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    KJY's Avatar
    KJY Posts: 10, Reputation: 1
    New Member

    Feb 10, 2006, 05:19 PM

    I received a 1099-G regarding state tax refund I got 2005 and I know I have to include it as income in Form 1040. And I also received another 1099 form saying "Statement for Recipients of Interest Income", "Calendar Year", "Total Interest Paid or Credited-$36.67". My questions are,

    1) I followed instruction for 1040 and in worksheet to figure out whether this refund is taxable or not. The result showed that it is not taxable. Can I trust this worksheet?

    2) Do you know what the second form I received and what do I do with it?

    3) I have an option to report either as a dual-status or a resident alient. Could you tell me which one has more benefits? I am from Korea, so I may be able to have benefit from tax treaty for $2,000. But, when I chose to be a dual-status, 1040NR form is going to be used only as a statement and the actual form to be used will be 1040, isn't it? Then, I end up having any tax treaty benefit, don't I?

    Thanks in advance.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,818, Reputation: 846
    Senior Tax Expert

    Feb 10, 2006, 10:54 PM
    1) Yes, you can trust the worksheet.

    2) That is a Form 1099-INT, which is used to report interest income you earned from money in a bank, credit union, or other savings account.

    3) If you file as a resident alien, you will, more than likely, lose your $2,000 treaty exemption. However, that is more than offset by the fact you can claim a $5,000 standard deduction.

    Now, if your itemized deductions exceed $3,000, then file dual-status, because you will be able to itemize and still get the $2,000 treaty exemption.
    KJY's Avatar
    KJY Posts: 10, Reputation: 1
    New Member

    Feb 11, 2006, 05:54 PM
    Thanks for the answer. My follow-up questions are,

    1) The second form wasn't from bank. It was from Internal Revenue Service and it says Form 1099. Any idea what I should do with it?
    2) If I file as a dual-status, Do I simply subtract $2,000 from my total income and put that income as final total income in the form? Would IRS know?

    Thanks again.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,818, Reputation: 846
    Senior Tax Expert

    Feb 11, 2006, 08:21 PM
    1) If you file a return late and got a refund, the U.S government paid your interest on the refund. That interest is taxable, hence the Form 1099-INT.

    2) You claim the treaty exemption on Line 39 of Form 1040NR and Line 6 of Form 1040NR-EZ.

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