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pinke_v · Jan 17, 2006, 04:57 PM

Hi,

I've been reading through previous posts & while there are some similarities to my situation, I think there are some key differences and I would appreciate any help I can get on this matter.

I graduated from graduate school in Massachusetts in June 2005 and thus, have been on F1 visa from 2003 until now. My H1 kicks in on Feb 1, 2006. I started my current job in Massachusetts from July 2005. I am an Indian citizen who is single. I have some questions that I am having trouble with:

1. What form do I file exactly? 1040NR or 1040NR-EZ? What does 'dual status' mean? Will I have to file two separate forms since I earned income from my university assistantship as well?

2. The W2 I received from my current employer states that both Social Security taxes and Medicare taxes have been withheld from my income. Is that erroneous? If so, how do I go about reclaiming the said amounts?

3. If I do not claim any itemized deductions, can I take advantage of the India-US treaty? If so, how can I factor it into my tax filing?

Any clarification is much appreciated.

Thanks very much,
Pinke

AtlantaTaxExpert · Jan 17, 2006, 09:16 PM

Pinkie:

1 & 3. If you itemize, then file Form 1040NR. If not, file Form 1040NR-EZ. Since you are an Indian citizen, you are authorized to claim the standard deduction on either form. However, since you may owe Massachusetts state income taxes, itemizing may produce a larger tax exemption than the $5,000 standard deduction. Even though you have income from multiple sources, you file just one form. As for "dual status", it can apply to you, but it actually involves a lot of paperwork that essentially requires you file a Form 1040 (normal retrun) with Form 1040NR attached as a statement to account for income earned while under F-1 status. It is, In my opinion, unneeded in your case.

I believe the withholding of the Social Security and Medicare taxes for your new job is valid, even though you were under F-1 status at the time you started the job. I am assuming that you had to apply for H-1 status in order to get this new job. By doing so, you declared your intent to change status and forfeited the exempt status that excused you from paying Social Security and Medicare taxes.