[dmitra]

Hi,

I am an Indian graduate student in the USA. I interned in the USA between April 8, 2012 and Aug 19, 2012 under a J-1 "short term scholar" Visa (expired Sep 1, 2012). Then I returned to France (where I was doing my undergrad) and obtained an F-1 Visa. I re-entered the US on Sep 13, 2012 to begin my PhD. So I spent less than 1 month outside the USA.

I wish to know if I am eligible to the Tax Treaty mentioned in publication 901 and 519? I changed my visa status and did not satisfy my 2 year return home condition applied by the J-1 visa. But the 1040NR EZ form doesn't seem to ask this question? Is the eligibility of Tax Treaty benefits to students earning a fellowship somehow effected by a J-1 short term scholar visa? If so, which publication of the IRS points it out? I would be grateful if you could help.

Thanks in advance

[AtlantaTaxExpert]

If you had done the J-1 tour in 2011, it would gave burned one of the five years of exempt status you get with the F-1 visa, but since it was in the same year, there is, In my opinion, no impact.

[dmitra]

If you had done the J-1 tour in 2011, it would gave burned one of the five years of exempt status you get with the F-1 visa, but since it was in the same year, there is, IMHO, no impact.

Thank you for your reply. I do know that there is a question of being a non-resident alien for tax purposes which is determined by the number of years I spent on the J-1 Visa. Is there a clause that states that in order to be eligible for treaty benefits, I must spend a full calendar year in my home country before stepping on US soil again?

To be honest, I didn't completely understand your response. Could you slightly elaborate?

Thanks

[AtlantaTaxExpert]

You are STILL a non-resident alien, and will be through 2016 unless you change visas again. The F-1 visa makes you exempt from the Substantial Presence Test.

[dmitra]

I talked to the resident tax expert at my university. They say that since I am a TAX RESIDENT of France and not India just before entering the US, I only qualify for US-French Treaty and not US-India Treaty. But even then I cannot benefit from the Treaty due to not spending one full calendar year in France before re-entering the US. Is this true?

[AtlantaTaxExpert]

If you paid taxes in France, then you are a French resident and the French treaty applies.

Otherwise, the Indian treaty applies.

You get one or the other. I know of no case where NEITHER treaty applies.

[dmitra]

I have a rather difficult question I am confronting right now. I saw this in a webpage from University of Richmond (http://controller.richmond.edu/payro...-treaty.html):

"Tie-Breaker Rule: Some NRAs may be a citizen of one foreign country and a resident of another foreign country. The NRA may not pick and choose which treaty would offer the better benefits. In this case the "tie-breaker rule" guidelines should be set out in the residency article of the tax treaties. In general, the treaty to use would be the one where the individual has the closer connection (i.e. where the individual has a permanent home, where the economic connections are closer)"

My case is exactly the same. I am a citizen of India and a resident of France (only for tax purposes for the US). But I have NO connections left with France anymore. On the contrary, I am an Indian citizen and have a permanent home in India. Can I take advantage of this condition? Can you tell me where I can find this rule as it is written here?

I want to clarify why the US-French treaty is a problem and why I prefer the US-India treaty. I confirmed with the French Tax Authority and since I no longer live there or earn anything from France, I am not entitled to declare or pay taxes in France. So using US-French treaty would give me refunds but I'll end up in trouble eventually when I won't be able to show any proof that I filed taxes in France.

Thank you in advance

[AtlantaTaxExpert]

Given what the French authorities told you, claim the Indian tax treaty.