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Fei · Feb 20, 2006, 12:04 PM

Dear Atlanta Tax Expert,

Thank you for your help to all of us. I have been trying to find an answer to my questions through your previous posts but failed to do so.

I came to the US in2003 as a F-1 student and was under F1+OPT status for 2005. I have two questions regarding my tax return:

1. For form 1040 NR-EZ, for item 7, do I add the amount for 3,4,5 and subtract the amount in 6?
I just do not see how the treaty benefit can be subtracted from my total taxable income.

2. I have paid about $600 for state tax in 2005. Do I need to file state tax return?If I do, which form should I use?

Many many thanks!

Fei

AtlantaTaxExpert · Feb 20, 2006, 07:11 PM

Fei:

The instructions could be clearer.

1) You deduct the treaty exemption before you enter the wages on Line #3.

Example: Your total wages is $15,000, and your treaty exemption is $5,000. You put $10,000 on Line #3. The IRS knows (by line #6) that you are claiming the $5,000 treaty exemption, so they are not requiring you to show the math.

2) Which state??

Fei · Feb 20, 2006, 09:20 PM

Thanks a million, AtlantaTaxExpert!

I could have been clearer about my second question! I'm from California.

Actually there is one more thing. On the W-2 I got from my school, my gross pay is $5,260 and there is a line saying that the Non Taxable Comp. is $5,000. So my reported wages is $260.
I couldn't figure out what that 5000 non taxable comp is and wonder whether it's the treaty benefit.
With that, can I still claim treaty benefit on my 1040 NREZ?

Again, thank you for answering my questions. You have my eternal gratitude!

Fei

AtlantaTaxExpert · Feb 20, 2006, 09:27 PM

Fei:

The California Form you would use is Form 540-2EZ. You can get it off the California state government website.

Contact the school, but I would bet that the Non-Taxable Comp is your treaty exemption. Yes, claim it on the Form 1040NR-EZ. Given that your taxable income is only $260, you will get ALL of your withheld taxes back.

Fei · Feb 20, 2006, 09:36 PM

Wow, that's fast!

Yes, you are right. I should contact that school about it.

Just a clarification. If that's indeed the treaty benefit, I cannot claim it one more time when I file tax return, right?

BTW, I have two more w2s so I probably cannot get all my withholdings
Back:(

Fei

AtlantaTaxExpert · Feb 21, 2006, 09:41 AM

Fei:

If your visa status remained F-1 throughout all of 2005, you can claim the treaty exemption.

If it changed (to, say, H-1), then you cannot claim it.

Fei · Feb 21, 2006, 01:00 PM

OK, I see.

Two more questions.

1. What will happen if I just file 1040 EZ instead of 1040 NREZ which I'm supposed to file?
2. Do I have to file both 843 and 8316 to get my social security and medicare withholdings back?

Again, many thanks!

Fei

AtlantaTaxExpert · Feb 21, 2006, 10:19 PM

Fei:

If you file the Form 1040EZ, you cannot file the Form 843 (which is the only form you need) for the Social Security and Medicare taxes. The IRS will check!

Fei · Feb 23, 2006, 09:55 PM

Dear AtlantaTaxExpert,

I went to a tax expert at where I work today to seek help.
He was very nice but unfortunately he doesn't know anything about taxes for non resident aliens. So here I am...
Can I ask you a few more questions?

1. Even though I was under F-1 status, can I choose file as an resident alien?
When I asked this last time, I didn't mean that I wanted to get more money by doing this. If I choose to do so, I wouldn't file 843 to get my SS and medicare back. Because, I just found the money I will get back will be pretty much the same regardless of how I file.

So I just want to know whether filing as a resident alien is an option to me as long as I don't try to steal money from IRS?

2. If the answer for the first question is no, I would really appreciate if you can tell me which one I should choose for 3b and 4a on form 843 and also what 4b means.

3. Last time you told me that I could use 540-2ez for my state tax return(california). I'm wondering whether I can just use 540 instead of 540 2ez if I don't care about the trouble?

Again, thanks a million!

Fei

AtlantaTaxExpert · Feb 23, 2006, 10:16 PM

Fei:

1) If you were under the H-1B visa for at least the month of December 2005, then you can file as a resident alien if you wait until June 21st to file. You would be filing under the First Year Choice. If there is no H-1B visa in 2005, then you must file as a non-resident alien. Those are the rules in your case, how inconvenient.

2) In 3a, choose "Employment". In 3b, choose "941" and "Other" and print "F-1 visa exemption". Leave 4a blank! In 4b, put the dates the Social Security and Medicare taxes were withheld from your pay.

3) If you are more comfortable using California Form 540, then use the 540.