Refund of federal withheld for J1 India for Resident Alien

[aanshuman5]

I was employed as a postdoctoral fellow with J1 visa from 2022 to 2024. I returned India before the completion of 2-year stay in the US.  However, I didn't avail treaty benefit for waiver of federal taxes as I was not sure regarding my return. However, for the current year I have to file as resident alien and want to claim the treaty benefits. Please suggest how and where to file for tax return.

[pk]

@aanshuman5 , from your post what I get :

(a) Entered 2022  with J visa and   left the USA  before  completion of 2 years ----Can you provide actual dates of entry and  exit ---- (J-1s two year  tax exemption).  Also  did your visa terminate   or what?

(b) Citizen  of India 

(c)  Have you then returned back to US for the year 2024  or what ?   And if so with which visa ?     When exactly ?  This is because you  refer to "returned India before the completion of 2-year stay in the US"  and then you say "for the current year I have to file as resident alien".  I am confused.

While I await  clarification from you , generally   ( and in connection with  US-India Tax  treaty article 22 ) you have to file an amended   return  for each year you wish  change.  If your original returns were on 1040-NR then the amended returns would also be  the same type  in addition to the 1040-X.

Note -- TurboTax does not support form 1040-NR  -- suggest using service like SprinTax, Tax Professional or your School Foreign Student's Services or similar.

My Ref:   Amended return frequently asked questions | Internal Revenue Service

Is there more I can do for you ?

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

Namaste ji

pk

[aanshuman5]

Yes I am an Indian citizen, entered USA in October 2022 and left in August 2024 with J1 visa as I joined a job in India. I visited US in the month of December 2024 again for 7days with B1 visa. 

With these timelines still I am being classified as resident alien to file tax for the year 2024. I want to apply waiver for US-India treaty tax (already deducted from my salary during stay in US) for the year 2024 for now. 

Please suggest in this reagard.

[DaveF1006]

Yes, your exemption period ended Dec 31, 2023 so you would be a resident alien in 2024.  You can file as a Dual-Status citizen, thus using the treaty benefits to exclude your Indian income from Aug-Dec. To file. To file as a dual-status citizen, you need to purchase TurboTax software.

• If you’re a resident alien who gives up residence in the U.S. during the year and are not a U.S. resident on the last day of the tax year, Form 1040-NR is your main return . Write Dual-Status Return across the top of the return. Attach an “informational statement” to your return to show the income for the part of the year you’re a resident. You can use Form 1040 as the statement, but be sure to write Dual-Status Statement across the top.

1. Fill out your 1040-NR. Print it.
2. Start filling out your 1040.
3. Open the 1040/1040SR Worksheet in Forms mode when you have completed the interview section of the 1040.
4. Scroll down to the Line 17z - Other Taxes Smart Worksheet on Schedule 2 Part II, Line 17(z) and enter the federal tax withheld from your 1040-NR.
5. Finish filling out your 1040. Choose to file by mail.
6. Print and sign your 1040. Write Dual-status Return at the top of the form.
7. Mail your 1040 and 1040-NR together

If you aren’t enclosing a payment, mail your return and statement to: 

Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215

If you’re enclosing a payment, mail your return and statement to: 

Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303

[pk]

@aanshuman5  no matter how you go about doing this, it is messy.

(a) For  Tax year 2022 ---   You were an NRA and on exempt status  for this calendar year .   

You have to file an amended return to recoup the taxes already paid and your return filed / processed.  This would  include  1. an updated / amended  1040-NR  including schedule-OI, a form 1040-X for the year 2022, a copy of the original filed/accepted  1040-NR -- Mailed in.   The Schedule  OI,  exclusion  amount is the  W-2 income amount and the memo is " article 22 of  US-India  Tax Treaty "  .     The 1040-X  "reason for amendment "  is  Correction for non-exemption  of   excludable income per US-India Tax Treaty article 22.

Note unless you have a valid  US bank account, you will get a  check from the IRS  which must be cashed  somewhere.

(b) For the Tax Year 2023 -- same as above

(c) For the tax year 2024 --- you are no longer on exempt status. Thus you file as a Resident for Tax purposes.  However, because you left the country  in August 2024  ( J-1 terminated ), you are better off being a Dual Status.  So you file a form 1040 covering the period 01/01/2024 through the day you left the USA ( August, xx, 2024 )  and a form 1040-NR covering any US sourced income post your departure in August '24.  Note  ( because  TurboTax does not support  1040-NR) , you have  print/date/sign form 1040  and file by mail.    You  write across the top of form 1040 " DUAL  STATUS FILER", attach the form 1040-NR -- even if it is  empty except for your personal details .  Also note that on this 1040  ( because you are eligible to exclude  the wages from your  J-1 job) , you have to include an "other" income with a negative  income equal to your W-2 Box -1 -- thus  excluding all your income from research/teaching.  The memo on the "negative" other income should say "Excluded per Article 22 of US-India Tax Treaty "

Because of all these complications , you may want to consider  the services of a qualified tax professional ( one whom is familiar  with international taxation and particularly with US-India tax treaty vis-a-vis J1 Researcher.

