in claiming back multiple years back taxes, as opposed to just from the previous financial year?

Also, I'm having trouble finding the correct form in order to apply for this refund, so any help would be appreciated!

Thanks

Thanks Tax Expert,

My understanding is that the taxes were withheld so that I wouldn't end up owing the IRS the back taxes, should I decide to stay longer than 2 years. I think the university just play it safe in this situation - the problem is, the staff at my university are incompetent and I struggle to get clear answers from them!

It's still not clear to me whether it makes a difference for me to file for the refund now, on the 2007 return, or at the end of my stay in the US (say, on my 2008 return).

The Texas Tax Expert · Mar 23, 2008, 08:40 PM

Mostly it's a time value of money thing. If you're confident you won't have to pay it back (ie you plan to meet the treaty conditions), you'd be better off claiming the tax back now and enjoying having the money available for your use.

jenmason · Mar 31, 2008, 08:33 PM

Originally Posted by ken99

Hi.

I'm a British J1 research scholar at a university in California, where I started work at the beginning of 2007. The university withheld taxes from my wages but I believe as long as I don't stay longer than 2 years I am eligible for a tax treaty refund under article 20A. It's most likely that I will leave the US before the end of this year.

My question is, am I supposed to claim now for the taxes I paid in 2007 on this years tax return, or should I wait until I leave and then claim all taxes back for my time in the US? Is there any difference in claiming back multiple years back taxes, as opposed to just from the previous financial year?

Also, I'm having trouble finding the correct form in order to apply for this refund, so any help would be appreciated!

Thanks

Hi I work with British professors at the Univ. of Michigan and process their tax treaty forms for them. As long as you don't stay beyond the US tax year (Jan 07-Dec 08) you shouldn't have to pay tax. I would claim it back now if I were you.

P.S. I hope you filled out the 8233 tax treaty form for the 2008 tax year, so they don't continue to tax you. As far as the refund I would see a tax preparation specialist to assist you in completing your refund.

jenmason · Mar 31, 2008, 08:44 PM

One more thing... it is a 2 year max. So if you started in April 07 then you have until March 31, 2009 to be exempt from US tax. However, for the FICA tax (social security tax) they go off the US tax year you were here. So if you stay beyond Dec 08 then you will have to pay FICA tax, starting Jan 1, 2009 which is about 7.65% of your salary. Hope this helps.

ken99 · Apr 12, 2008, 02:02 PM

Thank you both for your help - I was able to file my taxes with a program called Cintax. This determined, as you quite rightly said, that I should not pay tax assuming I leave within 2 years. Thus my 1040NR-EZ included a request for a refund of the taxes withheld.

I spoke to the staff at my university in order for them to stop withholding my taxes, but it sounds like they're not competent enough to deal with this request (despite me printing out the tax treaty and showing it to them). To be honest, I've given up wasting my time with them, so I guess I'll just have to file for another refund next year.

One of you mentioned FICA taxes. The problem is, although I started work in Jan 07, I entered the US on my J1 visa in Nov 06. So they have determined that as of Jan 08, I should pay FICA taxes. So I never had US income in 06, but my presence here for one monthe means I have to pay the taxes - does this sound right to you?

Thanks again.

MukatA · Apr 12, 2008, 10:22 PM

1. Everyone on J1 is exempt from FICA taxes for two years. If taxes are withheld you need to file Form 843.

2. J1 Researcher from U.K. is exempt from federal tax for 2-years.

If federal taxes are withheld file your tax return Form 1040NR or 1040NR-EZ and Form 8843 to claim the refund.

The Texas Tax Expert · Apr 13, 2008, 12:08 PM

Originally Posted by ken99

Thank you both for your help - I was able to file my taxes with a program called Cintax. This determined, as you quite rightly said, that I should not pay tax assuming I leave within 2 years. Thus my 1040NR-EZ included a request for a refund of the taxes withheld.

I spoke to the staff at my university in order for them to stop withholding my taxes, but it sounds like they're not competent enough to deal with this request (despite me printing out the tax treaty and showing it to them). To be honest, I've given up wasting my time with them, so I guess I'll just have to file for another refund next year.

One of you mentioned FICA taxes. The problem is, although I started work in Jan 07, I entered the US on my J1 visa in Nov 06. So they have determined that as of Jan 08, I should pay FICA taxes. So I never had US income in 06, but my presence here for one monthe means I have to pay the taxes - does this sound right to you?

Thanks again.

The problem you have is that you have become a resident. The J1 allows you to exclude days of presence but only for 2 years (and yes, you have to count 2006 as your first year). This makes you a resident and you must therefore pay FICA. The treaty protects your income.

You could look at the totalization agreement for the US-UK which addresses issues of social security taxes. I'm unfamiliar with it off the top of my head and I don't have time to look right now.

jenmason · Apr 14, 2008, 06:01 PM

Ken, Where do you work? I process all of our british doctors that come over at UM hospital. I have processed up to 25 a year. I have helped other universities with visa/tax issues. Maybe I can explain this to someone in your dept. You can email me directly if you would like. [email protected]

moon_l · Mar 7, 2011, 01:02 PM

I realise these posts are now quite old, but I wondered if anyone knew what happens regarding this tax treaty if a UK citizen working in a US University leaves after 2 years to work elsewhere (perhaps Europe)for sometime and later returns to the US for work? Are the back taxes expected to be paid on return?