Hello,

I found this post on the website:
http://pub33.bravenet.com/forum/2786.../fetch/510478/

Generally, the standard deduction is not allowed on the dual status return. However, under the US/India tax treaty, a student from India is allowed to claim the standard deduction on a nonresident return. As a dual status taxpayer, a student from India can claim the standard deduction on the nonresident portion of the return, limited to income earned during that period. Form 8843 should be filed showing the number of days exempt from the substantial presence test during the period you are an F-1 visa holder.

Sorry, I don't mean to say one is wrong or correct. From the messages I read in this thread the above information seems to be invalid. Can someone please clarify on this.

Thank you,
Raj

Raj:

Excellent. The author is a CPA, apparently with experience in preparing 1040NR returns. The interpretation he offers seems logical, so I will not contest it.

I will also amend my guidance once again.

Both of my husband and myself are from China and transferred from F1 to H1B in 2004. The only difference between us is the transferring time: March 8 for my Husband and Oct 1 for myself. Could you please let me know, for each of us
1) tax status: nonresident? Resident? Dual status?
2) forms to file
3) deductions that can be claimed
4) tax treaties(US-China) that can be used
5) should we pay social security/medicare tax?

Thanks a lot!

Lily

There are rules that are clearly defined for your case. I would suggest that you read Tax Guide for Aliens carefully to decide your best course of action. In the publication you will find answers to all the questions you posted. Also, AtlantaTaxExpert has been very helpful and dependable, you could also wait for him to reply.

Thanks,
Santosh

Lily:

1) For 2004, your husband is dual status. You are not, nor will you be in 2005.

2) Your husband has to file Form 1040NR/1040NR-EZ for the time he was under F-1 visa status, then file Form 1040 for the time he was under H-1. See the thread originated by me which has both bold red and bold green print in it for details on how to file.

You file as a nonresident alien, filing Form 1040NR/1040NR-EZ. You will not have to worry about filing dual-status next year. Just file for 2005 as a resident alien, jointly with your husband if you so desire.

3) & 4) The F-1 visa status indicates that you are students. Citations from www.thetaxguy.com indicate that you are both eligible to claim a $5,000 standard deduction. You can claim it on your Form 1040NR/1040NR-EZ; your husband claims it on his Form 1040. Be sure to cite the U.S.-China tax treaty on the Standard Deduction line on both forms.

5) You are both liable for Social Security and Medicare taxes for the period you were under H-1B status. If your employer(s) began withholding these taxes from your pay when you came under H-1B visa status, you need do nothing else.

Thanks a lot for the answer. It is very clear and helpful!

Lily

Hello,

I came to US as a student in May 2002. Started working in April 2003 as an intern.Continued working during OPT through OCt 2004, when my visa status was changed to H1B. What form do I need to file ? Am I a resident alien for tax purpose ? Is this dual status or not ? And if it is dual status do I need get any taxes back like soc sec...

Also I got married in Dec 2004. Does it make any difference to my filing, we are filing jointly, she's not working.

Thanks...

Implied:

Even though she does not work, her status is critical to my answer.

Is she a U.S. citizen?

If not, what is her visa status as an alien?

Sorry, incomplete info, she's on H4, I am an indian...

Implied:

You do not meet the Substantial Presence Test, so you have the option to file as a nonresident alien. You may wish to do this because, as an Indian citizen, you can claim the Standard Deduction of $4,850 (unless your itemized deductions are higher) under the U.S.-Indian Income Tax Treaty. You will also be able to claim your wife as a dependent and claim total personal exemptions of $6,200.

By remaining a nonresident alien, you remain exempt from Social Security and Medicare taxes while you were under the F-1 visa. The day you converted to the H-1B visa is the day you became liable for the Social Security and Medicare taxes, and your employer should have begun withhold Social Security and Medicare taxes from your pay at that time.

You should be able to file as a resident alien under the First-Year Choice. I do not think it would make you liable for Social Security and Medicare taxes while you are under the F-1 visa. However, you would have to wait until sometime in May 2005 to file, because you have to qualify for the Substantial Presence Test before you file under the First-Year Choice. You would need to file an extension by 15 April 2004, then file once you met the Substantial Presence Test. See page 9 of IRS Pub 519 for details on the First-Year Choice option.

