[vvume]

I am an Indian Citizen and was on F-1 from Dec 1999 to Sep 2007. After 5 years of F-1, for my 2005 taxes, my international tax preparer at my University said I could continue claiming the ~=5000$ US-India tax treaty after 5 years by submitting a letter stating strong ties to India and intent to return home after completion of studies. Since he prepared the tax form, he signed that portion on the 1040 NR EZ stating he was the preparer. I used the same template to do my 2006 taxes and claimed the India-US tax treaty yet again. I did receive the refund for both 2005 and 2006. I and my wife switched to H1-B for 2007 and are filing as joint resident aliens for the whole year.

I have been reading about the tax treaty benefits for F-1s and have come across several posts which assertively state that I should not claim treaty benefits after 5 years since I become a resident alien (I didn't know this at that time and my preparer said nothing of this - since he filed the taxes for all international students each year and was sponsored by the international student office, I trusted his authority on the subject). I am yet to come across a concrete case of exemption after the 5 year limit. I am now worried that claiming the treaty exemption for 2005 & 2006 might cause problems for me down the road, particularly when filing 2007 taxes being the first when I will not be claiming the benefits. I have not received any clarification or audit request from IRS and I will not be claiming treaty benefits for 2007. Do I need to take some action?

[AtlantaTaxExpert]

The tax will be the same either way, because, for India, the treaty exemption amount is EQUAL to the standard deduction for that tax year.

That said, you technically did not file correctly for tax years 2004, 2005 and 2006 (the Dec 1999 part counts as a FULL year under the five-year rule).

To be safe and to set the tax record straight, you should amend the return for 2004 through 2006 and state that you are filing as a resident alien.

BTW, since you were in school at the time and assuming that you did PAY tuition, you can then claim the tuiton credit or deduction for that year, which means you MAY get some money back with each amendment. You can get copies of the Form 1098-T for 2004 through 2006 from your University's registrar office.

You need to file the 2004 amendment by 15 April 2008 if you want to claim the tuition for that year. After 15 April 2008, you FORFEIT any refund due to the three-year statute of limitations on claiming tax refunds.