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    kemarshall01's Avatar
    kemarshall01 Posts: 1, Reputation: 1
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    #1

    Jun 1, 2012, 11:42 AM
    US-UK tax treaty - paying back refund when staying over 2 yrs
    Hi all,

    I am a UK national working in the US on a J-1 visa. My institution witholds my taxes and I have to file for a refund, both this year and last I claimed the tax back citing article 20a and got a full refund. Originally I was going to stay for less than 2 years, however the option is now available to stay longer, which I would like to do but I am concerned about my position with the IRS. I know I will have to pay them back but I cannot do so in one lump payment. I understand there are payment plans but will I incur penalties and interest, and if so does anyone know roughly how much these would be? I do not want to get in trouble with the IRS but I want to remain at my institution. If anyone has any advice or has been in this situation themselves it would help me greatly.

    Thanks.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Jun 1, 2012, 11:50 AM
    When you file the amended returns to pay the tax, you can request the IRS waive the pailure-to-pay penalties. They may or may not grant the waiver.

    You can then submit Form 9465 to request a payment plan. The IRS charges about $90 to set up that plan, and they WILL charge interest (required by law), but the interest rate is a reasonable 8%, and, as long as you make your payments on time, you will have no problem with the IRS, though they WILL confiscate subsequent federal tax refunds until the debit is paid.
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