A different scenario here: My first entry to the USA was on H1B. I changed to F1 after few years. Based on substantial presence test, being an exempt individual for first 5 years on student visa, I am a non-resident alien for tax. Can I claim standardized deduction based on US-India tax treaty as I am a student? Or is there any criteria preventing me from claiming it as I came to USA for work initially? Note. Until I came to the USA for work, I was a resident of India.
I was on H1 from 2014 to 2021. Starting 2022, I am in F1.
Yes. since you are in the five-year exemption period, you are eligible to claim a Standard Deduction under the provisions of the US/India tax treaty under Article 21(2).
This shouldn't interfere you receiving the deduction as long as this is your first F-1 student exemption period. Contact Sprint Tax for further information here.
@anandakrishnan-m , having read through this thread and generally agreeing with my colleague @DaveF1006 , I still am troubled -- the scenario as I understand is
(a) You entered US with H-1B in 2014
(b) there was an adjustment of status in 2022 rom H-1B to F-1
(c) For 2014 through 2021 and probably 2022 ( assuming you went back to school in Sept of 2022 & status adj. in latter part of the year ) you filed 1040.
(d) Thus from xx/xx/2022 onwards you are exempt from counting days present for purposes of SPT.
While article 21 of US-India tax treaty, requires students with Indian residency ( prior to entering US for educational/training purposes) be given the same deductions etc. as a US citizen/immigrant student, it does not define what is "immediately prior to " -- i.e. is it three months, a year prior or what .
So what happens , as in this case a student of Indian origin / citizen has been living in the USA for a years and without exiting the country becomes a student with F-1 -- does he/she get the same rights as a student whom has just entered the country for the sole purpose of learning/training etc.?
In the technical explanation I find this : referring to article 21
. Paragraph 4 provides that, for purposes of this Article, an individual shall be deemed to be a resident of a Contracting State if he is resident in that Contracting State in the taxable year in which he visits the other Contracting State or in the immediately preceding taxable year. Thus, a student visiting the United States from India is considered to be a resident of India if he is so resident in the year he arrives in the United States or in the year immediately preceding his arrival in the United States.
I have underlined the text that is applicable here. Based on this and only this it seems that a student whom has not gone back to India to satisfy "resident of" requirement , cannot take advantage of this article i.e. article 21 para 2, because he./she was not a resident of India immediately prior to starting his/her schooling. This would mean that the student would be treated as any other foreign student filing a 1040-NR and having to use itemized deduction. What I don't know is if this even matters .
pk
Thanks for your response. To clarify, I exited the country in Dec, 2021 and entered on F1 visa in Jan, 2022. I am not sure if that changes anything. I am filing through a CPA and will post here when I find an answer to this situation.
@anandakrishnan-m , if you exited the country and entered with F-1 , then obviously the issue I brought up is not applicable . Your earlier post did not articulate that you had entered the country with F-1. Or did I miss that .