[HiLowA25]

I worked in US for 3 months, under J1 - visa, Work and Travel program for students during the summer, my question is how could I get my income taxes back ? I looked over the internet and I found that I have to file the Forms 1040NR and 8843 to Department of the Treasury,Internal Revenue Service Center,Austin, TX 73301-0215. I should be able to get the all taxes back I'm wondering if there is a specific way that I should fill out these forms to benefit some deductions, I'm not sure but if you earned over a specific amount they're not going to give the all taxes back.

Thank you kindly in advance !

[Mom of 2]

Here is a link for you to use. http://www.irs.gov/businesses/small/international/article/0, id=96477,00.html

Although you may FEEL that you SHOULD get ALL of your taxes back, the U.S. government (based on this link) has the right to deny ANY part of or ALL of the refund. In my opinion, if you want to collect a full refund like actual residents of the United States, go through the process of becoming a resident of the United States. You want all of the rights of a resident, yet you are not a resident. Wow, I never realized that non-resident aliens were even able to get ANY tax refund. I'm taking the 5th on my further opinion of the subject, as I know that you most likely do not want to open this question to a serious debate between residents of the United States versus non-residents of the United States. At least you are trying to follow the rules, which is more than I can say about the illegal aliens who are in this country.

[taxesforaliens]

The amount of your refund would depend on several things.
You might be able to benefit from a tax treaty with your country. Where are you from? And what kind of income did you have?
Usually, as a nonresident alien you cannot take the standard deduction with a few exceptions, so it would depend where you are coming from.
You will need to file form 1040NR or 1040NR-EZ and form 8843 to exclude the days you were in the US from being counted for he Substantial Presence Test.
There aren't may deductions you can take as a non-resident alien.
Here are the instructions for form 1040NR:
Www.irs.gov/pub/irs-pdf/i1040nr.pdf

Mom of 2 obviously confuses illegal aliens wit non-resident aliens and has no idea about residency status of foreign students/workers/teachers etc. So disregard her post (except for he link).

[AtlantaTaxExpert]

I agree with TaxForAliens post EXCEPT for the lack of deductions, because, if the income is NOT tax-exempt by treaty, you CAN deduct your travel costs PLUS rent, utilities, local transportation and daily living expenses on Form 2106 as an itemized deduction.

The reason is simple: by IRS definition, the 3-month work tour in the U.S. is a temporary job, and the expenses noted above are deductible under IRS rules for such jobs.

It has been my experience that most people who participate under the various Work and Travel Programs get paid barely enough to cover their expenses. When they file the Form 1040NR with the Form 2106 and claim the expenses noted above, the combined effect of the personal exemption ($3,650 for 2010 and $3,700 for 2011) and the Form 2106 deduction usually COMPLETELY OFFSETS whatever they got paid. The net result is that any income tax withheld (on both the federal and state level) are usually refunded in full.

If you need professional help filing your return, email me at [email protected]. This IS what I do!

[HiLowA25]

Thank you all very much for the responses I received, I'll contact AtlantaTaxExpert if he could help me filling out these forms.

Thank you once again. Very kind of you !

[AtlantaTaxExpert]

Glad to help; I will be looking for your email! :-)

[IntlTax]

If you want to be able to deduct travel costs and rent, utilities, local transportation and daily living expenses on Form 2106 as an itemized deduction, you must be working away from your "tax home." If you are a student in your home country, then you probably cannot deduct any of these expenses in the U.S. See IRS Publication 463.

[AtlantaTaxExpert]

I agree with IntlTax IF the J-1 visa holder is in fact a student studying in the United States.

However, J-1 visaholders on Work-and-Travel are generally NOT considered to be students, but rather trainess or interns. It depends on HOW the J-1 visa is issued. If it is part of an existing STUDENT J-1 visa, then the "tax home" issue raised by IntiTax prevents you from claiming daily living expenses.

However, if the visaholder is a student in a foreign country who travels to the United States under Work-and-Travel for the summer break, then returns to their home country to resume school, then they are considered trainees and CAN claim daily living expenses. I could find NO reference to foreign students in IRS Pub 863, so this issue is one of interpretation, one I have argued successfully in defending such returns in audits before the IRS.

