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    jayeshb's Avatar
    jayeshb Posts: 2, Reputation: 1
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    #1

    Mar 12, 2005, 08:45 PM
    F1 to H1B - Itemized Deduction/ Standard Deduction?
    Dear all,
    My status in US changed from F1 to H1B in mid Nov 2004. I was on F1 from Sep 2002-Nov 2004.[OPT from May 2004-Nov 2004]
    Will I be able to take the standard deduction ? If so will it be under the US-India treaty?
    Please help.
    Regards.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Mar 14, 2005, 12:06 PM
    Jayeshb:

    In the late 1990s, I did quite a few 1040NRs and I knew the rules pretty thoroughly. However, since 9/11, I have had to cut back my tax practice due to military commitments, so I am a bit rusty when it comes to the 1040NR.

    I need to ask some questions:

    Based on your post, I assume you are from India. If so, did you earn any income while under the F1 visa? While under the H1B visa? If so, how much under each?

    Are you married? If so, what is the status of your spouse?

    I ask these questions because I went through a question-and-answer routine with another Indian citizen last week which, had I asked these questions up front, I could have answered him with one post instead of six.

    I await your answers!
    jayeshb's Avatar
    jayeshb Posts: 2, Reputation: 1
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    #3

    Mar 14, 2005, 07:44 PM
    Salary approximations for 2004
    F1 - 2004 - $44K
    H1 - 2004 - $5K

    I am currently single.

    Thanks for your help in advance :)
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #4

    Mar 15, 2005, 06:31 AM
    Okay, In my opinion, you can take the standard deduction under provisions allowed in the Indian Tax Treaty.

    However, double-check to be sure that your itemized deductions do not exceed the $4,850 standard deduction. This is very possible if you live in a high-tax state like New York, California or Massachusetts (in such states, the state and local income tax by themselves would probably exceed the standard deduction). If you own a house on which you are paying a mortgage, then for sure the itemized deductions exceed the standard deduction.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #5

    Mar 29, 2005, 09:08 AM
    See my posting on this issue!
    Tax04F1toH1's Avatar
    Tax04F1toH1 Posts: 2, Reputation: 1
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    #6

    Mar 29, 2005, 08:10 PM
    Similar situation but somewhat diff
    I have a similar situation like him. I am from india. I was on F1 from Aug2002 to Oct 2004, on OPT from May 2004 to Oct 2004 and on H1 from Nov 1 2004. I earned approx. $5000 on F1 as a Graduate Research Assistant, $20,000 on OPT and $ 4000 on H1B with the same company as an OPT. I have received 2 W2s. One for $5000 from my college and the other one for $20000+$4000=$24000 from the company. They deducted around $400 under social security and medicare taxes since Nov 1 - Dec 31 2004.

    My questions:

    1. Am I supposed to file 1040NR-EZ with $4850 as Std. ded amd $3100 as personal exemption.

    2. Do I have to add all the earnings and the taxes from both W2s and fill out only one 1040NR-EZ?

    3. If I am considered as NR, Am I supposed to get the FICA taxes back for the year 2004 when I was on H1B?

    I am really looking forward for this response.

    Thanks a lot in advance

    Quote Originally Posted by AtlantaTaxExpert
    Okay, IMHO, you can take the standard deduction under provisions allowed in the Indian Tax Treaty.

    However, double-check to be sure that your itemized deductions do not exceed the $4,850 standard deduction. This is very possible if you live in a high-tax state like New York, California or Massachusetts (in such states, the state and local income tax by themselves would probably exceed the standard deduction). If you own a house on which you are paying a mortgage, then for sure the itemized deductions exceed the standard deduction.
    Deepa's Avatar
    Deepa Posts: 5, Reputation: 1
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    #7

    Mar 31, 2005, 01:58 PM
    Please help
    I have a similar situation.

    I was on F1-OPT from June 26th 2003 till june25th 2004 and
    On H1 from June 26th 2004 to now.

    My husband was on H1 all through this time.

