Tax treaty benefits

[rathi42]

Tax treaty benefits???

Hi All,

I am from India and I came to US in 2005. I had taken the benefits of the tax treaty for the year 2005 so I did not pay any tax on my income of year 2005. In 2006 I did not take the benefits of the treaty and all the federal and state taxes were deducted from my salary (i.e. I payed all the taxes for 2006 income for which I wll be filing form 1040NREZ this year). I had few questions.

1. Now I am supposed to pay the tax for my income of 2005. I am filing form 1040NREZ. On which line I should include the income from year 2005.

2. In 2005 no state taxes were withheld from my salary and I paid nothing, but still filed the state income tax return form. My question is wheather or not I have to pay the state income tax for 2005 also.

Your help is greatly appreciated.

Thaks in advance.

 

[jk0274]

Did you not file a tax return for 2005? I know you were on a treaty but you should still have filed a 2005 return along with the necessary forms as evidence that you are subject to a tax treaty and hence not paid any taxes. Therefore, I believe that, as you intend to restate your 2005 tax return but this time paying the taxes, you may need to file form 1040X (which is for both resident and nonresident taxpayers).
http://www.irs.gov/pub/irs-pdf/i1040x.pdf

However, please check with another source whether this is the proper method for individuals who are choosing to renounce a legal tax treaty benefit, as I am not a tax specialist.

As to your second question, and assuming that your state does recognize US tax treaties (not all states do by the way, even though it appears that your state does since you didn't pay in 2005), a state tax return is usually linked to a federal return, and the IRS does forward information from any tax return (and probably tax return amendments) to the state revenue service. Therefore, if you amend a federal return for any particular year, it is expected that you will amend the state return as well. Otherwise, the state may send you an inquiry.

 

[rathi42]

Hi

Thanks you so much for providing this useful information. I did file my tax return for 2005 with all the evidence. I guess all J-1 scholars who take the benefit of the tax treaty have to go through the same procedure.

Thanks once again.

 

[dremz]

Tax Filing

Hi, I have some questions regarding filing taxes. I'm sponsoring my mother for green card,should I claim her as a dependent while filing my taxes or not?

Thanks in advance

Did you not file a tax return for 2005? I know you were on a treaty but you should still have filed a 2005 return along with the necessary forms as evidence that you are subject to a tax treaty and hence not paid any taxes. Therefore, I believe that, as you intend to restate your 2005 tax return but this time paying the taxes, you may need to file form 1040X (which is for both resident and nonresident taxpayers).
http://www.irs.gov/pub/irs-pdf/i1040x.pdf

 

[jk0274]

Is your mother currently in the United States? The bottom line is that if she is not a US citizen or qualified "resident alien" (which you can be if you've lived in the US for a certain amount of time but depends on your status and visa), she cannot be claimed as a dependent.