Ask Experts Questions for FREE Help !
    NoLo1234's Avatar
    NoLo1234 Posts: 2, Reputation: 1
    New Member

    Aug 23, 2007, 01:24 PM
    Whether it is a taxable interest income since the principle came from other country
    Q1: My mom from Hong Kong gave me $37,000 to deposit to my US bank, the original purposes was to pay my tuition in US college. I ended up getting a scholarship, so I had the money on CD and earn est. $1500 interest in a US bank in 2007. Would this interest counted as taxable income while I am using my OPT? My OPT starting from 10/3/2006, and I will change my status to H1 on 10/1/2007.

    Q2: I am still confused about "First Year Choices," does that mean I can choose between 1040NR and 1040 for 2007 (the year I have status changed from F-1 to H1)?

    Q3: When a student holding F-1 visa and stay in USA for more than 5 years, do they automatically consider as resident status and subject to Social security and medicare taxes on their income?

    Q4: If the F-1 Visa is effective on 12/1/2002, does it still count as a year toward that 5 years limitation for resident status?

    This is my first time ask a question, I hope I am not confusing.
    Thanks a bunch!!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert

    Aug 24, 2007, 02:04 PM
    Q1: No, as a non-resident alien, that interest is actually tax-free.

    Q2: No, the First Year Choice is actually a choice between filing as a non-resident alien or as a dual-status alien. Now, normally, it makes no difference tax-wise which was you file, and filing as a non-resident alien is a LOT easier. If, however, you are married, THEN you can file as a resident alien.

    Q3: Yes.

    Q4: Unfortunately, you must count ALL of 2002 towards the five-year rule. Hence, if you arrived in the U.S. ANYTIME in 2002 on a F-1 visa and spent ANY part of each successive year un the U.S. then, for 2007, you MUST file as a resident alien. You WILL be liable for Social Security and Medicare taxes.

    If you have not already shared this information with your employer, you have a legal obligation to tell him immediately so that he/she canm begin withholding these taxes from your pay! Sorry!

    BTW, if Q4 makes you a resident alien, then Q2 does NOT apply to you, and the interest earned in Q1 IS fully taxable in 2007 (but not in 2006).
    NoLo1234's Avatar
    NoLo1234 Posts: 2, Reputation: 1
    New Member

    Aug 27, 2007, 06:22 AM
    Thanks a lot! That's very clear.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert

    Aug 27, 2007, 10:19 AM
    Glad to help!

Not your question? Ask your question View similar questions


Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.

Check out some similar questions!

Income is taxable or not [ 1 Answers ]

The amount that we get as per diem allowance in us is non taxable in us, if this amount anyone takes back to india, is it taxable there or not.

Taxable income [ 4 Answers ]

Are employee cell phone reimbursements considered taxable income

Compute taxable income [ 2 Answers ]

Would like to know how to compute taxable income

Compute taxable income [ 0 Answers ]

Hi, help me please Morgan and Maggie are married and have two dependent children. They also fully support Mary's mother who lives with them and has no income. Their 2006 tax and other related information is as follows: Total salaries $110,000...

Taxable Interest (f1 To H1b In Oct) [ 3 Answers ]

Dear Atlanta Expert and other friends, Thank you for this website and your contribution. I have question regarding taxable interest. On October 1, 2005, my status was change from F1 to H1B, As per the sticky note, I should be filling the 1040 NR + 8843. My question is about taxable...

View more questions Search