Tax Treaty for immigrant


Y

Yi Chen

I was on student visa F-1 from 2000 to 2003 and I benefit
from a tax treaty of $5000. For the years 2000, 2001, 2002 I
filed as non-resident alien.

I filed for family-based immigration in Febrary, 2003 and
got my green card in December. Should I file as "resident
alien" or "resident"? I can still benefit from the tax
treaty for 2003, is that correct?

Thanks,

Yi
 
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A

A.G. Kalman

Yi said:
I was on student visa F-1 from 2000 to 2003 and I benefit
from a tax treaty of $5000. For the years 2000, 2001, 2002 I
filed as non-resident alien.

I filed for family-based immigration in Febrary, 2003 and
got my green card in December. Should I file as "resident
alien" or "resident"? I can still benefit from the tax
treaty for 2003, is that correct?
You are a dual-status alien. I.e., nonresident alien for
the period that you were not a resident alien. Assuming
that your student visa was still current for most of the
year, you would not pass the substantial presence test.
Under the green card test, your first day of residency is
the first day you were a lawful permanent resident of the
U.S. All days prior to that date you are a nonresident alien
for tax purposes.

I'll assume the treaty you reference is the one with the
PRC. Therefore, the $5000 exclusion of personal compensation
as a student is available to you.

See IRS Pub 519, US Tax Guide for Aliens to understand how a
dual status alien files their tax return.

One last item, you said you filed for family-based
immigration. If you are married to a nonresident alien at
the end of the year, you both can make an election to be
treated as resident aliens for the entire tax year. As
such, you would no longer be dual-status and you would file
your tax returns just like any other US citizen or resident
alien. (This is also explained in Pub 519). You would
include your combined annual worldwide income on the tax
return. The tax treaty benefit would still be available for
2003 as the PRC-US tax treaty has a unique clause in Article
4.

You have to disclose that you are availing yourself of the
treaty benefit if you exclude any compensation on a resident
alien tax return (1040 or 1040A). See Form 8833.
 
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B

BigBill0716

Yi Chen said:
I was on student visa F-1 from 2000 to 2003 and I benefit
from a tax treaty of $5000. For the years 2000, 2001, 2002 I
filed as non-resident alien.

I filed for family-based immigration in Febrary, 2003 and
got my green card in December. Should I file as "resident
alien" or "resident"? I can still benefit from the tax
treaty for 2003, is that correct?
You can claim tax treaty benefits on a dual status return.
Your income would be allocated between the two periods and
the benefits claimed on the non resident (1040NR) attached
to the 1040 return.
 

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