[thelonglife]

Hello，experts. I have a question about tax of J1 hoder to consult with you.

I will do postdoc research in South Carolina recently with J1 visa. I book the air ticket on Dec 31, 2007, but boss told me arrival on this date will lose one year of tax eligibility, he ask me to change the date of arrival to Jan 1 2008 or later. But the ticket can not be refunded or changed ,I have to buy another ticket to change the date of arrival , it will cost me $800 more. By the way, the date on my DS-2019 is Dec 1,2007--Nov 31,2008.

I want to know, if I don't change the date , how much will I lose each year(my total income is about 33,000/year). Which is better for me---to buy another ticket or to lose one year tax eligibility.

Thank you for the consideration.

[MukatA]

What is the country of your residence?

[thelonglife]

My country of residence is P.R. China .Thank you for the reply.

[MukatA]

This is what the treaty between China, P.R. and the U.S. says
"A student, business apprentice, or trainee who is a resident of the People's Republic of China on the date of arrival in the United States and who is present in the United States solely to obtain training, education, or special technical experience is exempt from U.S. income tax on the following amounts.

* Payments received from abroad for maintenance, education, study, research, or training.
* Grants or awards from a government, scientific, educational, or other tax-exempt organization.
* Income from personal services performed in the United States of up to $5,000 for each tax year.
An individual is entitled to this exemption only for the time reasonably necessary to complete the education or training."

So it appears that your arrival on Dec 31 or Jan 1 will not make any difference.

[thelonglife]

Thanks ,MukatA. But is there any time limitation? It said that there is only three year tax free. The lady in the international office said that I will not be double taxed unless I stay in US longer than one year. It seem that if I stay there for more than one year, I will have only two year tax free then, Is it true ?

[MukatA]

Read
IRS Publication 901: Tax Treaties.
Internal Revenue Service

[thelonglife]

Thank you very much , MukatA.

I found the following words in the treaty:

An individual who is a resident of the People's Republic of China and who is temporarily in the United States primarily to teach, lecture, or conduct research at a university or other accredited educational institution or scientific research institution is exempt from U.S. income tax on income for the teaching, lecturing, or research for a total of not more than 3 years.

This exemption does not apply to income from research carried on mainly for the private benefit of any person rather than in the public interest.


So , there is 3 years time limitation.

I will lose one year tax free if I arrive on Dec 31,2007. I want to know how much should I pay for the tax? Is it much more than the air ticket ($890)?

[MukatA]

Income is exempt for 3 years. Your first tax year will be 2008. So it will be exempt for 2008, 2009 and 2010.
In the tax year 2007, you won't have any income.

[thelonglife]

That hit the point, how can I be taxed if I have no income in the year 2007. Thanks a lot, MukatA. Best wishes to you.

[AtlantaTaxExpert]

MukatA has covered this issue very well.

BOTTOM LINE: You can arrive on 31 Dec 07 and still get the exemption for 2008, 2009 and 2010.

[thelonglife]

Thank you AtlantaTaxExpert, I will contact with you if I need further help. :)

[AtlantaTaxExpert]

Glad to help!