US india tax treaty on F1 H1b

[DS30]

so your F-1 visa qualifies you for the treaty for the part of the year you were a student under F-1

[DS30]

Since I cannot see Form 8833 and how Sprintax applied the treaty exemption and since Sprintax works with 1040NR returns, you need to ask them any further questions you have about why they are allowing any treaty exemption (if they actually are) for the period after you because H1B.

[ruturaj1989]

I tried asking them they are firm on that even when I am on H1B I am eligible for "INDIA, Standard Deduction Allowed Under U.S. - India Tax Treaty 21(2)". I came here for the second opinion as I saw a few places that I won't be eligible. I really appreciate your help and I can provide more information if needed? (Form 8833 has All questions in Part I answered and 11-13 in part III answered. The tax treaty is applied on line 11 Itemized deductions (see instructions) Standard Deduction Allowed Under U.S. - India Tax Treaty of 6350. In the description it is"INDIA, Standard Deduction Allowed Under U.S. - India Tax Treaty 21(2)").

[DS30]

So how you are qualifying under the 21(2) paragraph of the India- US income tax treaty is you were considered a student under F-1. So payments received under both visa classes (F-1) only will be exempt.

[ruturaj1989]

I have been trying to find out the meaning of "business apprentice" from IRS, I couldn't. Where can I find if H1B as considered as an apprentice? Since the definition of an apprentice is "a person who is learning a trade from a skilled employer, having agreed to work for a fixed period at low wages." while H1B is supposed to be a highly skilled employee.

[bine22]

H1B is not considered an apprentice.

[nirajgoel]

Hi

I have a similar situation Was on F1 till 30th spe 2019 and then on H1 Oct1st 2019 onwards. filing as Single individual.

1. If I choose to file as non-resident, what benefits/deductions I get due to India-US tax treaty ?

2. My understanding of the 2nd option is :  Wait till I pass the significant presence test to file the returns (I file an extension and pay any taxes I owe to IRS before deadline (April 15,2020)). Once I meed the resident (for tax) status, I use the First year choice in-order to file as resident. In this option, I will be able to use the standard deduction of $12,200. 

Is this understanding correct ? Are there any cons of 2nd option over 1st ?

[nirajgoel]

@rbh9982  @DS30  @ruturaj1989 

Hi

I have a similar situation Was on F1 till 30th sep 2019 and then on H1 Oct1st 2019 onwards. filing as Single individual.

1. If I choose to file as non-resident, what benefits/deductions I get due to India-US tax treaty ?

2. My understanding of the 2nd option is :  Wait till I pass the significant presence test to file the returns (I file an extension and pay any taxes I owe to IRS before deadline (April 15,2020)). Once I meed the resident (for tax) status, I use the First year choice in-order to file as resident. In this option, I will be able to use the standard deduction of $12,200. 

Is this understanding correct ? Are there any cons of 2nd option over 1st ?

[sbbyl29]

@rbh9982  @DS30  @ruturaj1989  @nirajgoel 
How were you able to resolve this?

[anshuv99]

AFAIK you can't claim standard deduction as a dual resident. You can only claim Itemized deduction. I don't see a point in going with a dual resident. As a non-resident from India allows me 12,400$ standard deduction which is significantly higher than the itemized deduction I am getting as a dual-status.

[marmik3737]

Hello,

Did you finally filed as non resident alien and claimed the stadard deduction for the tax year you got visa status change from f1 to h1b?

if yes, did it cause you any inconvenience down the road till now?

Please reply as soon as possible. Thanks in advance for the help!

Thanks,

Marmik

[ErnieS0]

The nonresident tax form, Form 11040NR, does not have an option to claim a standard deduction unless you are a student or business apprentice from India.

Nonresidents, with the exception below, cannot claim a standard deduction. If you switched from F1 to H1B and qualified as a U.S. tax resident, then you would file as a resident and would be eligible to claim the standard deduction.

Standard deduction.

Nonresident aliens cannot claim the standard deduction. However, there is a special rule, described next, for certain nonresident aliens from India.

Students and business apprentices from India.

A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty. You can claim the standard deduction, provided you do not claim itemized deductions.

Use Worksheet 5-1 to figure your standard deduction for 2022. If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction.

See Standard deduction.

In any case, TurboTax does not support non-resident returns. Contact Sprintax.com.

@marmik3737