[oormi]

Hi,

I have a similar issue... I was on f1 and transferred to h1b in March 2005 so I have been on h1b for more than 183 days. Which form should I fill in this case and what standard deduction would I be eligible for? I am from india too. Is there a form 2106 which gives h1b holders added deduction if filing as itemised deduction? Please help.

Oormi.

[AtlantaTaxExpert]

Oormi:

I already answered part of your question under the previous posting.

Regarding the Form 2106, that form will be available to you when you file the normal tax return (Form 1040). However, you must meet several conditions before you can file.

Form 2106 is used to report employee business expenses. However, those expenses must exceed 2% of your Adjusted Gross Income; i.e. whatever your employee business expenses are, 2% of your AGI will be subtracted from them on Schedule A. Further, these adjusted employee business expenses plus the rest of your itemized deductions must exceed your standard deduction to be worthwhile.

[oormi]

Thanks, your advices are really valuable. Great to have you on the forum.

Oormi.

[AtlantaTaxExpert]

Glad to help!

[paramthegreat]

Hi everyone,

I am a single individual from India. I am trying to file taxes for year 2005 (actually just calculating to get an estimate). I have been on F1 from Sep 2001 till May 2005. I was never on OPT due to some mistakes made by my school. Also I did not have any earnings between Jan 2005 and July 13, 2005. I had filled my application for H1 in May 2005 and I got my H1 approved with start date of July 13, 2005 with a consulting firm.
Also, I have never left the US between Sep 2003 and now.

Now based on the posts in this thread and above information, please comment if the conclusions I have made are correct:
1. I do not pass the substantial presence test of being on H1 >= 183 days for 2005. That means I am considered a non-resident alien.
2. I can file the form 1040NR and can take standard deduction (which was $3000 for 2004) for 2005
3. I can take another deduction due to tax treaty with india (again $4850 for 2004) for 2005

I will sincerely appreciate all your help,

Thanks,
Parminder

[AtlantaTaxExpert]

Parminder:

Your are correct that you can file as a non-resident alien, in which case you, as an Indian citizen, are entitled to claim a personal exemption of about $3,100 and the standard deduction of $5,000.

Further, you have the option to file as a resident alien, which means filing a Form 1040/1040A/1040EZ. I believe you will find the tax to be the same (but do it both ways to be sure).

For 2006 onward, you will have to file as a resident alien.

[sampath]

I disagree with AtlantaTaxExpert's reply. Although s/he is correct in saying that you may claim a personal exemption of $3,100 for yourself, realize that you have changed your status from resident alien (F1/OPT from Jan 1 - Sep 2005 > 183 days) to non-resident alien (H1 from Sep - Dec 31, 2005 < 183). This status change should make you a dual status alien. According to 1040 NR (pg 5, under dual status alein section), your dual staus should restricts you from claiming the standard deduction of $ 5000.

AtlantaTaxExpert, isn't my disagrrement, a valid one??

[AtlantaTaxExpert]

SamPath:

Your objections may have been valid if the dates you cited [resident alien (F1/OPT from Jan 1 - Sep 2005 > 183 days) to non-resident alien (H1 from Sep - Dec 31, 2005 < 183)] were accurate and if you had not confused the visa status.

However, the dates Parminder cited were 1 Jan 2005 to 12 July 2005 for F-1 status (which does not count towards the Substantial Presence Test), and 13 July 2005 to 31 Dec 2005 for H-1 status (which is less than 183 days).

Also, a F-1 visa qualifies a foreign citizen for non-resident alien status and a H-1 visa qualifies a foreign citizen for resident alien status. Your statement gave the exact opposite definition.

Filing a dual-status return is an option, but not a requirement, for Parminder. Due to the complexity of filing as a dual-status alien, I never recommend such a filing if it can be avoided. However, it was the "First Year Choice" portion of the Dual-Status Alien section of IRS Pub 517 that allowed me to tell Parminder that he/she could choose to file a normal tax return. My read of her situation indicated that she qualified to file as a resident alien because she will definitely qualify for the Substantial Presence Test in 2006 and she meets the minimum in-country requirement while under the H-1 visa in 2005.

[fastclock]

Hi,

I have a question on filing...

I am from Indonesia and transferring from F1/OPT to H1B on 4/1/2005. I have a wife and 2 children (wife+1child transfers from F2 to H4 on 4/1/2005 also, 1 other is born here). My wife is not working.

From reading the responses, I meet the substantial presence of 183 days, therefore I have dual-status and may file as a resident alien using 1040 form as a regular filing.

My main question is if I use the 1040 form, can I claim deductions on all my dependents (3)? Or is it prorated starting from 4/1/2005?

Separately, how do I file interests from the bank in 1040 form? Is it just combined with the W2 income?

Thanks.

[AtlantaTaxExpert]

FastClock:

Your assessment is correct. You should file Form 1040 or 1040A as a resident alien.

You should file jointly with your wife and claim both children as dependents. There is no proration of their exemption status.

