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I am a student, and it is my first-year present in the United States. According to sources, I am eligible to claim exemption from federal withholding if the following two conditions are met:

You owed no federal income tax in the prior tax year, and

You expect to owe no federal income tax in the current tax year.

I expect to owe no federal income tax this year. However, I am unable to understand the first requirement. Since I was not in the US at all, do I satisfy the requirement of owing no federal income tax in the prior year?

If not, is there another way to claim a tax withholding exemption? My total income is less than the standard deduction.

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    Seems almost certain if you had no business dealings with US entities that could possibly be construed as employment.
    – Jon Custer
    Aug 1, 2023 at 14:21

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Since I was not in the US at all, do I satisfy the requirement of owing no federal income tax in the prior year?

If you were not a US tax resident and had no US-sourced or effectively connected income as a non-resident, then you owed no US Federal tax. Basically, if you didn't work in the US and had no business or investments in the US, you owed no tax.

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If you are a student on F, J, M, or Q status, you are generally a nonresident alien for the first 5 calendar years, because you are an "exempt individual" (days of presence exempt from the Substantial Presence Test) as a student unless you have already been an exempt individual for some part of 5 previous calendar years.

As a nonresident alien, Notice 1392 applies to your W-4, and at the end it says that you cannot claim exemption from withholding on your W-4 even if you meet the conditions:

Exempt from withholding. Do not claim that you are exempt from withholding in the space below Step 4(c) of Form W-4 (even if you meet both of the conditions to claim exemption from withholding listed in the instructions to the Form W-4).

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  • That applies to W-4. However, it is possible to claim such exemptions under Form 8233 for NRAs. For example, Article 21 of the US-India Tax Treaty states the following: "2. In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a student or business apprentice described in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the State which he is visiting." Aug 2, 2023 at 5:03

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