[kalafior]

Dear Atlanta Tax Expert,

You have done a wonderful job advising people -- and in particular foreign students and professionals -- on their taxes. I hope my question is not repetitive since I value your time (I have read through all the relevant threads and the specific question does not seem to have been covered already.) So I hope that you can offer a few words of advice.

I am a national of Poland. I came to the U.S. to study at a university on 31 Aug 2000. I was a student until Feb. 2005, when I started OPT. I stayed in the US while working on OPT until 26 Aug 2005. I then returned to Poland, have not re-entered the U.S. since, and do not plan to come again to live in the U.S. in the near future.

My questions:

1) I guess that as a F-1 person (I never switched to any other visa status), I could normally exclude my days of presence as a student/trainee (under OPT.) However, Pub. 519 says "You will not be an exempt individual as a student if you have been exempt as a teacher, trainee, or student for any part of more than 5 calendar years unless you establish that you do not intend to reside permanently in the United States... The facts and circumstances to be considered in determining if you have demonstrated an intent to reside permanently in the United States include, but are not limited to ... whether you have maintained a closer connection to a foreign country." The grammar of this sentence confuses me somewhat (the "have been" refers to what time - the beginning of 2005 or of 2006?) but I guess that since I was a student for part of 2000, 2001,2002,2003,2004 and 2005, I can no longer exempt my days in 2005 (which were above 183) because that was my 6th year? So I should file for 2005 as a resident alien for the first time? Is this right?

2) However, from a certain point of view it seems to me that it would be more beneficial for me still to file as a non-resident. This is because I earned only $5000 in 2005, so if I apply the tax treaty with Poland (Art. 18(1) -- up to $2000 p.a. for 5 years -- so until Aug. 30, 2005, by my reasoning -- on personal services as a student/trainee) and the personal exemption, I can get all my federal tax withheld back AND I can also get the Social Security and Medicare contributions that my employer withheld back? My employer claimed that as of 2005 he had to start witholding these because I could become a resident alien in that year if I stayed over 183 days. And so he withheld. But in the event, if I could continue to be regarded as a non-resident for 2005, I could get these back, too, either by asking him or, if he refuses to refund, by filing 843? But the key to that would be to be able to continue to file as a non-resident for 2005. Can I do this, even though I technically meet the substantial presence test for 2005, by "establishing that I do not intend to reside permanently in the United States"? According to Pub. 519, this could be done by showing a "closer connection to a foreign country", which I guess I could do by saying that I left the US for good in Aug. 2005, I am now a student in Poland and have lost any right (visa etc.) of coming back to the U.S. I do fear that this could be a complicated way of proceeding, but on the other hand it does seem a bit silly that I should be treated as a resident and have SS and Medicare contributions withheld even though I am unlikely to ever live in the US again... (I will looking forward to visiting as a tourist :-)

What would you advise? Should I try filing as a non-res. And apply for the refund of SS and Medicare, or should I just file as a resident, use the standard deduction and personal exemption (and thus also get all my federal witholding back) and forget about the refund? What documents would be needed if I were to apply for a refund?

Thanks in advance,

Michal

PS. It's really nice that people in the US spend their time helping others on the Web without having any personal interest from it. That you have such a well-developed civil society. This kind of behavior is something that I will really continue to respect a lot in Americans for a long time to come (seriously, no cheap ingratiation intended :-)

[AtlantaTaxExpert]

Michal:

File as a non-resident alien. That will get all your withheld income tax back, and leave open the option to file Form 843 to get the Medicare and Social Security taxes back.

Once you file the income tax returns (don't forget the need to file the state tax return), file Form 843 to get the refund of Medicare and Social Security taxes. The fact that you have returned to Poland and are a student there speaks for itself as to showing a "closer connection to a foreign country". The worst that can happen is the IRS will say no.

Read pages 45 - 47 of IRS Pub 519 for the refund process.