Ask Me Help Desk - F1 to H1B Dual Status Alien Tax Question

Hi Atlanta Tax Expert,

Just had one more question.

If I file as "first year choice" after June 3rd,from what I have read, I need to file 1040NR and 1040.

In this case can I claim itemized deduction of local income tax on 1040 from oct 2005 - dec 30 2005 and standard deduction of 5000 for 1040NR from jan 2005- sept 30 2005?

Thanks in Advance,

Regards,

Rahul

Rahul:

If you file First Year Choice, you need only file the Form 1040. You can claim the itemized deduction (which includes the state and local taxes you paid) or the $5,000 standard deduction, whichever is more. You cannot claim both!

Filing both 1040 and 1040NR is for a dual-status return, which no longer applies (see my sticky note posting)

Hi,

I have another question that bugs me... I am filing residents alien (H1B) for tax purpose (1040A). I have a child born in the US, and another one that holds H4 visa.

Is this correct that I can claim Child Tax Credit on the child born in the US (since he's a citizen), but I can't on the child that holds H4 visa since she's not a US permanent resident?

I think the term qualifying Child Tax Credit that says: The dependent must be a U.S. citizen or resident means the dependent has to be a US permanent resident and not a resident alien for tax purpose.

However I need to ask the question anyway because a tax helper says otherwise.

Thanks

If your H4 child meets all the criteria for dependency as specified in IRS Pub 17, then he/she qualifies for the Child Tax Credit.

He/She may not qualify for the Earned Income Credit, however.

Thanks. She is qualified for the child tax credit, the only part I was not clear was whether her H4 status would cause her to be ineligible.

Glad to help!

Hi Atlanta Tax Expert,

Details :
* I am citizen of india
* Entered US in Oct 2000 on F-1
* Was on F-1 until Oct 21, 2005 (Worked on OPT from Apr 12,2005 - Oct 21, 2005)
* Switched to H-1 on Oct 21, 2005

My Questions:
1) What forms do I need to file?
2) Can I get back the SSN and Medicare paid from April 12th to October 21st 2005 by claiming to be NR?
3) What deductions can I claim?

Your Answer:
1) Since you came in country in 2000, the five-year time limit for the exemption allowed under the F-1 visa is up. All of the time you spent in 2005 is eligible for the Substantial Presence Test. File Form 1040.
3) You can claim the Aper deduction ($5,000) and a personal exemption ($3,200) for yourself and your spouse and children (if applicable).
2) file Form 843 to claim the refund for SSN and Medicare. The fact that you are filing as a resident alien is irrelevant.

Can you please clarify the 2) answer you have, as the p519 page 46 says I am not eligible for SS / Medicare exemption as I am a resident alien for tax purposes, so does the website http://www.utexas.edu/international/...43require.html recommended by IRS.

Any help is greatly appreciated.

Cordially,
Ajit.

Ajit:

I have modified my guidance since I posted that answer.

The website is correct.

You cannot claim the exemption if you file as a resident alien.

Sorry, I haven't been checking the forums.
Looks like my new laptop is gone in smoke... sigh!

Thanks for your advice,
Ajit.

Hi AtlantaTaxExpert,

Thank you very much for your previous response to my posts. I have a new question for you though. But let me post my first question, so that you can see the context easily.

Quote:

Originally Posted by paramthegreat

Hi everyone,

I am a single individual from India. I am trying to file taxes for year 2005 (actually just calculating to get an estimate). I have been on F1 from Sep 2001 till May 2005. I was never on OPT due to some mistakes made by my school. Also I did not have any earnings between Jan 2005 and July 13, 2005. I had filled my application for H1 in May 2005 and I got my H1 approved with start date of July 13, 2005 with a consulting firm.
Also, I have never left the US between Sep 2003 and now.

Now based on the posts in this thread and above information, please comment if the conclusions I have made are correct:
1. I do not pass the substantial presence test of being on H1 >= 183 days for 2005. That means I am considered a non-resident alien.
2. I can file the form 1040NR and can take standard deduction (which was $3000 for 2004) for 2005
3. I can take another deduction due to tax treaty with india (again $4850 for 2004) for 2005

I will sincerely appreciate all your help,

Thanks,
Parminder

And your response was

Quote:

Originally Posted by AtlantaTaxExpert

Parminder:

Your are correct that you can file as a non-resident alien, in which case you, as an Indian citizen, are entitled to claim a personal exemption of about $3,100 and the standard deduction of $5,000.

Further, you have the option to file as a resident alien, which means filing a Form 1040/1040A/1040EZ. I believe you will find the tax to be the same (but go ahead and do it both ways to be sure).

