[kokia]

Hi, I am on H1B visa since this Oct. 2nd.

My OPT expired on June 2006, so I went back to Japan and stayed there
Until end of Sept. My company hold my position while I am gone since
I was supposed to apply last year (Due date was so quick so I could not
Apply, but company promissed they'll support me last year when I was hired July 2005,
, so my employerdid hold my position for almost 4 months).

I had to pay my flight fee to go back to Japan, and had to pay
My lawer fee. Also, I have to leave my apartment in June, and
Had to pay storage fee, and I paid moving fee when I came back to the U.S.

I am wondering if I can claim the expense I had to pay as above.
Do you think I can claim those? Is it worth to claim?

Also,

The 4 months I was not working with my employers will make some differences
On applying Tax Return this year?

I appreciate if you could answer my questions.
Thank you very much.

[AtlantaTaxExpert]

Kokia:

You should be able to claim the moving expenses moving from Japan back to the U.S. as that is clearly a move for job purposes. However, you muts hold the job for at least 39 weeks after the move. You can also claim the storage fee.

The move back to Japan will NOT be deductible.

You can file either a non-resident tax return (Form 1040NR) or a dual-status return. I see no advantage to filing dual-status as it is a more complicated return that will probably generate the same amount of taxes due. The only exception to that rule is if you are married. If you are married and your spouse is NOT with you, then filing dual-status makes sense because you can then claim your spouse as a dependent under the provisions of the OLD tax treaty with Japan.

If you are married and your spouse IS with you on an H-4 visa, then you should both consider filing as a resident alien. That allows you to claim your spouse's personal exemption plus a DOUBLE standard deduction ($5,150 X 2) of $10,300.

The lawyer's fees can probably be deducted as an employee business expense as an itemized deduction if you file as a non-resident alien (Form 1040NR). You will NOT be able to claim the standard deduction on Form 1040NR, so this deduction (plus whatever state and local income taxes are withheld from your salary) will be deductible as itemized deductions. Other employee business expenses MAY be deductible as well.

I assume you entered the U.S. prior to 2005, which means the OLD tax treaty with Japan still applies to you. If so, up to $2,000 of the income earned while on OPT is exempt from federal income taxes under Article 20(1) of the old tax treaty. You can claim this exemption only if you file as a non-resident alien or if you file a dual-status return. The $2,000 exemption will NOT apply if you file as a resident alien with your spouse.

You will have to pay Social Security and Medicare taxes, but, unlike most other resident aliens, your Social Security taxes will be credited to Japan's social security system under your name under provisions of the Japan-U.S. Tax Treaty.

That about it for now. If you want to discuss these issues further, please contact me at [email protected].