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amitg1980 · Mar 16, 2006, 11:41 PM

Hi A.T.E,
Thanks for your advice and time. Let me keep it as straight as possible:
1. Can I claim US-India treaty benefits while filing state taxes in Mass.
2. Can I claim my brother as dependent if I am paying his tuition fee for undergrad education in US? If yes, where do I reflect it in 1040NR form? (This is assuming that I am and was always on F-1)
3. Can I put tuition paid for my own graduate studies as deductible in taxes?
4. Is there any other deduction apart from personal exemption and standard deduction that I can or could take in last/this year tax return as a student from India?
5. (This is not inline with point 2, but please consider points 2 and 5 on case by case basis, thanks) Being on H-1 from October 2005, would you suggest filing just non-resident 1040NR or employing complicated first year resident's election by filing for extension and filling 1040 later? (I do not own a house or pay mortgages and do not anticipate taking any benefits that I can not take as a non resident). I want to do it right more than get more return back.

Thanks,
Amit

AtlantaTaxExpert · Mar 17, 2006, 10:03 PM

Amit:

1) No, but you can claim the personal exemption and standard deduction that is authorized by Massachusetts.

2) Yes. Claim him in Box 7 of Form 1040NR.

3) No, not if you are filing as a non-resident alien.

4) Not that I know of.

5) If you paid tuition in 2004, it makes sense to wait and file as a resident alien, because then you can claim one of the Education Credits or deduct the tuition on your return.

amitg1980 · Mar 17, 2006, 11:29 PM

Thanks ATE, it was fabulous. Really appreciate your help. I have a few more specific questions, answers to which will be of great help.

Before that let me give some more information:
I came in US in Sep 2003 on F-1.
Worked on CPT (F-1) in 2004 and also got stipend as research assistantship and Teaching assistantship as a student from University. I did not pay any tuition for entire year in 2004.
I continued working on CPT in 2005 for a few months and then worked on campus in the university hourly basis. I started working on H-1 from October 2005. I paid tuition for one semester in 2005.

I understand that my earnings on CPT are definitely taxable. Does US-India treaty allow me to take deductions for stipend and on campus earnings? My friend was in similar situation and went to H&R Block for his taxes. They have put his entire stipend as tax exempted earnings under US-India tax treaty and quoted Article 21(1). If I'm not wrong Article 21(1) is for students from Netherlands and for students from India it is Article 21(2). But, does US-India treaty exempt my stipend (for teaching and research) from taxes?

Thanks and regards,
Amit

AtlantaTaxExpert · Mar 18, 2006, 09:16 PM

Amit:

Yes, the stipend is exempt from taxes, but the article is 21(1) (see IRS Pub 901).

amitg1980 · Mar 19, 2006, 01:28 PM

ATE,

What about earnings from on campus jobs for living expenses?

I did not know about tax exemption for the stipend, so I have to file an amendment for last year too. What will be the procedure for filing amendment for last year?

If I am filing 1040NR-EZ, Line 6 will have stipend amount, right?

I asked you a question about dependent for whom I paid tuition. I write the name of the dependent in box 7 of 1040NR form, but where do the tuition amount goes? Line 45? Does it matter if the dependent is here for graduate studies, can I still claim tuition credits for that if I paid for his tuition expenses?

I am on H-1 now since oct 2005. The only way to take exemptions for my own tuition expenses in 2005, is to file first year option, right? If I don't file that option this year, will I still be able to take this exemption next year?

Thanks a ton for your help.

Amit

AtlantaTaxExpert · Mar 19, 2006, 09:55 PM

You cannot claim tuition expenses for either yourself or your dependent if you file Form 1040NR or 1040NR-EZ.

The earnings for the on-campus job is liable for income taxes.

Yes. Line #6 is where you put the stipend.

fancieryu · Mar 30, 2006, 10:17 PM

It seems there's a Treaty entry in Schedule Y of mass tax forms, in which you can claim treaty benefits. Is it correct?

AtlantaTaxExpert · Mar 31, 2006, 12:29 AM

My expertise in MA tax process is too slim to properly comment. A call to the Massachusetts Department of Revenue should get you an answer.

Catseyes · Mar 31, 2006, 12:15 PM

If you can claim tax treaty benefits, then the line is #4 on Sched Y for MA taxes.
It says :" amounts excludible under... or US tax treaty ...".

Remember that the amount has to be included in your income ( line 3 for R , and line 5 for NRPY)

whatisthat · Mar 14, 2007, 12:00 PM

Originally Posted by AtlantaTaxExpert

Amit:

Yes, the stipend is exempt from taxes, but the article is 21(1) (see IRS Pub 901).

The stipend from a permanent establishment in USA / US citizen is not exempt.

AtlantaTaxExpert · Mar 18, 2007, 04:46 PM

No comment

prat1k · Jan 21, 2008, 12:12 PM

Originally Posted by AtlantaTaxExpert

Amit:

Yes, the stipend is exempt from taxes, but the article is 21(1) (see IRS Pub 901).

Hey ATE!

I understand the thread is pretty old.. I actually came across it while googling 21(2)..

I am a student from India on F1 and get teaching assistantship. I am in a NY state government institute. Can I still exempt from my income for tax purposes?

Thanks!

AtlantaTaxExpert · Jan 21, 2008, 12:40 PM

Negative.

Student on F-1 visas who earn money are exempt from Social Security and Medicare taxes, but they MUST pay federal and state income taxes.

prat1k · Jan 21, 2008, 12:47 PM

Originally Posted by AtlantaTaxExpert

Negative.

Student on F-1 visas who earn money are exemp from Social Sceurity and Medicare taxes, but they MUST pay federal and state income taxes.

Thanks! Since I know that now.. should I fill form 1040nrez or 1040ez? I have been around since July 2005. Article 21(2) of us-india tax treaty gives me privileges of New York resident for tax purposes.. I think the real question is - what will give me back more? Nrez or ez?

Thanks again!

AtlantaTaxExpert · Jan 21, 2008, 03:51 PM

It does not matter which gives the most back!

As a student under the F-1 visa, you MUST file Form 1040NR or 1040NR-EZ, unless you came to the U.S. before 2003, in which case you have used up your five-year student exemption and must file as a resident alien.

sss09 · Apr 7, 2010, 07:16 PM

Hi A.T.E.

I came to US in aug '07 on F-1 and now I am on F-1 OPT and working in mass since jan '09. Can I claim US-India treaty benefits while filing state taxes in Mass. In the schedule Y form?

Also, Will be a resident or non-resident of mass? I moved here in jan '09.

Thanks in advance for your advice!
Sowmya.

AtlantaTaxExpert · May 6, 2010, 02:10 PM

Negative.

Like most states, Massachusetts does NOT honor the tax treaties between the U.S. and foreign countries.

However, you are a non-resident of Massachusetts under commonly-accepted tax law that treats students (be they U.S. or international) who originate OUTSIDE of the state as non-residents for the duration of the stay in Massachusetts as long as they maintain student status.