I am an Indian citizen staying in the US as a J1 visa holder since August-2024. I filed my taxes in January for the yrar 2024. If I wish to invoke tax exemption under the US-India treaty, can I do it for my second year. And will the federal taxes paid for tax year 2025 can be refunded ?
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@adityain2003 , Namaste ji
1. What are you doing here in the USA --- I ask because J visa based exemption ( article 22 of US-India tax treaty ) is applicable ONLY to Profs./ Researchers etc. and with some conditions on type of research.
2. Generally this exemptions from US tax including application of "savings clause" is pretty much based on a two year term starting from the day the J-1 holder enters the US. From the language in the treaty and the technical explanation thereof, one probably cannot pick and choose which part of the two years to ask for exemption.
My ref. for this is US-India Tax Treaty --> PUB3434 (REV. 7-1999)
Is there more I can do for you ? You can either add to this thread or if you wish private answers you can PM me -- just NO PII ( Personally Identifiable Information).
Namaste ji
pk
Thank you for your reply. I am a post doc researcher
@adityain2003 , thank you for your answer to my questions. Namaste Aditya ji
(a) absent any contravening facts, from your post you appear to be a Non-Resident Alien (NRA). Therefore you need to file your return on form 1040-NR ( not supported by TurboTax --- need to use some service like SprinTax, your own school Foreign Student office etc.).
(b) If above is true and you have filed a form 1040, then you need to amend your return. This would mean filing a return using 1040-NR, a note explaining ( and including a copy of your original return--1040) that you had used the wrong form. On this 1040-NR, you have to recognize the US sourced income and then exclude this income with a comment such as " Exclude Per Article 22 of US-India tax treaty".
(c) Note that this exemption from tax is valid for two years from the date of entry and if your plan ( or high likelihood) of extension of stay past two years, then you are better off allowing the taxation of the income to proceed i.e. not assert article 22 conditions/benefits. This is because there is a claw back condition if employment/stay goes beyond 2 yrs. ( IMHO India uses "may" rather than "will" while US technical explanation kind of recognizes the "may" but does not quite clarify. Also I have not come across any case history one way or the other).
Is there more I can do for you ?
Thank you PK ji. Namaste
This is a big help
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