[amolkatkar]

Hi,
I am a physician, entered in USA on J1 on 28 Feb 06, converted on H1 on 16 Oct 07.
I didn't pay any taxes for year 2006 since I was on J1.
I am filing taxes for 2007. My questions are-
1. Can I be exempted from paying taxes for the period of year 2007 while I was on J1 (Jan to 16 Oct)?
2. Do I have to pay retro taxes for 2006? If yes, when?
3. If I have to pay retro taxes for 2006, is there any option of paying them later?
Thank you so much for taking your time to answer my queries and I hope it ll be helpful for many others going through the same situation.
ASK.

[The Texas Tax Expert]

Hi,
I am a physician, entered in USA on J1 on 28 Feb 06, converted on H1 on 16 Oct 07.
I didnt pay any taxes for year 2006 since I was on J1.
I am filing taxes for 2007. My questions are-
1. Can I be exempted from paying taxes for the period of year 2007 while I was on J1 (Jan to 16 Oct)?
2. Do i have to pay retro taxes for 2006? If yes, when?
3. If I have to pay retro taxes for 2006, is there any option of paying them later?
Thank you so much for taking your time to answer my queries and I hope it ll be helpful for many others going through the same situation.
ASK.

What country are you from?

[amolkatkar]

India. I live in Massachusetts.

[MukatA]

Here is from the tax treaty:
(An individual is exempt from U.S. tax on income in the United States to teach or engage in research at an accredited university or other recognized educational institution the United States for a period not longer than 2 years. If the individual's visit to the United States exceeds 2 years, the exemption is lost for the entire visit.
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.)

1. Only way your income is not taxable during J1 is that you were doing research.

2. Now you are on H1-B. Evidently, your stay is going to exceed 2 years. That means you will even pay taxes for 2006.

3. So it appears that a better choice may be to file your 2007 return as resident and report all your income during 2007 (including that during J1).

[amolkatkar]

Thanks for your advice MukatA. Ok, now in my case the exemption is lost. I will pay taxes for 2007.
But What if IRS brings up issue of retro taxes?
Can I choose to pay them later?

[MukatA]

I don't have any knowledge as to how IRS deals with retro taxes.
AtlantaTaxExpert can reply this.

[The Texas Tax Expert]

If you stay longer than the 2 year period, you forfeit your right to the exemption. It's not a case of choosing whether to report it or not, you are required by law to report your income in the US from the very beginning.

Unless you are married to a US citizen or resident, then MukatA's advice about filing as a resident is incorrect. You would need to file as a non-resident, based on the information you provided.

[amolkatkar]

I am married but my wife is in India, never joined me, so for tax filing purposes, I am "single" and I live in Massachusetts. I did visit India for 3 weeks in January, but that doesn't affect my status to file as "nonresident".
Could you please tell me which form should I file?
Thanks,

[The Texas Tax Expert]

You would need to file as a Non-Resident (I am assuming that the J1 visa was your first visit to the US). File a 1040NR and you will need to file as a married person.

[amolkatkar]

I already filed 1040A with the online software.
Would that create any problems?
What should I do to avoid any possible problems?

[ask23]

Great

[ask23]

Helpful

[AtlantaTaxExpert]

Yes, it will. You should amend the return using Form 1040X and attach a properly-prepared Form 1040NR-EZ to it.