[sean250281]

My apologies I believe this question has been addressed over a 100 times but I need one final clarification.

I was on OPT (F-1) visa from Jan 2006 to Oct 31st 2006 and from Oct 31st onwards till the end of the year I was on my H-1B. I am single and from India. As far as my understanding goes I need to file the 1040 NR-EZ, but I have received suggestions on filing both. What do I need to do? Moreover I erroneously filed 2005 taxes as 1040 while on F-1(not realising I was a non-resident). Please explain!

[AtlantaTaxExpert]

Sean:

I just got off the phone with the International Tax representatives at the IRS. I was not satisfied with some guidance I had received regarding the requirements of dual-status tax reporting. Here is the new guidance direct from the IRS:

Dual-status is required if the person meets all three of the following conditions:

1) They are in residency status at end of the calendar year.

2) They have been in the United States in residency status (normally on a H-1 or H-1B visa) for at least 31 consecutive days.

3) They meet the Substantial Presence Test completely during the calendar year.

If you fail Item #2, you CANNOT be a dual-status alien. You must file as a non-resident alien.

If you meet Item #2, but fail to meet either Item #1 or Item #2, then your default status is that of a non-resident alien. You CAN file as a dual-status alien if you meet other criteria and wait a set period before filing your tax return, but that is YOUR CHOICE! It is NOT MANDATED BY LAW!!

As a practical matter, you meet all three items if you convert from a J-1 or F-1 visa to an H-1 or H-1B visa on or before 1 July 2006.

In your case, since you converted to H-1B status on 1 November 2006, you have a choice of either filing your tax return immediately as a non-resident alien (filing either Form 1040NR or 1040NR-EZ) OR waiting until early May 2007 and filing as a dual-status alien. Since you are single and from India, there is NO ADVANTAGE to filing dual-status. You should file as a non-resident alien in 2006. In 2007 and beyond, you will file as a resident alien.

As for 2005, you should file Form 1040X, requesting that your status be reverted back to non-resident alien status and submit a completed Form 1040NR or 1040NR-EZ AND Form 8843 with the Form 1040X. It is likely that no additional tax will be due, but it WILL set your tax record straight.

Sean, if you are the person I think you are, you will be receiving an e-mail from me shortly telling you the same information noted above.

If not, and you have further questions, contact me at [email protected].