Can I still claim tax treaty benefit in a year that my status changed from F-1 to H-1B?

[freegator]

I am a resident alien for tax purposes for the entire year of 2023. In the first part of 2023, I was an F-1 student and the stipend as a research assistant at my university was my only source of income. Then I started a full-time job at a company on CPT and I continued working on OPT after my graduation. Later in 2023, my status changed to H-1B.

I assume I would have been eligible to claim the benefit of US-China Tax Treaty according to its Article 20c and exclude $5,000 from my income as a research assistant at my university if I were an F-1 student for the entire 2023 and only worked as a research assistant. However, as I later worked full-time on CPT/OPT off-campus and then changed status to H-1B, will those facts make me ineligible to claim the $5,000 exemption? If I am eligible, how do I make it very clear that I am excluding the $5,000 only from the part of my income when I was a research assistant at my university, but not from my full-time job later?

[Vanessa A]

 I assume I would have been eligible to claim the benefit of US-China Tax Treaty according to its Article 20c and exclude $5,000 from my income as a research assistant at my university if I were an F-1 student for the entire 2023 and only worked as a research assistant. According to Pub 901, "An individual is entitled to this exemption only for the time reasonably necessary to complete the education or training"  So, this means that during the time you were still a student, you would be able to claim the exemption for.  So, if you earned $5,000 or more as a research assistant DURING the time you were a student, you would still be able to claim the US China Tax Treaty exemption.  If you earned less than that during that time, your exemption would be limited to the amount you earned WHILE a student. 

 However, as I later worked full-time on CPT/OPT off-campus and then changed status to H-1B, will those facts make me ineligible to claim the $5,000 exemption?  Since you are and will be present in the US for more than 183 days, you would not be eligible for the other tax treaties.  Changing to the H1-B visa after you graduated does not change your ability to claim this exemption. 

 If I am eligible, how do I make it very clear that I am excluding the $5,000 only from the part of my income when I was a research assistant at my university, but not from my full-time job later?  On line 6 of form 8833, you will need to explain your situation and when you graduated and that you are excluding the $5,000 from your income while a student and covered under the treaty. 

TurboTax does not handle form 8833 so you will need to print and mail your return and attach form 8833.  To do this, you will need to remove the $5,000 in Treaty Exempt income by selecting the following

1. Income
2. Less Common Income
3. Miscellaneous Income
4. Other Reportable Income
5. Answer Yes to Any Other Taxable Income
6. Enter the description such as US China Tax Treaty Student 
7. Enter the amount you are claiming as a negative number. 
8. Continue through your return.  
9. Print and mail your return attaching form 8833 to the address listed on the instructions that print with TurboTax

[freegator]

Thanks @Vanessa A for the detailed answer and outlining the steps! 

Just curious, if someone has the status of an F-1 student for the entirety of 2023 and also a resident alien for tax purposes the entire year, but worked off-campus full-time for a company on CPT/OPT, would they still be able to claim the $5000 exemption? Does the tax treaty or some other tax codes require the exemption to be only applied to income from on-campus employment (such as a university research/teaching assistant)?

[DaveF1006]

If you are still a student in good standing, you may use the treaty benefits to claim the exemption. This is not limited to on-campus employment.

@freegator