[TaxQuery]

Dear Atlanta,

I am single Indian national living in USA since July 2003. (except a 3 week vacation outside USA in Jan 2005)
I was on F1 and my OPT is valid from 16th May 2005 to 15th May 2006. I got my H1 B valid from 1st Oct 2005.

1] What forms I would be filing for Tax ? (1040NR and 8843 ? )

2] My employer deducted the SS and Medicare tax from Oct 2005 ( after the date on H1B got effective). As I do not pass presence test (H1 B Status <183 days for 2005), can I claim this SS and Medicare tax back?

3] What deductions I am eligible to get? ( i.e standard deductions, any additional deduction?)

Thanking you in Advance.

[AtlantaTaxExpert]

TaxQuery:

1) Because you are an Indian national, you are allowed to claim both the personal exemption ($3,200) and the $5,000 standard deduction (and therefore pay the same amount of tax) regardless of which way you file (resident, non-resident, dual-status).

This being the case, the easiest and most quick way for you to file is file Form 1040NR and Form 8843. It is likely the IRS will accept the return without question.

However, you are technically a dual-status alien, which means you should file Form 1040 with Form 1040NR attached as a statement to account for income earned while on F-1 visa status. It is a complicated return to prepare.

Finallym, under First Year Choice, you can wait until 1 June 2006, at which time you can file as a resident alien and file only Form 1040.

2) Your employer correctly withheld the SS and Medicare taxes when your H-1B visa status started. You are not eligible for a refund.

3) As noted above, you get the standard deduction regardless as to how you file. If you paid some tuition and fees, however, you can only claim the Education Credit if you file as a resident alien.

[TaxQuery]

Thank you for your immediate and very helpful answers to my questions.
One additional small question:
1] How much can I claim for Tuition, fees etc when I apply as Resident Alien? Can I go back beyond 2005 ( like fees paid in 2004 when I was on F-1 visa? )

Thanks a lot !

[AtlantaTaxExpert]

You cannot go back to 2004.

The form to file for the Education Credits is 8863. The deduction is capped at $4,000. The Hope Credit is normally capped at $1,500 and the Lifetime Learning Credit is capped at $2,000.

[TaxQuery]

Thanks a lot for this info.
One last question/ clarification:
1] Last Year, I filed 8843 and 1040 NR EZ. This year per your advice it should be 8843 and 1040 NR. Did I make any mistake by filing 1040 NR EZ last year instead of filing 1040 NR? Between 1040 NR EZ and 1040 NR which is applicable to me for this year?

Thanking you in advance. I really appreciate your help.

[AtlantaTaxExpert]

TaxQuery:

If you can use the Form 1040NR-EZ, then do so. It is much easier to prepare, and there is no difference in the tax calculations.