Does this make sense ?

Is there more I can do for you ?

Namaste ji

pk

[aanshuman5]

Thank you for your response.

I would like to know if I can file my taxes using the standard deduction and simply forego any refund that may be due from the taxes that were withheld from my income. Is it possible to do so without claiming the refund?

Additionally, my spouse is currently employed in the United States. If we choose to file our taxes as "Married Filing Separately" (MFS) and I decide not to claim any tax treaty benefits, would that allow us to file as resident aliens  for tax purposes?

[aanshuman5]

Thank you for your response.

I would like to know if I can file my taxes using the standard deduction and simply forego any refund that may be due from the taxes that were withheld from my income. Is it possible to do so without claiming the refund?

Additionally, my spouse is currently employed in the United States. If we choose to file our taxes as "Married Filing Separately" (MFS) and I decide not to claim any tax treaty benefits, would that allow us to file as resident aliens  for tax purposes?

[DaveF1006]

Yes, you can file as a  resident alien in 2024 and claim the Standard Deduction.  There's no provision, though for not claiming your refund unless you are trying to make amends for the past. If this is the case, the only way you can make amends is by amending your previous tax returns as PK mentions.

In your second question, you can file separately or jointly if you wish to be treated as resident aliens for tax reporting purposes. If this is the case, then Married Filing Jointly would give you a much better tax return. There is no advantage to File separately in this case.

If you wish to amend your prior year's tax returns, you would need to contact Sprint Tax here. TurboTax does not prepare or amend 1040 NR returns.

[aanshuman5]

Thank you for your prompt response. 

Please note I (We) wish to file the return for 2024 (not amended).

Since my spouse is currently residing in the U.S., can she file jointly through TurboTax (on behalf of both of us) and submit our tax return electronically? 

I was not physically present in the U.S. on the last day of 2024 (left the US prior to that i.e., J1 terminated). Would that impact our ability to e-file, or would either of us be required to mail any documents?

[pk]

@aanshuman5 , having gone over the whole thread and  agreeing with the suggestions/comments/response by my colleague @DaveF1006 , I am not quite clear as to your aim in this whole  situation.  So I will restate/clarify  what I understand it to be :

 (a) For the tax years 2022, 2023  you  did not claim treaty benefits  (  No US taxation on US sourced income for two years  -- duration not calendar ).   Therefore  you can indeed amend your filed returns for the  tax years 2022 and 2023.   Note this has nothing to do with  tax year 2024-- you have not filed that return yet.  There is no issue  on the mechanism  for filing the amended return  -- both @DaveF1006  and I have covered this ( i.e.  you have to use a service  that supports 1040-NR )

(b)  Assuming that we all agree  that you were a Resident for Tax purposes for tax year 2024   till your exit from USA and  with the new wrinkle that your spouse is in the US for the tax year 2024 on a work vise  ( please confirm that she is on work visa and that she is a resident for tax purposes  -- at this point , we know nothing about that aspect :(

              1.  For MFJ filing  --

                              A)  your spouse must be a resident for the tax year 2024 i.e. meet the  SPT by the end of the year.

                              B) you  must be a Resident for the whole year i.e.  expose your Indian income to US taxes   ( even though  you may be able  to claim Foreign Tax home and thereby exclude Indian income or Foreign Tax credit / deduction to mitigate the tax bite )

                              C)  The Standard deduction is iffy unless you each meet  residence in the USA for the whole calendar year ( for you it is true even with a foreign tax home ; for wife -- we have no details ).   -- this restriction is true for Single filer but I do not have a the statute language or case law to  prove this  -- it is a  logical  extension however.

                     2.   For MFS filing :

 I do not understand the  question.   Unless you are talking about the restriction that  both spouses must use the  type of deduction.   I have to research this  -- because  once you become an NRA i.e. your dual status forces you to use itemized  and therefore to  burden your spouse  with the same requirement seems  unfair I if she is otherwise  eligible to use standard deduction ).  I need to spend a little time on this -- there is probably no case law support either way.

Have I missed something in this ?

pk

[pk]

@aanshuman5  understand the issue.  Please see my earlier / in the mean time response  -- sorry for the delay

pk