    What form should I be filing.Can we file a joint return ? Which one would be best. I am from india too

    Thanks in advance
    Deepa
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #8

    Mar 31, 2005, 03:00 PM
    Deepa:

    You may want to change your "handle". There is another Deepa on this board and I thought you were her.

    Your husband is a resident alien. Due to this fact, you have two choices:

    1) You can choose to be treated as a resident alien and file jointly with your husband. You would file Form 1040/1040A/1040EZ. This will probably be the easier of the two options.

    OR

    2) You can file dual-status and file separately from your husband. He would file Form 1040/1040A/1040EZ. You would prepare Form 1040NR/1040NR-EZ as a "DUAL-STATUS Statement" for the part of the year you were under F-1 visa status and attach it to Form 1040/1040A/1040EZ. Since you are an Indian citizen, you would be allowed to claim the standard deduction on the Form 1040NR/1040NR-EZ or the itemized deductions on Form 1040/1040A/1040EZ, but not both. See my other thread (with bold red and bold green writing) as to the procedure you must follow to file dual-status.

    As to which one would be best, I cannot answer that without actually the preparing the returns in question and comparing the result.

    Bottom Line: The best way to determine which is best is to prepare your returns both ways, then file the one which produces the least amount of tax.

    If you have more questions, but do not wish to reveal details of your finances on this public forum, contact me at [email protected].
    Deepa's Avatar
    Deepa Posts: 5, Reputation: 1
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    #9

    Apr 1, 2005, 07:33 AM
    Thank you very much
    Thank you very much for your guidance.

    1. I have already done the first option, but I was not sure if I can use the second one and you cleared me on this.

    2. I will try doing the second option this weekend.

    3. but last year I filed together with my husband will this be of any issue in filing the present year taxes

    4. If in this year I file separately form my husband and if he files 1040 EZ will he be able to claim me on his return as a dependent.

    I think the answer is no and he will have to claim the standard deduction amount for married filing separately. ( because both of us are working).

    Can you please say if I am right or wrong in this thinking.

    5.Lastly I have another question. I am trying to help my brother also filing taxes. He has been on F1 from 01-01-2001 to 08/20/04 and then on H1 the rest of the year.
    His marital status is single.

    So according to your answer for my yesterday's question he should be filing a dual status or should he be filing like a non resident since for tax purposes he has been in the country only for 133 days.

    Your help would be really appreciated
    Thank you once again
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #10

    Apr 1, 2005, 08:10 AM
    Deepa:

    Okay, I did not realize that you filed jointly with your husband for 2003. Looking at your original post, I should have anticipated that possibility.

    In my opinion, you are now considered a resident alien and the second option is not available to you unless you choose to revoke the resident alien option (read pages 10 - 11 on IRS Pub 519 on how to revoke your resident alien status). Now, that is your choice, but unless you and your husband's combined income exceeds $178,000, it is likely filing jointly using Form 1040/1040A/1040EZ will result in less tax being owed than filing a Form 1040NR. You may also file married filing separately as a resident alien (using Form 1040/1040A/1040EZ ) if that option results in less tax than filing jointly.

    BOTTOM LINE: Compute the taxes all three ways: #1 - Resident alien filing jointly, #2 - resident alien filing separately, and #3 - husband filing resident alien filing separately and you filing non-resident alien using Form 1040NR and claiming the standard deduction under the Indian-U.S. income tax treaty. All things being equal, I would bet my tax preparation fee that #1 results in the least amount of taxes owed.

    As for your brother, he does not meet the Substantial Presence Test, so he should file Form 1040NR or Form 1040NR-EZ as a nonresident alien. For 2005, he should file as a resident alien, using Form 1040/1040A/1040EZ.
    Deepa's Avatar
    Deepa Posts: 5, Reputation: 1
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    #11

    Apr 1, 2005, 08:30 AM
    Thank you once again
    Thank you very much I promise I will do that

    As for my brother I tried doing 1040Nr-EZ for him he is getting the same return as on 1040 EZ.