[IntlTax]

The type of visa issued has nothing to do with whether the individual has a tax home in their home country.

[AtlantaTaxExpert]

I agree about the visa being irrelevant.

The main issue is whether the visaholder has established his tax home, and I assume that the tax home HAS been established because I believe most young people, by the time they reach college age, have worked, earned some type of salary and have paid taxes in their home country, thus establishing their tax home.

[IntlTax]

ATE, you should look at the case of Hantzis v. Commr. 638 F.2d 248 (1st Cir. 1981), where the First Circuit held that a second-year law student living and attending law school in Boston and working at a temporary summer job with a New York City law firm could not deduct her travel expenses between Boston and New York or the cost of the apartment in New York, or cost of meals in New York. The Court stated that "a taxpayer who pursues temporary employment away from the location of his usual residence, but has no business connection with that location, is not 'away from home' for purposes of §162(a)(2)."

[AtlantaTaxExpert]

I will look at it. Thank!

[AtlantaTaxExpert]

Having looked at BOTH IRS Pub 463 and Hantzis decision provided by IntlTax, it appears that the critical issue is establishment of a "tax home" from which the taxpayer moves on a temporary basis to perform work and which must be maintained to returned to at the end of the temporary position. The maintenance of the tax home must be for a business reason, not one of personal convenience. This is stated in IRS Pub 463.

In the Hantzis decision, the court said that maintaining the first home in Boston must have a business justification, and it did NOT have a business justification because the taxpayer (a law student) did not have any business in Boston; she was a student at Harvard Law School. The only reason she maintained her home there was because her husband lived there.

Given these facts, In my opinion HiLowA25 must have established his tax home in his home country in order to claim his living expenses while working and traveling in the U.S. In my opinion, he does this if he has worked in his home country location and filed a tax return. I have successfully argued this in the past with the IRS. If we accept the establishment of a tax home in the home country (which I believe is REQUIRED under the non-discrimination clause of every tax treaty in existence), then the second issue is whether the taxpayer HAD to maintain two places of abode. The exact text of the Hantzis decision is below:

However, the court ruled, to be deductible, the exigencies of a taxpayer's trade or business must require him to maintain two places of abode and thereby incur additional and duplicate living expenses. If the reason for having two homes was personal, the expense would be nondeductible under section 262. Here, Hantzis's trade or business did not require that she maintain a residence in Boston as well as New York. She had no business connection with Boston; the home there was kept for reasons involving her husband, not business necessity.

If I do in fact prepare HiLowA25's return next month, I will have to explore that second issue in more detail when I do my due diligence. If he maintained an apartment or separate house in his home country and worked in a job to which he would return after this J-1 tour in the U.S. then he does, in my opinion, meet the "exigencies of business requirement" noted above. If, however, he was a student with no job and no tax return (hence, NO tax home), or if he lived with his parents or failed to maintain an apartment (no business exigencies), then the court (and thus the IRS) holds that the expenses are personal in nature and not deductible.

Further, there must be a "business connection" associated with the temporary job. At face value, it does NOT appear that the Work-and-Travel Program would have any "business connection", so the deductions for travel and daily living costs would NOT be deductible.

However, a J-1 visaholder who is a TRAINEE under a training program clearly does have a business connection, so they would be deductible. So would a L-1 visaholder who is sent to the U.S. for less than one year.

Again, it all seems to be a matter of interpretation of the specific cases involved. Each case must be judged on its own merits, but, all things considered, it is likely HiLowA25 cannot deduct his travel costs or his daily living expenses.

[IntlTax]

ATE, so by your definition above, you seem to be saying that everyone who "has worked * * * and filed a tax return" has a tax home where they have worked, regardless of whether they are currently employed at all. If they are a student, as long as they have worked and filed a tax return, they have a current tax home. So if the Harvard Law student in the Hanzis case had previously worked in Atlanta and filed a tax return, then she would have a tax home in Atlanta. Under this argument, she would be able to claim travel expenses while working in New York because she would be working at a location away from her tax home (Atlanta). Is this what you are saying?

