[bqcao]

Hi There,

I had hold a F-1 visa since 2001 and changed to H1B last September. I'm planing to file my tax return as a resident since I'm qualified (right?). Some people say that I won't be eligible to the $5000 exemption then. Some say that I am still eligible. I'm confused. Could you please help me out?

Thanks!

[The Texas Tax Expert]

Hi There,

I had hold a F-1 visa since 2001 and changed to H1B last September. I'm planing to file my tax return as a resident since I'm qualified (right?). Some people say that I won't be eligible to the $5000 exemption then. Some say that I am still eligible. I'm confused. Could you please help me out?

Thanks!

You would be eligible but only in regard to the income earned as a student. The H1B income cannot be shielded.

[bqcao]

Thanks a lot for your prompt and helpful answer! Just want to make sure I got exactly what you mean.

My income from previous state where I hold my F1 is A, my income from where I have my H1B is B. Suppose there is no any other deduction and exemption, my taxable income is A+B-5000 for federal tax? But, for state return, in the previous state, I should use A-5000 as taxable income, while in my current state, I should use only B as my taxable income. Is this what you meant? Thanks again!

[The Texas Tax Expert]

Not quite right. I'm talking about federal. The answer looks more like this:

A - 5000 (but not going below zero) plus B. Then follow the normal tax regime for a resident.

[bqcao]

Thanks a lot! It helps!

[AtlantaTaxExpert]

TTE:

Does not his entry date in 2001 make him a resident alien, thus making him ineligible for any treaty exemption?

[The Texas Tax Expert]

Most treaties have a saving clause but most also have an escape clause for the articles relating to students and teachers.

[AtlantaTaxExpert]

Escape clause? First time I have heard of that! Email me on that if you would!