    I have just now read this

    "Resident at End of Year

    You must file Form 1040, U.S. Individual Income Tax Return if you are a dual-status taxpayer who becomes a resident during the year and who is a U.S. resident on the last day of the tax year. Write "Dual-Status Return" across the top of the return. Attach a statement to your return to show the income for the part of the year you are a nonresident. You can use Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents as the statement, but be sure to mark "Dual-Status Statement" across the top. "



    So does this mean that my brother has to file has to both 1040 and 1040 NR or 1040 NR EZ.

    If so how to differentiate between the wages earned as a non-resident and that as a resident in the same year and also he has only one W2 because he worked with the same company while he was on F1-OPT and also on H1.

    Your guidance is highly appreciated
    Thank you
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #12

    Apr 1, 2005, 09:18 AM
    Deepa:

    Read my original post with the bold red and bold green print.

    It clearly states that, in order to qualify for dual status, your brother must meet the Substantial Presence (183 days in the U.S.) or the Green Card Test. He does not meet either test, so he should file as a nonresident alien (filing Form 1040NR/1040NR-EZ).

    He should also file Form 8843 to account for his F-1 visa status.

    For 2005, he can file as a resident alien.
    Deepa's Avatar
    Deepa Posts: 5, Reputation: 1
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    #13

    Apr 1, 2005, 10:53 AM
    I read your original post
    I am sorry in your last reply also you have asked me to read the original post but I was not able to find it.

    Now I did a search for it and read it just now.

    Thank you very much.

    Sorry I have two more doubts:

    1. I heard people saying that you can get more returns if you work on F1-OPT or when you be as a non-resident alien. But I do not see it in my brothers case. I did both 1040 NR -EZ and also 1040 EZ ( which I now know for sure I should not have done) and there is no difference in the returns we are getting. So, there really no difference even if your are on F1 -OPT or H1.

    Do you agree with this.

    2. Now I have decided to file joint returns with my husband. But do you still think I will have to file the form 8843 to show change in my status.

    Thank you
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #14

    Apr 1, 2005, 12:35 PM
    Deepa:

    1) You may not see a difference in refunds between Form 1040 and Form 1040NR. However, a nonresident alien does not liable for Social Security and Medicare taxes, whereas a resident alien must have Social Security and Medicare taxes withheld from their paycheck at a 7.65% rate. That's the difference the "people" are probably speaking of.

    2) You will have to file Form 8843 as long as your visa status remains F-1. The year it changes is (I believe) the last year you have to file Form 8843.
    Deepa's Avatar
    Deepa Posts: 5, Reputation: 1
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    #15

    Apr 4, 2005, 12:45 PM
    Question
    You said that we will have to file 8843 as long as our status remains F1 but last year as I filed as resident alien with my husband I did not file 8843 even though I was on F1.

    This year also as I told you I was on F1 till June 26 th and then on H1 . And now I also I am filing as a resident alien along with my husband .

    So do you think I made a mistake by not filing form 8843 last year along with our 1040 EZ

    Do you think I should file an amendement for last year and just attach a copy of 8843 and also


    Do you suggest me to file 8843 this year

    Your suggestions will be appreciated

    Thank you
    Deepa
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #16

    Apr 4, 2005, 08:21 PM
    Deepa:

    I believe it is an annual requirement as long as you are on F-1 visa status and if you are trying to exclude days from the Substantial Presence Test.

    Since you are filing as a resident alien, excluding days for the Substantial Presence Test is moot!

    Since you filed as a resident alien last year with your husband, there is no need file a Form 8843 for last year.
    Aqua123's Avatar
    Aqua123 Posts: 1, Reputation: 1
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    #17

    Mar 26, 2012, 12:26 PM
    Hi,

    I have a question on the GA 500 form. In schedule 6, what would be the applicable 'standard deduction' for Indians on F1-visa?

    By default, it is 2300 but I believe that the US-Indian treaty allows the deduction to be 5000.

    Could you please confirm the same.

    Thanks,
    Janet
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #18

    Mar 26, 2012, 07:52 PM
    Janet:

    Use the defaulr $2,300.

    Georgia does not honor tax treaties with other countries.

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