[IntlTax]

Also, by your definition, in the Hanzis case, the woman would have been able to deduct the costs of traveling to New York if she had ever worked in Boston and filed a tax return. The court does not discuss her former situation. It discusses her current situation other than her job in New York, which is being a student at Harvard. Therefore, if someone is a student in their home country, it should not matter what they previously did in their home country.

[IntlTax]

Also, in Rev. Rul. 74-453, a foreign university degree candidate worked in the U.S. during his summer vacation under an on-the-job training program intended to supplement his education but not required by the university in his native country. The student had no principal or regular place of business or employment away from the location of his training. His reason for working away from his abode was to supplement his education. The student's “tax home” was the location of his training and no deduction was allowed for travel expenses in connection with the services performed for the U.S. firm.

[AtlantaTaxExpert]

In the Hantzis case, the court did NOT agree with the IRS position on tax home. See extract below:

Circuit Judge Campbell rejected the IRS's contention that the trade or business (the "tax home") had to predate the incurrence of the expense.

The circuit court reversed on the basis that there was no business exigency (necessity) to maintain the home in Boston; the necessity for the Boston home was personal, i.e. her husband was there (see extract below):

However, the court ruled, to be deductible, the exigencies of a taxpayer's trade or business must require him to maintain two places of abode and thereby incur additional and duplicate living expenses. If the reason for having two homes was personal, the expense would be nondeductible under section 262. Here, Hantzis's trade or business did not require that she maintain a residence in Boston as well as New York. She had no business connection with Boston; the home there was kept for reasons involving her husband, not business necessity.

In the IRS Revenue Rule 74-453, the person in question (A) had NOT established his tax home in his home country (see bold italic in extract below):

A, a nonresident alien and a candidate for a degree at a foreign university, came to the United States as a trainee in 1973 for a period of 90 days during his summer vacation under a program sponsored by a private nonprofit organization that helps foreign students obtain on-the-job training with participating United States industrial companies. [ I]A was not gainfully employed while attending the foreign university.[/I] The on-the-job training gained through the program is intended to supplement college and university education. In A's case, the training period was not required by his university as a prerequisite for a degree.

Had A been working in his home country, I contend that he WOULD have established his tax home in his home country. This is made clear further down the revenue ruling (extract below):

In discussing the concept of “tax home” for traveling expense purposes, Rev. Rul. 60-189 concludes, in part, that a “tax home” is wherever the taxpayer works, unless he has a different principal or regular place of business or employment or a real and substantial business justification for working away from his abode. In the instant case, A had no principal or regular place of business or employment away from the location of his training. His reason for working away from his abode was to supplement his education and, therefore, was not a business justification. Thus, his “tax home” was at the location of his training in the United States, and the traveling expenses incurred in connection therewith were not incurred “while away from home.”

Given these facts, IF A had a job while attending the university, the "tax home" portion of the ruling would not be relevant, because A could argue that he did in fact establish a "tax home" at the location of the university by virtue of working at his job while attending the university.

I do note that the IRS would probably STILL have disallowed the deductions on the argument that the training had no business justification, i.e. it was part of his education.

Also, based on what was provided above, the tax home is established by working in the home country. The IRS seems to also require (by implication) that the tax home must also be MAINTAINED by continuing to work while attending school. That was my intent as well, though I did NOT make it clear in my posting yesterday. The law student who worked in Atlanta DID establish a tax home in Atlanta, but she lost that tax home when she moved to Boston and did not perform some type of work while attending school in Boston. Had she worked part-time in Boston, she WOULD have established a tax home in Boston, but that, by itself, would NOT have been enough to deduct her costs in New York, because there was no business necessity to maintain the home in Boston.

[IntlTax]

So then we agree. If the student is not currently working in his home country (i.e. he is a student there), then he would not have a tax home in his home country and he could not deduct the expenses.

[AtlantaTaxExpert]

Yes, I agree that the student must be currently working to have established and maintained his tax home in his home country, and that maintenance of the tax home IS a pre-requisite to claiming his expenses.