If you have not already done so, you should get Individual Tax Identification Number (ITIN) for your wife and oldest child (by filing a W-7) and a Social Security Number (SSN) for your newborn child (by visiting a Social Security Adminsitration office with your child's birth certificate). Your spouse and children need either ITINs or SSNs to be claim on your tax return.

[guy22g]

Hi Atlanta Tax Expert,

This is a tax query for 2005 with regards to the date status chnged question on 8843 and 1040NR-EZ.

I had been working on my F-1(OPT) and H-1B at different places. My OPT was valid till Dec 2005 and I worked on OPT till Nov 2005. However my H-1B start date was Oct 1st but I actually began working (payroll start date) only on Dec 1, 2005.

I would really appreciate it if you could let me know what my tax status was for Oct, Nov 2005. What date should I put on my 8843 with regards to date status changed since even though my H-1B started on Oct, I didn't work on it nor was on H-1 payroll on it for Oct, Nov. H-1B law allows for the receipient to start working on it up to 60 days after it is approved.

I would really appreciate your response. Thanks.

[jdzorba]

Hi all,

My visa was changed to H1b from F1 as of Oct. 1, and I have been working since Nov. 04 with F1 CPT/OPT. I am going to make the first-year choice for 2005. I'll need to file 4868 to extend the deadline to 08/2006 because I'll meet the 183 day test condition around 05/2006.

Pub 519 says "you can choose to be treated as a U.S. resident for part of 2004." (about 3 month for my case), but "no proration" in the above post. I checked 1040 form and there's one check box for dual-status alien, which leads to zero standard deduction.

My question is how much difference in tax this will make. That standard deduction is the only difference?
Say, 1040NR tax is $1000 and 1040 is $500. Can I get $500 returned? If not, how much?

Thanks.

[AtlantaTaxExpert]

Guy22G:

Claim Oct 1st as the H-1B change of status date on Form 8843.

Jdzorba:

The standard deduction is $5,000. At the lowest tax rate of 10%, that means an additional $500 on your refund. So, yes, it makes a big difference whether you can claim the standard deduction or not.

Submit the Form 4968, then submit the Form 1040 with the standard deduction.

[jdzorba]

AtlantaTaxExpert,

Thanks for your reply.
I thought I can't file a standard deduction because I'm a dual-state alien even if I make the first-year choice by submitting 4868. Because making first-year choice means "resident alien just for the partial year," so the difference is the standard deduction, isn't it?
I was hoping I could do that because I'm MFJ with dependents, but it doesn't look like it. However, filing 1040 instead of 1040NR will help a lot.

Jdzorba

[guy22g]

Thanks AtlantaTaxExpert, appreciate your response.

[AtlantaTaxExpert]

Jdzorba:

You have three choices to file:
- As a non-resident alien.
- As a dual-status alien.
- As a resident alien under the First Year Choice.

If you file as a non-resident alien, you file Form 1040NR by April 15, 2006, in which case you cannot claim the standard deduction. You would also have to file Form 4883 to account for your F-1 visa (exempt individual) time.

If you file as a dual-status alien, you file Form 1040 with Form 1040NR as an attached "statement" to document the income you earned while under the F-1 visa. If you file as a dual-status alien, then you will not be allowed to claim the standard deduction. Also, you would file your return prior to April 15, 2006, so Form 4868 would not be needed. You would also have to file Form 4883 to account for your F-1 visa (exempt individual) time.

If you file under the First Year Choice, then you file as a resident alien, which means you can claim the standard deduction. You would file Form 4868 to apply for an extension to file (submitted with a check if your calculations determined that you would owe taxes) so that you would meet the Substantial Presence Test prior to filing your 2005 tax return. Since you are choosing to count your entire 2005 year as a resident alien, filing Form 4883 is not required for 2005.

In my opinion, the First Year Choice makes the most sense.

[fastclock]

Thank you for the response.
That's very helpful.

[AtlantaTaxExpert]

FastClock:

Glad to help!

[pranavtest]

Hi Atlanta Tax expert.
You post great feedback with relevant answers which prompted me to post my query here.

1)My wife and I are both Indian citizens.
2)My wife was on OPT up to December 05. I have been on H1B since Jan 2001.
3)Wife converted to H1B visa starting December after getting a job in September.
4) No SS/Medicare taxes deducted yet from wife's paycheck since her pay- period is 1.5 months behind current date. So for her current paycheck her payroll date is the December 1st through December 15th.


What profession do we enter if we file as MArried filing jointly(Student? /Software? ) . I assume taxes are different if she enters profession as student.

Please advise which forms are required.

Thanks in advance for your help.

Pranav

[AtlantaTaxExpert]

Pranav:

Under "Profession", enter whatever you think appropriate. You can even leave it blank. It has no bearing on how your taxes are computed.

You (as a resident alien) must file Form 1040/1040A.

Assuming she was under a F-1 visa, she can still Form 1040NR. However, it is likely that there will be no difference in taxes owed if you file separately or jointly.

Given this fact, In my opinion, it makes sense for you to file jointly, simply because it is easier to file one return jointly than two returns separately.

Filing jointly will not affect your wife's Social Security and Medicare tax status. That is driven exclusively by your wife's visa status.