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I am a married International student on F1 Visa in US. My spouse is here on a dependent VISA.

I applied for my tax return using form 1040NR with an ITIN application for my wife at the one of the IRS office in US. After a month my wife's ITIN application got rejected and my tax return was sent ahead to be processed as Single resident alien.

I got a notice from IRS that I owe them taxes, which is not the case. While processing the IRS officials removed the tax treaty Itemized deduction of $6300 saying it was not in the correct place. I mentioned it on line 38 of Form 1040NR. Where should I mention it and how do I update my tax return ?

  • A lot of times it's easiest to call them (800-829-1040) as a first step to resolving issues like this, if you have a local office that you've visited before, starting there might be easy too. – Hart CO Sep 7 '17 at 23:11
  • I tried calling and resolving the issue. But it seems that they are totally unaware of the situation and want me to go to local office and resubmit. The problem is the local office allows visits by appointment only. It takes almost a month to get the appointment. – Chirag Sanghvi Sep 8 '17 at 23:31
  • Apart from that have you ever filed form 1040NR before with tax treaty ? – Chirag Sanghvi Sep 8 '17 at 23:33
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First of all, if you are married, you cannot file as "Single" filing status. You can only file as "Married Filing Separately" (on the 1040NR this is called "Other married nonresident alien"; nonresident aliens cannot file as "Married Filing Jointly", so this is the only married option). Is that what you mean they processed it as?

The fact that you tried to put $6300 in Line 38 (itemized deductions) indicates that you were trying to claim the standard deduction, which is available to students under the US-India tax treaty. Is that what you were trying to do? If so, did you write "Standard Deduction Allowed Under U.S.-India Income Tax Treaty" on the dotted line on line 38, as instructed in Worksheet 5-1 in Publication 519?

Under the US-India tax treaty, students can claim an exemption for their spouse and dependents, as long as those spouse/dependents are not filing a tax return and cannot be claimed by someone else. Is that why your wife was applying for an ITIN? According to Publication 519, if you are doing this, you are supposed to list your spouse and dependents under Line 7c (dependents). Your spouse is not your dependent, but for the purposes of using this US-India tax treaty provision, you are supposed to list her under "dependents", and not check "spouse". Is that how you filled it out?

  • Yes. I followed all the things that you mentioned. But, as I said previously, my wife's ITIN application got rejected due to insufficient documentation, they started processing my return as single non-resident alien. After which they removed the standard deduction of $6300 under tax treaty. When I called them, they said that there nothing on line 38 and asked me to contact local IRS office. I have an appointment setup and will check with them. – Chirag Sanghvi Sep 10 '17 at 6:00

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