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One of my friend first entered to US from Bangladesh on August 2017 in F2 status and here is the tax treaty between US and Bangladesh

He was in F2 status in US part year from Jan 01 to May 28, 2018 (148 days). Then he left US on May 28 and changed status to F1 and reentered to US again on August 08 and stayed throughout the year in F1 status (Aug 08-Dec 31 2018,146 days).

Is he eligible for the Tax treaty exemptions? He received a form 1042-S that shows that he has income from Fellowship and according to the tax treaty between US and Bangladesh, he can claim some exemption on that income.

GLACIER is not allowing him the treaty exemption when he puts his information about F2 status. But as far as I know he is an Exempt individual for first 5 years if he had an F visa status whether it was F2 or F1.

Is there any provision that says if he changed his visa status from F2 to F1 he can not claim tax treaty any more?

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Some people believed that in order to take advantage of tax treaty provisions that required you to be a resident of the other country before coming to the US, that it means you must have been in that country for at least a year right before coming to the US in the status that qualifies for the tax treaty provision. In your case, you only went back to the country for 2 months, and before that you were in a status that didn't qualify for the tax treaty provision.

However, there was an IRS opinion that said that someone from China who was first in the US as an F1 student, who then did a Change of Status to a J1 teacher/researcher, was eligible for the tax treaty provision for teacher/researcher despite not having been back to China for one year between their F1 and J1 statuses. The opinion relied on the language of the particular article of the US-China tax treaty, which required that the person "is, or immediately before visiting a Contracting State was, a resident of the other Contracting State" (which this person was, before coming to the US on F1), and that the person "is temporarily present in the first-mentioned Contracting State for the primary purpose of teaching ..." (which the person was), without explicitly requiring that the person was a resident of the other state immediately before teaching/researching in the US.

Article 21 paragraph 2 of the US-Bangladesh tax treaty, which is the section that deals with tax exemption for students, contains the same language, e.g. that the person "was a resident of a Contracting State immediately before visiting the other Contracting State" (which you were, before you came to the US on F2) and that the person "is temporarily present in that other State for the primary purpose of ..." (which you are) without requiring that the person be a resident of the other state immediately before being a student in the US. So I think the logic of that opinion should apply equally to the US-Bangladesh tax treaty exemption for students.

There are some differences between your case and the one in the opinion, e.g. you did go back to Bangladesh for a short period of time, whereas the person in the opinion did a Change of Status in the US without going back, but I think that, logically, it shouldn't be harder to claim the tax treaty exemption for someone who has gone back to the country for a short time than for someone who didn't go back at all. I am not sure how you would get GLACIER to allow it however.

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