If you had money withheld to pay Social Security and Medicare taxes, you will not be able to claim a refund for those taxes if you file as a resident.

Hi,

Let me be clear about my status. I am working on H1 right now and I converted my status from F1 to H1 on Oct 1st 2004. So, I am considered to be a non-resident alien and I should be filling out form 1040 NR or 1040NR-EZ.
Is that true ? Please help!

Thanks,

Yes, you may file as a non-resident alien for 2004, which means filing Form 1040NR or 1040NR-EZ.

However, you have an option. You may file as a resident alien under the "First Year Choice", which means filing Form 1040/1040A/1040EZ, since you met Substantial Presence on 1 April 2005.

I suggest you prepare the return both ways, then file the return that produces the least amount of tax.

For 2005, you will have to file as a resident alien.

I have a similar situation. I am from India. I was on F1 status and got converted on H1-B from Oct. 1. I understand that I have an option of filing as a non-resident alien or resident as I completed the substantial presence. I have another thing. My wife entered USA on F2 visa and right now on F1 visa. SHe has earned some income from her teaching Assistanceship. Can we file jointly in 1040NR/1040 NR-EZ or we have to file using 1040.
Thanking you in advance.
Amit

Amit:

If you file jointly, you must file Form 1040/1040A/1040-EZ.

If you file as a nonresident alien, you each must file your own Form 1040NR or 1040NR-EZ.

Hi Atlanta Tax Expert
Thank you very much for the reply. Further adding to the question.

If I file 1040 can I claim standard deduction $4850 for both of us?

Also if I file using 1040NR can I claim the std. deduction?

Thank you in advance
Amit

Amit:

Assume your wife is Indian as well.

If you each file Form 1040NR, you each can claim a $4,850 standard deduction.

If you file jointly using Form 1040/1040A/1040EZ, your standard deduction is $9,700.

Hi Atlanta Tax Expert,

Had a question regarding your post below (April 9), since I am in a similar situation to ilovesai -

>>ATE: "However, you have an option. You may file as a resident alien under the "First Year Choice", which means filing Form 1040/1040A/1040EZ, since you met Substantial Presence on 1 April 2005.">>

If the current year is 2005, how can one meet the substantial presence test?

i.e.. Current year (Jan - Mar 31) - 91 days
+ 1/3 of days in 2004 -> Oct 1 - Dec 31 - 92 * 1/3 = around 31 days.

Hence, that only comes out to 122 days, give or take a day. < 183, hence failing the substantial presence test for for April 1, 2005.

I'm obviously missing something... what is it?
Thanks so much.


--------------------------------------------------------------------------------
Previous Post:
Yes, you may file as a non-resident alien for 2004, which means filing Form 1040NR or 1040NR-EZ.

However, you have an option. You may file as a resident alien under the "First Year Choice", which means filing Form 1040/1040A/1040EZ, since you met Substantial Presence on 1 April 2005.

I suggest you prepare the return both ways, then file the return that produces the least amount of tax.

For 2005, you will have to file as a resident alien.
__________________
Hope This Helps!

Atlanta Tax Expert

CoffeeGal:

You are correct; I made a computational error.

However, the First Year Option still applies if the person delays filing his/her return to wait out the Substantial Presence Test requirement.

Details can be found on Page 9, IRS Pub 519. Be sure to properly substitute the years, as IRS Pub 519 was published for Tax Year 2003 and has been updated (but is still valid).

I am in a similar situatation as many on this thread - I was on F1 (OPT) till Mar 2004 when my H1-B was approved. My question:

I understand I should file the form 1040 as a resident but if I had no earnings while in F1 status would I still have to attach the form 1040NR marked 'Dual Status Statement'? Or would it be sufficient to send form 8843 along with my 1040 (marked 'Dual Status Return')?

I apologize for any inconvenience if this question was answered elsewhere and I failed to find it. I'd appreciate any direction in this regard.
Thanks in advance.