For 2006 onward, you will have to file as a resident alien.

Now for my question. My wife has been on F-1 in the USA for entire period of 2005. She was a full-time student & was working as an intern so she has made taxable income. But the company she was working for choose to not withhold any Federal taxes and gave her a 1099-C instead. Since we are in Texas, fortunately we do not have to deal with state tax. We were not married in 2005, but we were staying together for the past 2 years. We got married in Jan 2006. I have the marriage certificate from India to prove this.

My question is, Can we file our taxes jointly as married couple or do we have to do separate taxes. When filing individually, I am looking at a refund of approx $1200 and she is having to pay $1700. If we can file jointly, then I was hoping that we could keep our deductions and would have to send only the difference 1700-1200=500 to IRS. I want to avoid having to send a big chunk now to IRS and wait for my refund.

Thanks a lot,
Parminder

Hi, I am an international student from India and I was working on OPT from 1 Octber 2005 till the end of year. I applied for my H1 in August 2005 and got approval in November 2005 for start date of H1 from 12 Feb 2006. Now which form do I need to fill for federal returns. Can I still fill 1040NR-EZ and take both the standard deduction of $5000 and personal excemption of$3200?? Also in 2006 which form will I need to fill??

Also I got around $300 in interest from my bank(savings account). Do I need to mention this to federal or state returns(being on F1)??

Thanks in advance

My son was born Dec. 28, 2005. Can I claim him?

Hi Atlanta Tax Expert,
Can you please help me with these questions. I would really appreciate it.
Thanks,

Quote:

Originally Posted by quin

Hi, I am an international student from India and I was working on OPT from 1 Octber 2005 till the end of year. I applied for my H1 in August 2005 and got approval in November 2005 for start date of H1 from 12 Feb 2006. Now which form do I need to fill for federal returns. Can I still fill 1040NR-EZ and take both the standard deduction of $5000 and personal excemption of$3200???? Also in 2006 which form will I need to fill???

Also I got around $300 in interest from my bank(savings account). Do I need to mention this to federal or state returns(being on F1)???

Thanks in advance

Atesfu:

Yes, you can claim your son.

Quin:

File Form 1040NR. You can claim the standard deduction of $5000 and personal excemption of $3200. You must also claim the $300 in interest earned in your savings account.

Any inputs of my post #190 please.

Quote:

Originally Posted by AtlantaTaxExpert

Atesfu:

Yes, you can claim your son.

Quin:

File Form 1040NR. You can claim the standard deduction of $5000 and personal excemption of $3200. You must also claim the $300 in interest earned in your savings account.

Thanks AtlantaTaxExpert, but how do I claim for my interest of savings account? Do I need to fill any other form for that? Can I fill 1040NR-EZ instead of 1040NR?? What difference does it make if I fill either of these (I don't have any dependents)...
Thanks,

Quin:

Unfortunately, you cannot claim interest on Form 1040NR-EZ. That's why you must use Form 1040NR.

This is what I got from instructions for form 1040NR (for line 9a and 9b)...

"If you received interest not effectively connected with a U.S. trade or business, report it on Form 1040NR page 4, unless it is tax exempt under a treaty and the withholding agent did not withhold tax on the payment. See Pub. 901 for a quick reference guide to the provisions of U.S. tax treaties. In addition, interest from a U.S. bank, savings and loan association, credit union, or similar institution, and from certain deposits with U.S. companies, is tax exempt to a nonresident alien if it is not effectively connected with a U.S. trade or business."

From what I can understand it says that we need not report these interests... Am I right?? Please help clarify this point...

Also do you mean that we need to report it and then claim for an excemption?? If so then how to do it??

Quote:

Originally Posted by AtlantaTaxExpert

Quin:

Unfortunately, you cannot claim interest on Form 1040NR-EZ. That's why you must use Form 1040NR.

The exemption I spoke of is the personal exemption of $3,200. That exemption is not related to the interest that must be reported as taxable income.

Where did you get the money that earned this interest? If the answer is from a job located in the U.S. then the interest IS considered to be connected to a U.S. trade or business and is fully taxable.

Interest income that is not effectively connected with a U.S. trade or business is documented with other audit trail forms, such as Form 1042-S. It IS taxed, but at a different rate than normal interest, as documented on Page 4 of Form 1040NR.

Hi,
I was on OPT until May 31 and my H1B started on June 1. I had no income on OPT.
Can I file a resident return with 1040EZ and claim the exemption and standard deduction, instead of a dual-status return.
Thanks.