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.