[Kerstin]

Hi,

I am a postdoctoral researcher from Germany working at an American university on a J-1 visa. I entered the US in Jan 07 and am still working here under the same DS-2019 form.
From the beginning, I chose to pay the federal income tax, as I knew I would likely stay longer than two years and knew about the retroactive tax treaty between Germany and the US.
This year, I searched the web for any news and in fact found that the retroactive rule is gone from article 20 (1) of the tax treaty. :)

Unfortunately I cannot find much information on what that change means for me.

On the IRS website ist says:
Treaty as modified. A professor or teacher who is a resident of Germany and who is temporarily in the United States to engage in advanced study or research or teaching at an accredited educational institution or institution engaged in research for the public benefit is exempt from U.S. tax on income received for such study, research, or teaching for a maximum of 2 years from the date of arrival in the United States. Publication 901 (4/2008), U.S. Tax Treaties
The provisions relating to withholding tax at source are effective for amounts paid or credited on or after January 1, 2007. For other taxes, the treaty is effective for tax years beginning on or after January 1, 2008. Publication 901 (4/2008), U.S. Tax Treaties

I do not quite understand the last two sentences. Is the new treaty valid from January 1, 2007 or January 1, 2008 for federal income tax withheld?

From what I understand I can get back the federal tax that I paid in 2008 when I file the 1040NR-EZ. But can I also get back the tax I paid in 2007? If yes how do I do that?

Thank you for your help,
Kerstin

[AtlantaTaxExpert]

Kerstin:

For you, it is valid starting 1 January 2008.

Normally, the tax treaty gives the taxpayer the choice of which treaty they want to be in effect. Claim the tax exemption for 2008, as you clearly are covered for that year.

As for 2007, in your place I would amend my 2007 return using Form 1040X and attaching Forms 1040NR-EZ and 8843. The worst that could happen is the IRS rejects the amendment, in which case you lose NOTHING but the time to prepare and submit the return.

if you want professional help, contact me at [email protected].