Is all the income for an F1 student from India tax exempt under article 21(2)?
Hi, I'm an F-1 student from India in my 4th year. In the previous years I have claimed the standard deduction and personal exemption in my 1040NR EZ forms and have received a partial refund of the total taxes withheld. I know a friend who has claimed that the entire earnings for the year (~20K) is exempt under article 21(2) and has received all the federal tax withheld. Is this legal? Can I claim 100% tax exemption too? I get compensated for teaching as a TA in my school. Thanks in advance.
United States - 1 Answers
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This is what article 21(2) of the US-India Tax Treaty actually says: 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. It simply means you are allowed to take the same standard deduction and personal exemption as if you were a RESIDENT. The earnings are NOT totally exempt.
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