Narayan:

To be on the safe side, submit the Form 1040NR "Dual Status Statement", even though it has no income data. I know that does not make much sense, but it is a requirement from the IRS, and it's best not to ignore it.

As I understand from the previous posts, if my H-1 started October 1,2004 and I was on F-1 (OPT) prior to that.. I can file:
Form 1040 NR and 8843
Correct me if I am wrong?
Now, in form 8843. line 11 the Q is:
Enter type of visa you held during
2000 __ 2001__ 2002 F1 2003 F1. If the type of visa you held during any of these years changed, attach a statement showing new visa type and date of change..

So basically the visa I held during these years (f1)changed to H1 in 2004..
Am I required to attach some statement.. As such I haven't got my H1 stamped.. I only have the approval.. Not sure if we need to attach H1 approval or anything here?

Thanks in advance for your help.
Regards,
Keyur.

Keyur:

My previous research indicates you key on the approval date of the H-1B. Yes, you do need to attach a statement as to why you changed to H-1B status. Don't put too much concern into it, though. Your H-1B has already been approved.

You can file Form 1040NR and Form 8843 as a non-resident alien.

You can also file Form 1040 as a resident alien under the First Year Choice Program if you wait until 2 June 2005 to file. You must file an extension (For 4868) and pay any taxes if you will owe taxes by 15 April 05. If you are due a refund, just file the extension, which can be done by mail, on the telephone or via the Internet (www.irs.org).

ATE,
Thank you so much for answering all these questions. I don't think I would have had a clue what to do without this website.

I have a couple of questions in follow-up to what you posted earlier:

1. If I'm an Indian filing a dual-status tax return, do I list the standard deduction and personal exemption on 1040NR-EZ or just leave these blank? (I'm claiming both these on 1040)

2. Since I'm claiming the standard deduction and won't be taking any itemized deductions, I won't be including Schedule A (Form 1040), with my return. Am I correct in doing this?

I know this is an 11-th hour post but it would really help me if you would clarify these two points. Many thanks in advance,
Jo

While you wait for ATE's reply...

1.) Do not list std deduction and exemption on 1040 NR/EZ

2.) No harm including it with a note on it "India income tax treaty ... $4850"


Thanks
Barath

I am a French citizen, married to a Taiwanese woman. I entered the US in Jul 2002 to study and graduated in May 2004.

I started to work in June 2004 under the F1 visa (OPT). I transferred to H1B on the 1st of October. I already got the social security taxes from my employer for the period June-Sep.

A. If claim the first-year choice:
1. I will file in the end of May 2005 when I will meet the substantial presence test (90 days in 2004 *1/3 + 150 days = 180 days)
2. I need to file a 1040NR now for the whole period June-Dec and pay the tax. When I meet the residency requirement, I refile the whole period as a 1040.
3. Since I am dual-status, I do not get the benefit of being married and I do not have any standard deduction. I only benefit from the personal exemption of 3,100 dollars and the state taxes (itemized deduction)
3. I do not get any tax break for the tuition I paid last year

B. If I simply file a 1040NR for the whole year
1. I do not get the benefit of being married
2. I only benefit from the personal exemption of 3,100 dollars shown on the 1040NR explanation sheet and the itemized deduction of state taxes
3. I do not get a tax break on tuition

Therefore, the results are the same and it seems it is better to file the 1040NR because it is less of a hassle and I can forget the whole first-year choice thing.

I probably get something wrong. Please tell me where I am mistaken.

Caezar

Thanks Barath.

To Josie:

Bbarath has given you correct answers. I have nothing to add.

To Caesar:

I am assuming you are filing taxes on the calendar year.

You are making this more complicated than it is. I see no requirement to file Form 1040NR at all if you are electing to file as a resident under First Year Choice. The First Year Choice would over-ride the Dual Status issue, for which you cannot qualify in any event because you cannot meet Substantial Presence in Calendar Year 2004.

You should file an extension (Form 4868) and wait until you qualify to file as a resident alien under the Substantial Presence Test (end of May), then file Form 1040. That will allow you to file jointly with your wife, claim the standard deduction plus two personal exemptions, and claim the education credit or deduction. There is NO requirement to file any other forms.

