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Masterme · Mar 24, 2009, 02:19 PM

I am J1 holder from India.

I joined in February 2007 and working till date on J1 visa. I took US-India tax treaty benefit for 2007 and 2008. But now I am staying longer than 2 years so they say I have to pay back all taxes I took for 2007 and 2008.

I am not sure how this has to be done. Do I have some time limit or I need to pay all back at once. What are my options. Or is there anyway to avoid taxes for the years 2007 and 2008.

One point is that I was residing 3 years in AUSTRIA (Europe) before coming to the USA. So, some people say that I can get tax exemption for 3 years by AUSTRIA - USA tax treaty. But unfortunately I did not enter this information in my forms during taking job in US.

Now, is it possible for me to claim AUSTRIA - USA tax treaty for the years ( 2007- 2008) instead of INDIA - USA tax treaty. I don't know how this will affect as I have already claimed the INDIA -USA tax treaty benefit for 2007-2008.

I am much worried about the repayment of taxes for 2 years. Any help is much appreciated.

Please help me.

Thank you very much,

Masterme

AtlantaTaxExpert · May 14, 2009, 11:40 AM

Who issued your passport and visa, Austria or India? That will probably dictate which tax treaty you can use.

If you have to pay the taxes, you can file Forms 1040NR-EZ and 8843 for both 2007 and 2008, plus file Form 9465 to set up a payment plan with the IRS, then pay it off like you would a car loan. They will charge you a fee of about $75 to set it up, then chanrge an annual interest rate of about 8%.

The Texas Tax Expert · May 14, 2009, 01:56 PM

I disagree with ATE that it depends on your passport.

On the other hand, I don't think using the Austrian treaty is of any benefit to you. It is much less generous than the India-US treaty and even though there is a 3 year provision, that's for students who receive support from outside the US. That is not likely to help you and I don't believe that the US-Austria treaty has a provision for researchers.

In actual fact you should probably never have been claiming the US-India treaty if you were actually an Austrian resident before coming to the US. If you've stayed beyond the 2 year period, you're out of luck anyway and will be taxed for the past two years.