I have been in USA for about two and a half half years on F1 visa. In 2013 I was on at F1 and F1 OPT till 30 September 2013. After that I switch to H1B status. I am a nonresident alien for tax purposes. I am an Indian citizen. Am I eligible to claim US India tax treaty the benefits per Chapter 5 Pub 519 for 1040 NR (http://www.irs.gov/publications/p519/ch05.html)? The treaty would give me a standard deduction of $6100. I am not sure because its sites like sprintax on Glacier Tax Prep I not taking this into account then I am computing taxes using them. Is there a limit on the number of years for which I can claim treaty benefits?


There is a limit on how many years you can claim treaty benefits, and when you're on H1b - you're resident for tax purposes (except for the first year where you can usually choose not to be).

If you're a non-resident - you can always itemize, I do not know how "the treaty would give you an itemized deduction of $6100". What the Indo-US treaty may be able to give you in some cases is a standard (i.e.: not itemized) deduction, which is generally unavailable for non-residents.

Since you're specifically asking about the STANDARD deduction available to Indian students under the Indo-US treaty, then the answer for this specific question is NO. If for any part of the year you're in any status other than the one allowing the deduction under the treaty (i.e.: any status that is not F1/J1) - you cannot claim the standard deduction.

If you're a H1b filing as non-resident - you can only claim itemized deduction.

  • Thanks for your response. Here is a link to 1040 NR EZ irs.gov/pub/irs-pdf/f1040nre.pdf Per Page 8 of instructions irs.gov/pub/irs-pdf/i1040nre.pdf, Residents of India can claim standard deduction instead of Itemized Deduction. But as you can see in 1040NR EZ form there is no section for itemized deductions. (instructions for Line 11). Under what section should the $6100 go? – Rohit Banga Apr 6 '14 at 18:57
  • It is confusing in the 1040 NR EZ form that Line 6 though reserved for tax treaties is not used anywhere else in the form. Based on this international.uoregon.edu/isss/taxes/info/SPT/NonResident/…, we can fill $6100 in Line 11 but still seems odd that line 6 is not used anywhere. – Rohit Banga Apr 6 '14 at 19:19
  • Actually Line 6 does seem to be used in special cases, see Page 8 Itemized Deductions Worksheet irs.gov/pub/irs-pdf/i1040nre.pdf. But it seems there is an exception for Indian students. – Rohit Banga Apr 6 '14 at 19:23
  • 1040NR EZ is a subset of 1040NR. Instructions for filling 1040NR EZ are also a subset of instructions for filling 1040NR. 1040NR is used if you want to report more types of income. – Rohit Banga Apr 7 '14 at 3:48
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    Filling the full form will not solve the problem as I will have to specify the deduction in Itemized Deduction in the full form also. Also I just heard back from Glacier. They do not support treaty deductions when a student switches status to H1B. So that explains why the treaty deduction is not computed automatically. – Rohit Banga Apr 7 '14 at 3:55

protected by Chris W. Rea Jan 28 '16 at 23:51

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