Tax filing for status change - from nonresident F1 to resident H1-B

Question

I have found this question is discussed in several places. I especially found this answer How do I file 2015 taxes for F-1 OPT till Sept 30, 2015 to H-1B from Oct 1, 2015? useful as my situation is similar.

I am F-1 student, single, didn't complete 5 years in the US. (I know F1 student status is exempt for 5 years for substantial present test.) In October 2017, my status changed from F-1 to H1-B. Since I was in the US for 92 days after becoming H1B (October - December 2017), I do not qualify substantial present test, and so can file taxes as nonresident alien (Forms 1040-NREZ and 8843 as I filed in previous years).

My questions are:

• My employer deducted social security and medicare taxes. If I file taxes entire year as nonresident alien, will it make any difference in taxes I owe? I think tax rates for F1 and H1B may be different. So, will it mean that I was actually owing more taxes under H1B, but paid less taxes as I filed as nonresident alien?
• There is a tax treaty with my country and I used itemized deduction before. Can I use the same deduction for my F1 period January - September 2017?
• Can I file state taxes as nonresident alien for entire year 2017? I was in the same state for the entire year.

I read about dual tax status in the same answer, but I am not going for it as it sounds complicated to me. I will appreciate if someone can give insights.

Answer 1

• My employer deducted social security and medicare taxes. If I file taxes entire year as nonresident alien, will it make any difference in taxes I owe? I think tax rates for F1 and H1B may be different. So, will it mean that I was actually owing more taxes under H1B, but paid less taxes as I filed as nonresident alien?

Income tax rates are the same for F1 and H1b. For FICA tax (Social Security tax and Medicare tax), nonresident aliens in certain statuses like F1 are exempt from FICA tax, whereas nonresident aliens in other statuses (like H1b) and resident aliens are subject to FICA tax. Deducting FICA tax is the employer's responsibility.

• There is a tax treaty with my country and I used itemized deduction before. Can I use the same deduction for my F1 period January - September 2017?

Anyone can use itemized deductions. Do you mean standard deduction?

• Can I file state taxes as nonresident alien for entire year 2017? I was in the same state for the entire year.

State tax definitions of "resident" and "nonresident" are different from the "resident alien"/"nonresident alien" for federal taxes. You need to look at your particular state's definition. Generally, if you live in the state, you are a resident. (Though whether you are a resident for state tax purposes only matters if you have income from outside that state, which would be taxed by the state if you are resident and not otherwise. Income from the state is always taxed by that state no matter if you are resident or not.)