Prepare the return both ways (as a resident alien and a nonresident alien) to determine under which form you pay the least amount of tax. Regardless of your choice, you will file as a resident alien for 2005.

OK, still some more questions

1. your conclusion "Regardless of your choice, you will file as a resident alien for 2005 " why so ?

2. my employer started with holding soc sec and othr taxes right from day I got approved which was som time in May04. So I can claim back my taxes for that period ,right ? How do I do that ?

3. Finally which form do I need to use ?

Thanks for the help. Appreciate it :)

Implied:

1) You are considered a resident alien in 2005 because you will meet the Substantial Presence Test. Once the Substantial Presence Test is met, filing as a resident alien is no longer an option but rather a requirement.

2) Okay, your H-1B status was approved in May 2004. That's not what you said below ("Continued working during OPT through OCt 2004, when my visa status was changed to H1B."). That changes your circumstance. Now you have met the Substantial Presence Test and are therefore considered dual status. You have to file a dual-status tax return.

3) Please read my posted thread (How to File Income Taxes When Converting from F-1 to H-1 Visa Status (AtlantaTaxExp)) which is five threads below, the one with bold red and bold green printing. The details on how to file a dual-status tax return.

All right, maybe I am being confusing. I thought it does not matter when you get the approval. My H1B Visa started from 1st oct 2004 valid for the normal 3yr period. I was on my OPT till Oct 2004. Is this differently treated for taxes... and depends on the date of approval??

From a legal perspective, my H1 came into effect only on 1st Oct and I was on OPT till then.

Also thanks for explaining the other questions, quite clear on those now.

Thanks

Hi AtlantaTaxExpert,


Thanks for all the advice you provide to the board. Here's something I'm a little doubtful about -

"adpcitMar 24, 2005, 07:37 AM
F1 student for 7 years, now on OPT, should I pay social security & medicare tax? I am from China. My H-1 may be approved for "

"AtlantaTaxExpertMar 24, 2005, 11:42 AM
Adpcit:
See answer for Mavin. The F-1 visa exempts you from Social Security and Medicare taxes.
That will apply for 2005 as well, since you will be a dual-status alien. If your H-1 visa becomes effective on 2 Jul 2005 or earlier, then you will meet the Substantial Presence Test and can then file Form 1040/1040A/1040EZ. You will also be liable for Social Security and Medicare taxes."


F-1 visa holders are non-resident alien for 5 calendar years. Starting from the 6th years, f-1 visa holder will be considered as resident alien unless of course, they want to file extra forms to prove their ties to their own country. Therefore, during OPT(after being in US for more than 5 years), one has to pay Social security and medicare, unless there's a tax treatly. And naturally they filed as "resident alien" status regardless the days of being as a h1b.

AtlantaTaxExpert,

Thanks for all your replies. It has been really helpful to read all the posts regarding F1 to H1. I had some questions which are a bit different.

- I am from India and I worked from Jan 2004 to Oct 2004 on F1 for my company
- From Oct 2004 I was on a H1
- So I guess I am not on a dual status
- My company withheld social security and medicare taxes from Jan 2004 - Aug 2004. I understand that I am eligible to get back this withheld amount. What forms will I need to file?
- Also I understand that I need to pay SS and Medicare taxes from Oct 2004 - Dec 2004. But my company stopped holding these from Aug 2004. But in March 2005, I reported this to my company and they withheld these SS and Med taxes from Oct 2004 to March 2005 from my march salary.

Could you please advise me on what forms I would need to file?

Thanks in advance.

Ananthrb:

First and foremost, you need to ask your company for the refund.

Since they just withheld six months' worth of Social Security and Medicare taxes from your paycheck, getting at least a partial refund of the preceding nine months' worth of Social Security and Medicare taxes should not be too difficult.

Once you have exhausted that option, you then file Form 843. Procedures for doing so can be found in IRS Pub 519.

Thanks, I did ask my company and they said they cannot redo my W2 and hence I need to apply for a refund on my own.
- Will I be entitled to all the money withheld for Social Security and Medicare that is displayed on the W2 form or just a percentage of it?

