[grantmcf]

Hi

I am a UK resident. I worked as a visiting professor for 18 months in 2002-3 on a J1 visa. I paid no US tax during that time. I did not file a tax return. I returned to the US this month on an H1B visa to work for a year as a visiting professor. What US tax do I have to pay?

Thanks

Grant

[MukatA]

For the years on J1, even when your income was not subject to income tax, you were required to file tax return (and Form 8843) and claim treaty deduction.

When did you enter the U.S. on H1-B? Are you married or single? On H1-B, you must pay FICA taxes and income taxes. Read about H1-B tax filing: Your U.S. Tax Return: The U.S. Visas

[grantmcf]

Thanks. I am married with 2 children, aged 6 and 9. I entered the US on 3/23/09.

[MukatA]

Your H1-B income is subject to FICA taxes, and income taxes.
For 2009, you can file dual status return or married filing jointly.

[grantmcf]

Thanks. My original question actually had to do with the US-UK tax treaty and the fact that I have worked in the US before, for 18 months on a J1 visa. Do I have to pay federal income tax now that I have returned to work in the US on an H1-B visa? I am a UK resident.

[MukatA]

No you do not pay tax on J1 exempt income of 2002-2003.

[grantmcf]

That is correct. My question is: am I exempt from withholding of Federal Income Tax now that I am back in the US on an H1-B visa, given that I am a British citizen?

[AtlantaTaxExpert]

No, you are NOT exempt.

The H-1B visa is a work visa, and you are subject to all of the taxes that U.S. citizens pay.

[mack20007]

There maybe a small area of opportunity for tax exemption.

If this individual is a visiting professor, he maybe an independent contractor. And, under the Uk tax treaty an I.C. is exempt from US tax. The tax treaty presumes an individual is an resident of their country, in this case the UK, however he maybe a resident for US purposes under the substantial prescense test, therefore a dual resident.

In which case the treaty must be resorted to using the tie-breaker rules in it to determine which country he is a resident of for treaty purposes. If the treaty says he's a resident of the Uk, he's automatically a NR for US purposes, file 1040NR claiming the treaty benefits.

An outside possibility exists also under the saving clause provisions in many treaties, I didn't look at the UK treaty on this. It says even if he is a US resident, he'll still be exempt under the treaty and claim benefits also under the saving clause provision. Pub 519 has an example of this with China.

Therefore I'd refer him to the treaty or someone who can spend time analizing it.

In the long and short of it, if he is staying here from Mar through Dec, the odds are against him being a dual resident, but the tie breaker rules should still be looked at.