topic Am I eligible for Article 21(2) deduction if I work full-time at a Tech company on OPT and STEM OPT? in Deductions & credits

Am I eligible for Article 21(2) deduction if I work full-time at a Tech company on OPT and STEM OPT?

vishwasjain2008 — Fri, 21 Feb 2025 21:41:22 GMT

Am I eligible for Article 21(2) deduction if I work full-time at a tech company on OPT and STEM OPT on an F1 visa?

The article mentions the word "training", and OPT & STEM OPT are both training, so I'm on the fence about whether a job outside the scope of research will be covered under this Article. Please help me with the same. Thank you!

Re: Am I eligible for Article 21(1) deduction if I work full-time at a Tech company on OPT and STEM OPT?

pk — Fri, 21 Feb 2025 21:09:47 GMT

@vishwasjain2008 , Namaste

(a) When did you enter the US with F-1 ? Was this your first or only entry ?

(b) Which country are you a citizen of ( India?) ? And you are therefore talking about US --XX country tax treaty --yes ?

I will circle back once I hear from you --yes ?

Namaste ji

Re: Am I eligible for Article 21(1) deduction if I work full-time at a Tech company on OPT and STEM OPT?

vishwasjain2008 — Fri, 21 Feb 2025 22:11:05 GMT

Thank you for your message @pk
Yes, I'm a citizen of India and I entered the USA for the first time in August 2021. Graduated in June 2022.

My OPT was from July 2022 - July 2023

My STEM OPT is from July 2023 - July 2025

Yes, I'm talking about the USA-India Tax treaty under Article 21(2).

If I'm eligible for this deduction I'm planning to file revised taxes for 2022 and 2023.

I'm yet to file taxes for 2024, which I'll do once I'm 100% sure that I'm eligible for it.

Re: Am I eligible for Article 21(1) deduction if I work full-time at a Tech company on OPT and STEM OPT?

pk — Sat, 22 Feb 2025 15:32:19 GMT

@vishwasjain2008 so you are talking about monies received by you for work under EAD .

My reading and understanding of the article 21 of US-India Tax treaty concerns / covers ONLKY monies received from outside of the US while an Indian citizen is resident in the US for the sole purpose of training/ education etc. ( on F, Q or J visa ).

This is meant to protect an eligible ( as defined above ) person from being taxed by US for receiving funds for living expenses or otherwise ( say a stipend , scholarship etc. ) while the person's tax status changes from NRA to Resident for tax purposes or is Resident for Tax purposes ( because he/she is outside the "Exempt " rules.

I quote the article below ( I have made appropriate changes to match your situation ---

1. A student or business apprentice who is or was a resident of one of ~~the Contracting States~~ India
immediately before visiting ~~the other Contracting State~~ USA` and who is present in ~~that other State~~ USA principally
for the purpose of his education or training shall be exempt from tax in ~~that other State~~ USA, on payments
which arise outside ~~that other State~~ USA for the purposes of his maintenance, education or training.
2. In respect of grants, scholarships and remuneration from employment not covered by paragraph
1, a student or business apprentice described in paragraph 1 shall, in addition, be entitled during such
education or training to the same exemptions, reliefs or reductions in respect of taxes available to
residents of the State which he is visiting.
3. The benefits of this Article shall extend only for such period of time as may be reasonable or
customarily required to complete the education or training undertaken.

Note that except for this treaty relief and in general, EAD based incomes are treated as US sourced income and taxed as such..

The only other relief is that you are not subject to FICA taxes ( Social Security & Medicare ).

You use the term employed by " private employer ". However, generally OPT and/or STEM OPT etc. require the "employer" to meet certain eligibility requirements ( generally called out on the EAD ) -- please make sure that your "private" employer is an eligible employer / training entity.

Thus I see no need for you to amend your earlier returns to assert US-India Tax treaty article 21 benefits.

Is there more I can do for you ? ( You can add to this thread or PM me -- no PII , Personally Identifiable Information.

Namaste ji