Thanks,
Ananth

Ananth:

You are entitled to the Social Security and Medicare taxes withheld while you were under the F-1 visa, so you will only get a percentage.

Hi,

For 2004 full year I was on f1 status. I worked oncampus and for OPT.
Please advise me what form I should fill for taxes. Is 1040NR / 1040NREZ OK?

Can I fill 1040EZ ?

Can I get the lifetime learning credit for my fees for 2004 (MS degree)

Studentf1:

You should file Form 1040NR or 1040NR-EZ.

Unless you are married to a U.S. citizen or a resident alien and choose to be treated as a resident alien yourself (and pay Social Security and Medicare taxes), you cannot claim any education credits.

AtlantaExpert:

Thanks for you reply. Im sorry I guess I was not clear. My W2 states that around 900$ were withheld as Social Security and Medicare taxes while I was a student. Will I be able to get the entire 900$ back or is it just a fraction of it. Would you know how much I should be expecting back.

Thanks in advance!
Ananth

Ananth:

You will get all of the Social Security and Medicare taxes withheld while you were under the F-1 visa.

HI,

I have some doubts about my tax returns this year. Let me explain :

1. I came on F1 to the US on Aug. 3 2001 and continued to be on that status till May 2004. I graduated in May'2004 from Texas. My OPT started from the June 1st 2004.

2. I was looking for jobs and then joined a consultancy... My H1 through the consultancy got approved and the begin date of my H1 is on 12/06/2004.

I received 2 w-2s, one for the month of January '2004 ( My work in the university) and the one for the month of Dec. 2005 from my company.

My doubt is what are the forms I use for filing the taxes.. How do I got about doing it
I am not sure if I am dual-status.

I did not leave the US in anytine during 2004.

Pras

Pras:

I think:

- Since you have not been on H1 >= 183days, you are not a "dual status alien"
so,
- you are the same "non resident" for tax purposes for 2004.
- You file form 1040NR + 8843
- Add up the amounts on your W2s as your total wages.
- you get to take the standard deduction $4850
- you get a personal exemption of $3100

You must be getting back "almost" everything that's withheld.

Thanks
Barath

Barath is absolutely correct. I have nothing to add.

Hi~

I have been in F-1 status for more than 5 calendar years and was told that I need to file as a resident alien. But I was only taking the time needed to complete college plus one year OPT and now I'm in a master's program. Since 2004 was my OPT year, I worked as an independent contractor and got a 1099-MISC. Should I file Schedule C-EZ with 1040 or 1040NR(does it worth it to go through the trouble of proving to the IRS of my non-resident status? If so what do I need to do?) Are there any other forms I should file? Also can someone explain the $3100 personal deduction? I am a Chinese citizen, if I file 1040 I suppose I can only take the $4850 standard deduction and not the $5000 treaty deduction right?

Thank you so much for your help in advance. I'm pulling my hair out... :confused:

Thank you Very Much... relieved to get the message..

Pras

Shqshz:

If you are still a student/in OPT, then you can still file as a non-resident alien. However, you have the option to file as a resident alien.

As a non-resident alien, file Form 1040NR with Schedule C to account for the Form 1099-MISC income. You get to claim BOTH the $3,100 personal exemption and a $5,000 standard deduction under the U.S.-China Tax Treaty. This exemption and deduction are claimed on Form 1040. You do not have to file Schedule SE as you are exempt from self-employment taxes. You must file Form 8843 to certify your F-1 visa status.

If you decide to file as a resident alien, you must file Form 1040NR with Schedule C and Schedule SE. You get to claim the $3,100 personal exemption, but your standard deduction is reduced to $4,850. Further, you are liable for self-employment taxes (tax rate is 15.3% of all income over $400).

Prepare both returns to see which involves the least amount of tax. Remember that once you file as a resident alien, you will require IRS permission to revert back to non-resident status.

AtlantaTaxExpert,

Thank you so much so your reply! I'm quite sure that filing as a non-resident alien will involve the least amount of tax. Do I have to provide any other paperwork regarding my non-resident status (or... no tendency to become a resident) besides Form 8843?

