Frequently asked Questions FAQs - Form 1040NR - Non Resident International student tax - F1 J1 H1B J1 TN visa taxes
ARTICLES

Frequently asked Questions FAQs - Form 1040NR - Non Resident International student tax - F1 J1 H1B J1 TN visa taxes

Frequently asked Questions FAQs - Non Resident Taxation - Form 1040NR - F1 J1 H1B H4 J1 visa taxes

Q#1: I arrived in the United States in 2005 under an H-1B visa. How do I file my tax return for 2006?

A: Since you were in country on January 1, 2006, and assuming you spend the entire year in the United States, you meet the Substantial Presence Test and qualify as a full-year resident. You will file as a resident alien, filing Form 1040, 1040A or 1040EZ. You must claim ALL income earned from all sources worldwide. You can claim the standard deduction and all deductions and credits available to U.S. citizens. However, to claim the Earned Income Credit, you must have a Social Security number that authorizes you to work within the United States. Further, to offset the foreign taxes you may have paid on foreign-based income, you can probably claim the Foreign Tax Credit (Form 1116).

 

Q#2: Same as Question #1, but my spouse will join me in the United States in June 2006. Can I claim him/her as a dependent?

A: No, you cannot claim him/her as a dependent. However, you can file jointly with him/her if he/she chooses to be treated as a resident alien. However, in doing so, neither one of you can claim any exemption from any tax treaty and you both must claim all worldwide income. Further, the spouse must fill out and sign Form W-7 and attach to the 2006 tax return to request an Individual Tax Identification Number (ITIN), mailing the return to the address on the W-7 form. Finally, you must attach a statement, signed by BOTH spouses, that contains:

  • A declaration that one spouse was a non-resident alien and the other spouse was either a U.S. citizen or a resident alien on the last day of 2006, and that you choose to be treated as U.S. residents for the entire tax year.
  • The name, address and identification number of each spouse (see notation about applying for the ITIN above).

 

Q#3: I am single and I entered the United States on February 1, 2006 on an H-1B visa. How should I file for 2006 if I stay in the United States for the rest of 2006?

A: Because you were a non-resident alien for the entire month of January, then moved to the United States, you are a dual-status alien and must file a dual-status return. You cannot file as a resident alien because you do NOT meet the residency requirements. In other words, if you are a non-resident alien for only ONE day, you cannot file as a resident alien. Because you will be in the United States for longer than 183 days and because you are single, you will meet the Substantial Presence Test and therefore CANNOT file as a non-resident alien.

 

Q#4: Same question as #3, but I am married and my spouse arrived on an H-4 visa. How should I file for 2006 if I stay in the United States for the rest of 2006?

A: As before, because you were a non-resident alien for the entire month of January, then moved to the United States, you are a dual-status alien and can file a dual-status return. However, because you are married, you have the option to file as a resident alien IF your spouse also chooses to file as a resident alien as well. You will have to claim all world-wide income, but the Foreign Tax Credit (Form 1116) is available if you paid taxes on that income to another government. This is likely a better option than filing as a dual-status alien, because you can file a joint return and claim the joint standard deduction. However, in doing so, neither one of you can claim any exemption from any tax treaty. Finally, you must attach a statement to your tax return, signed by BOTH spouses, that contains:

  • A declaration that you both qualify to make the First Year Choice, and that you choose to be treated as U.S. residents for the entire tax year.
  • The name, address and identification number of each spouse (see notation about applying for the ITIN above).

 

Q#5: I am single and entered the United States on August 2003 on a F-1 visa, then converted to H-1B status in March 2006. How should I file?

A: Your situation is similar to Question #3. Because you were under a F-1 visa, you are considered an “exempt” individual. Exempt individuals are treated as non-resident aliens while under the visa which puts them in their exempt status. Since you were a non-resident alien until March 2206, you are a dual-status alien and must file a dual-status return. You cannot file as a resident alien because you do NOT meet the residency requirements. In other words, if you are a non-resident alien for only ONE day, you cannot file as a resident alien. Because you will be in the United States for longer than 183 days and because you are single, you will meet the Substantial Presence Test and therefore CANNOT file as a non-resident alien.

 

 

Q#6: I am currently on a F-1 visa and have attended school at a local university since 2003. I worked as a graduate teaching assistant and earned about $15,000 for which I will get a W-2 with no Social Security and Medicare withheld. How should I file for 2006?

A: Since you are under a F-1 visa, you are considered an “exempt” individual. Exempt individuals are treated as non-resident aliens while under the visa which puts them in their exempt status, so you must file Form 1040NR or 1040NR-EZ. Depending on your country of origin, you may be eligible for tax treaty exemptions. See IRS Pub 901 for details. You must also file Form 8843 annually. You should mail it with your tax return. In those years you do not file a tax return, file the Form 8843 by itself.

 

Q#7: Same as question #6, except I arrived in country on my F-1 visa in January 2001. How should I file for 2006?

A: Normally, your F-1 visa would make you an “exempt” individual. However, there is a five-year time limit for the exemption granted to F-1 visa holders, so your exemption expired at the end of 2005. Because you are a student working for the university, you are still exempt from Social Security and Medicare taxes, but you will have to file as a resident alien (filing Form 1040, 1040A, or 1040EZ, whichever form you are eligible to file). In most cases, any tax treaty exemption you previously claimed no longer applies. You will, however, be able to claim all deductions and credits that any other U.S. citizen or resident alien can claim.

 

Q#8: I am a student on a F-1 visa. I arrived in the U.S. in 2002 and graduated in January 2006. I worked as a student assistant for a month, then went to an engineering firm on an Optional Practical Training (OPT) tour which will last until February 2007. I have noticed that the firm is withholding Social Security and Medicare taxes. I thought I was exempt from these taxes. Am I mistaken?

A: No, you are in fact still exempt from Social Security and Medicare taxes. Your OPT is considered an extension of your schooling. Contact your employer’s Human Resource and request they research your exempt status while requesting they refund the withheld Social Security and Medicare taxes. If they refuse, get the refusal in writing, preferably on company letterhead. You can request a refund of these taxes in 2007 by filing Form 843 along with the written refusal and other documents listed on page 46 of IRS Pub 519.

 

Q#9: While working for my employer on a H-1B visa, I did some contract work as a programmer, using my laptop while working from my apartment. When I got the check, they also sent me a Form 1099-MISC. How do I report this on my taxes?

A: Whether you file as a resident or dual-status alien, you must file Schedule C (to report the contract income from Form 1099-MISC) and Schedule SE (to calculate the self-employment tax). You should claim whatever deductible expenses you incurred while do this contract work on the Schedule C. You probably will be able to deduct at least a portion of the cost of your laptop computer. You also may be able to deduct some of the expenses incurred in your apartment, such as rent and utilities, if you used a portion of your apartment exclusively for this contract work. I would recommend you get professional tax help to prepare the return.

 

Q#10: I am a student on a F-1 visa, and I recently married another international student who is also on a F-1 visa. We expect to remain on our F-1 visas until sometime next year, and we both have paying student assistant positions. Can we file a joint tax return for 2006?

A: No; filing jointly is NOT a option for non-resident aliens. You must each file your own Form 1040NR or 1040NR-EZ, claiming whatever tax treaty exemption to which you are entitled.