Ok, a guy from a college asked me a question about tax and I was unsure. Here it is:

1. What are the benefits of filing taxes as a non-resident vs. resident? I told him that you get higher deductions as a  resident alien but you will have to pay social security and medicare taxes. But, how much benefit can someone going to a college can get from that?
2. How much can they benefit by claiming to be non-residents in OPT period? I guess they will save more during this period by claiming to be non-residents?
3. What are the standard deductions these college kids can take this year?

Thx.

 I came to know that you can't file as resident before 183 days of stay in the US. For those who came in Fall 2007, its non-resident.

Regarding deduction (State :MA):

Even if you have full assistantship (of range $20000-$25000 per year), you will not get more than $350 including both Federal and MA state tax refund. Not much but its law, you have to fill the tax return if you earning legally.

If you are here for more than 5 years you must file as a resident for tax purposes.

I am taking about those who came in Fall 2007 only.

My question was about those who do qualify as residents for tax purposes but who can choose to be non-residents based on their F-1 visa status and those who have not yet applied for H1B.

I am not sure about that because I don't fall under that category. But one of my friend who is here since 1.5 years filed residential tax return. According to him, you will get more refund as a resident than as a non-resident.

Thanks

Here is the answer to ur questions.

 

Regardless of whether ur resident or non resident,

standard ded including personal exemption: for single is 8750, meaning if u make this or less than this then u will get all federal tax back, state limitations are different.

if u r in OPT-no ssn or medicare tax

if u r in h1b, greencard or us citizen=pay all taxes

If u r here in the usa in nonimmigrant visa for less than 5 yrs=file 1040 NR , that is the only rule.

183 days rule might be for MA ...this might not even be for nonresident, it might be for us citizens & residents allien ...can't help here ..not fom MA

183 days rule that doesnot apply to any federal tax. only 5 yr rule.

Most of the foreign students file 1040 EZ or 1040 eventhough they r here for one semester..i personally do not suggest , my professional integrity, but ppl get more refunds for filing as resident cauz they get tuition credits as mentioned below.

 meaning u can deduct tuition fees and get tutiion tax credits. ( only if u paid for it, if u r in scholarship then u did not pay for it so u can't get it back, mind u some scholarship are not tax exempt meaning u r required to pay taxes on that)...this is tax if there are 100 rules then there are 101 exceptions..don't get into it unless u want to ...

Hope credit upto $1650 for first 2 yrs & lifetime learning up to $2000 per year after 2 yrs of postsecondary school.

These credits are not refundable so u can't get the money back unless u paid tax. u can only reduce ur tax liability..The general concept of "geting back" is misleading....

reminds me of newton's 3rd law of motion: every action has equal N opposite reaction.

if ur money caused some action, u will get it back through some tax reaction......no action no reaction...

have fun...

 

 

 

From what I know, I think it is better to file as non-residents because you would then be exempt from social security and medicare taxes which are around 6% and 2% respectively.

Anthony,
Standard deductions are only for residents or non-residents from those countries that have special tax treaty with USA(like India). F-1 students can only claim an exemption of 3400. Check your facts on this one. In addition, you have to pay social security and medicare if you file as a resident irrespective of whether you are in OPT or not. Good thing is, when you are in OPT, you can still claim to be non-resident as long as you have not applied for H1B or other status change with an intent to immigrate on a permanent basis and if you have not been here for more than 5 calendar years.
These points are based on what I read on IRS site.

 

Its not better, you are required to file as NR, this is what i suggested, if u are here for less than 5 yrs.

But I know for a fact 99% of the students file as residents. Just info. for u!!

Watever u r saying in ur post, read my post carefully, i summarized that clearly there.

In regards to exemption N deduction, there has been new exceptions added to the list, who can claim or not.

For your reference, some of the rules overlap each other N they are too many exceptions that are not listed in IRS site. Recommendation: File your tax using software, it will automatically pick up the standard deduction and exemptions for you when u choose the right form.