Thanks again.

The Form 8843, plus the Form 1040NR, should be the only forms required.

Hello,

I would appreciate any help with the following situation:

- I started working under my OPT (F1 visa) in July 2003. On January 31, 2004 I received an H1B approval notice "valid from 6/29/04".

- My H1B visa was issued on 24 June 2004. This is when my employer started withholding SS and Medicare taxes. However, I was not in the US during the periods June 19 - July 4 and December 18 - January 4, 2005. Does that mean that I do NOT meet the Substantial Presence Test (>= 183)?

- If I do NOT meet the test, I am not dual-status, correct? Then I should file Forms 1040NR and 8843, correct? As a citizen of Bulgaria, can I claim the standard deduction or do I need to itemize?

- If I DO meet the test (which I doubt), am I a dual-status? How do I calculate what exemptions and deductions have accrued under each status?

Thank you very much for your help!

Anna

Anna:

You are correct! You do not meet the Substantial Presence Test, so you should file Form 1040NR and Form 8843.

Bulgaria is not on the Table of Tax Treaties in IRS Pub 519. Therefore, you are not eligible to claim a standard deduction, nor is any of your income exempt by treaty. You should pay taxes on any income earned in the United States, and you need to itemize.

Thanks very much for your prompt response to my previous question!

I have another question: Since I have to itemize deductions on my 1040NR, can I claim dental expenses (that meet the 7.5% test)? If so, in what line of Schedule A should I include them?

Thanks again!

Line 1 of Schedule A.

Hi,
I need help for filing my taxes.
Here is my situation: I'm a single preson with Indian nationality.
1. I was on OPT till Oct 2004 and then was converted to H1B. ( According to posts on this forum, in this case I need to fill 1040 NREZ)
2. My employer did not deduct social security and medicare from oct 2004. They realized it now and are going to deduct it and send me a w-2c form. I've not received this form as of yet. What do I do if I don't receive it by Friday? Do I just use the previous W-2 they send me?
3. Question about 1040 NR-EZ. What is the purpose of my visit to United States
In this form?

Vedanata_2004:

For purposes or getting your income tax refund, the original W-2 would probably do.

However, because you are a nonresident alien on first a F-1 and then a H-1B visa status, you need to submit a W-2 that is accurate. For this reason, you need to file an extension while you wait for the W-2C.

Finish preparing the Form 1040NR-EZ. If you owe money, you need to file Form 4868 and write a check equal to the amount you owe. If you are due a refund, just submit the Form 4868. You can do it be phone or the Internet (www.irs.gov) and authorize the IRS to debit your checking/savings account by giving them your checking routing and account numbers (which are listed at the bottom of each check).

Your purpose for the visit to the U.S. is either training or education. That's the reason you got the OPT. Next year, that will not be the case, but then you will be filing normal tax returns and will not have to address that question.

Hello,

I have a question regarding the tax changes once my status has changed to H1b. MY OPT starts from January 3, 2005 and ends on January 2, 2006. My H1-b just started on November 7, 2005. When my status was still under OPT, I was not liable for Social Security and Medicare taxes. Currently, since my status has converted to H1b, am I still not liable for SS & medicare taxes?
After Nov7, 2005, my paycheck is not deducted for SS & medicare taxes. I am confused now and need help in solving this... Will there be any effect on this? Should I tell my company regarding this matter?

Yes SS and MC taxes must be deducted from your pay once you are on H1.

But, while filing taxes for 2005, you are a Non Resident for tax purposes, since you've been on H1 for less than 183 days.

Thanks
Barath

Mardreni:

Barath's advice is completely accurate. You need to contact your employer and inform them of their error; do this in writing (preferably an e-mail) and retain a copy.

However, if they fail to correct the error and withhold the taxes, you are under no legal obligation to pay the Social Security and Medicare taxes not withheld on your tax return. The legal obligation to withhold and pay these taxes rest with the employer, NOT the employee.

Just want to drop a note to say thank you all for helping me sort out my problem. I have informed my employer and this tax issue has been taken care of.

-Marisca-