Hi! I am confused over your interpretation of becoming a dual-status taxpayer in F-1 to H1-B scenario in this and many other topics.

Quote from p519: Alien (not a U.S. citizen) is considered to be a NONresident alien UNLESS he/she meets either one of the two tests: Green Card test or Substantial Presence (SP) test... Even if you DO NOT meet either of the tests, you MAY BE ABLE TO CHOOSE to be treated as a U.S. resident (i.e. be a resident alien) for part of the year (which effectively consitutes so-called dual-status). Please note that if you are an alien then you're a nonresident alien for tax purposes BY DEFAULT. Also, note that dual-status is a CHOICE, not a requirement.

Given this, I have a bit of a problem dealing with the statements that:
-first, in order to qualify for Dual-Status one MUST meet a SP test (completely opposite to what p519 says), and
-second, if person converts from F-1 to H1-B he/she MUST be in a dual-status for that year no matter when during the year this change occurred (seems to wrongfully insist on dual-status).

This is how I see this issue in the nutshell, please correct me if I am wrong:

In 2004 I held a student status under OPT classification through 6/29. When my status changed to H1-B on 6/30 I have no other choice except becoming a resident alien for income tax purposes for the entire year 2004, according to p519 (through passing SP test).

If my status changed on 7/10 instead then I have 2 tax options for 2004 (since I don't pass SP test). First option is to be a NONresident for the entire year. Second option is a dual-status taxation. But there is more. If I choose dual-status option and given that my wife is a nonresident for the entire year, there is another, even more liberal, tax election available - IRC Sec. 6013(g) known as "Nonresident Spouse Treated as Resident". This election allows both me and my wife be treated as residents for the entire 2004, therefore I convert from dual-status to resident and she converts from nonresident to resident for the ENTIRE year.

I will appreciate your clarifications.

P.S. Double-posted on www.thetaxguy.com forum
http://pub33.bravenet.com/forum/2786...fetch/578232/1

Dear all,

I finally asked "The Tax Guy" to help me file taxes and I highly recommend his service. He is obviously very knowledgeable about the subject and it was a pleasure to work this him. I have seldom experienced such professional service.

Caezar

Hi,

I was working on OPT till end of September 2004 and then on H1 visa from October 1, 2004. I was also outside US for 30 days in November 2004. I am filing my taxes for 2004 now. Reading through all the posts I understand that I will need to file 1040NR as I don't meet the substantial test.

I am from India. Can I claim the standard deduction under US-India treaty article 21(2) as I was on OPT (associated with student visa) till September ? The treaty says something like it is for students and business apprentices who are residents of India.

One more question, I had filed the taxes for "2003" through a CPA. I was on F1 visa for 2003 but I checked now and found that he had filed 1040 for me. As I was on F1 visa then and was a non resident he should have filed 1040NR.

If I will be filing 1040NR for 2004 do I also need to amend for 2003 and file amended 1040NR.

Please advise me what's the correct way for me to go.

Thanks,
Gud

Gud:

For 2003, you need to file Form 1040X to amend your return. You should attach a completed Form 1040NR to the Form 1040X to file properly as a non-resident alien. You should amend your 2003 return before you file the 2004 return, and send the amended 2003 return to the Philadelphia IRS Center. If you need more detailed guidance, contact me at [email protected].

For both 2003 and 2004, you may claim the standard deduction due to your OPT status.

Hi
I converted from F1 to H1B status on 1st Oct. My company has deducted Social Security and Medicare for the entire biweekly period although I should have ideally been taxed only for one week when I converted the status. I understand that I need to file the 1040NREZ form since I have been on F1 most of the year under OPT and I can claim standard deduction as an Indian citizen. How do I claim for my one week of Social Security and medicare tax for 2005? Thanks
Regards
Sushmita

Sushmita:

I have answered your queries via e-mail. Contact me if you have further questions.