More Tax Returns for International Students!!!

NOTE: Enter a lottery before Noon Sunday (03/25) PT, for a free download of TaxCut Premium (Federal + State + efile) , retail value of $64.99. at my other web site:!

Yannick and I have been students for so long that we were “forced” to become “sophisticated” senior students, at least financial-wise.

We came from China. There is an annual $5,000 exclusion of a student’s wages for the first 5 years. We were very happy back then, because we were optimistic that we could finish our PhD’s in 5 years.

As you know now that we did not accomplish our mission within 5 years. In the 6th year, as we were grudging the loss of the “$5000 exclusion of students wages”, we started extensive research on tax laws, treaties, and even attended a PhD level taxation seminar! (You see, there is a reason that we stayed in graduate schools for such a long time).

And you know what? Our efforts did get rewarded! Here is what we found: The tax treaty from the People’s Republic of China (PRC) contains no time limit, and a Chinese student who qualifies for it may use the article for as long as he is still in valid F-1 status, including during that period in which he is engaged in practical training in valid F-1 status.

So, if you are from P.R.C, still a student after 5 years in U.S., and believe in “NO Taxation Without Representation”, here is something we want to share with you. Hopefully this will save you some time, and help you get out of graduate school early.

Step by Step instruction to get you $5,000 tax exclusion:

I. Download Form 8833 .

II. Fill out the form like this:

1. Enter the specific Treaty position relied on:
(a) Treaty country: People’s Republic of China
(b) Articles: 20(C), Paragraph 2 of 04-30-1984 prot.

2. List the internal revenue code provisions overruled or modified by the treaty asked return position: IRC61; 871(b)

3. Name, identifying number of …. : N/A

4. List the provision(s) of the limitation on benefits…: N/A

5. Explain the treaty-based return position taken:

The taxpayer is a citizen of the People’s Republic of China. He entered the United States on on an F-1 visa (student), and has remained in F-1 status continuously since. Under the residency rules of IRC7701 (b), the taxpayer passed the substantial presence test in and his residency starting date was 01-01-. This means that for 2006, the taxpayer is a resident alien and is filing form 1040 for 2006 as a resident alien.

Article 20(c) of the USA-China income tax treaty allows an annual $5000 exclusion of student wages from gross income. The article contains no time limit, and a Chinese student who qualifies for it may use the article for as long as he is a bona fide student in valid F-1 status. Paragraph 2 of the 04-30-1984 protocol of the USA-China income tax treaty contains the “saving clause” of the treaty, which normally acts to nullify the tax treaty’s benefits once a resident of China has become a resident of the USA. However, paragraph 2 of the Protocol also specifies exceptions to the saving clause, among which is article 20 on student and trainees. This means that, even though the taxpayer has become a resident alien under the substantial present test of IRC 7701(b), he may still claim the benefit of article 20 of the USA-China income tax treaty. The taxpayer has elected to do this, and is claiming an exclusion from gross income for 2006 of $5,000 in student wages as allowed by article 20(c) of the USA-China income tax treaty. TOTAL EXCLUSION CLAIMED: $5,000

Gong Xi Fa Cai!

Non-Resident Alien or Resident Alien?

A blog friend started a discussion on tax filing for Aliens here . Yannick and I have been filing as Non-resident alien and then Resident alien for years, and we may have to file as “Aliens” for a few more years if the Green Card waiting lines gets longer 😦 So we can not help sharing our experience.

4 open houses in our complex of 80 units, just today!!!!!!

On our way back from grocery shopping today, we saw numerous open houses along the street outside a condo complex we are staying. Once we drove into the complex, there were another 2 open-house signs, and once we get into the parking areas in our small circle, there were again 2 open-house signs!!!

Yannick did an online research right after. Our landlord purchased this condo 1 year ago, for $400K. Its listing price was $420K, because of the messy condition; while a comparable unit in good condition was listing for $440k in the same complex. The dirty kitchen, bathrooms and walls took my landlord a month and lots of resources to rehab.

Now the condo on the other side of the road is listed for $370, 000, with exactly the same structure, size, age, neighborhood, view … And it has been on the market for over 7 months, still not sold.

Overall, Yannick’s conclusion: Good that we did not buy a house!

Since I started my new job, Yannick and I have been looking at the housing market, locally, nationally. To save for our down payment, we rented a tiny place in a condo. It is a nice condo, and all our roommates are nice. However, it’s really not that convenient to share the condo with the landlord couple and a single guy. We have to take turns to cook; we can only watch TV shows on computers; when both of us work, one of us has to sit on the bed; when there are grocery deals out there, I can’t buy because the fridge is full; when there is a deal with rebate, I have to ask whether my roommates have taken the deal… let me say, lightly, that this type of “sharing” is “not ideal“.

I wanted a space of my own, even a tiny one. Actually, I was very happy with my cozy room in the graduate housing of my school. I have to admit that at that time “having a house of my own” is not in my agenda, and I never had time to dream it. Now, it becomes a possibility … it also becomes pressure.

Despite my emotional attachment to a space of my own, Yannick is so “rational” that my “emotion” could not win. He predicted that the house price will come down even futher very soon (not really his prediction, who does not say this these days?), and he insisted that we hold the cash rather than putting it in some real estate.

We use majority rule in our family. Yannick controls 50% of the votes, I control 50% of the votes. However, in my 50%, 25% is controlled by my emotional attachment to a private, cozy space of our own, 25% is influenced by those warnings from the rational economists, those scaring housing statistics, and those who regret for their stumbling in the housing bubble … final votes: 75:25 — NOT buy.

Is hunting deals a really bad "hobby"?

I placed an order this morning for a 500W power supply. Free after Rebate.

Before I place the order, I first checked eBay

for its “reselling” price, then checked tax rate. then checked the review of the “rebate”. I clicked the “place your order” button after I feel that the probability that I will lose money on this deal is less than 0.1.

I made up this 0.1 probability myself. Can’t really pin down the probability” The UPC can be damaged, the power supply can blow, the check can get missing …. Nothing is really zero-probability, I just make up a number to make myself comfortable.

Initially, Yannick did not like my deal-chasing behavior. He considered it as “short-sighted”, “waste of time”, “waste of energy”, “low taste”.

After a long, long time, he finally stopped complaining about my deal chasing, because he finally figured that:
1. I am not chasing the deal, I am chasing the “feeling” of getting a good deal.
2. I may waste some “time”, but I do not waste money. Some times “hot deals” can get really expensive. I do not do those un-nessary deals. I either purchase something we really need, or if somethinge not get used in 3 month, I sell them (except for my clothing). I always check “resell” price before I make a purchase. And I almost buy things online, I do not evey pay gas for it!
3. Getting a good deal is a hobby to me now! It relaxes me from my boring work, gives me a tiney, yet sweet feeling of “achievement”.

Overall, getting a good deal is now (1) an inexpensive-hobby; (2) a good after dinner entertainment; (3) helping build frugal living style — why stopping me?

Now, Yannick encourages me to be a shopper! As long as I am a shopper that brings in money and decrease budget, as long as I am a shopper who are happy over the deals I am making, he is a happy too. Win-win situation!

Not sure how many shoppers out there are like me. Maybe I should start a deal chasing blog myself, and get more friends in the circle!

Hurry up! Ebay listing fee 50% off for Valentine day!

Hurry up! I went to check my ebay listing, and found this:

When is it?
One day only, starting Wednesday, February 14, 2007 between 00:00:01 PT (12:00 AM plus one second on Wednesday, February 14, 2007) and ending that same day Wednesday, February 14, 2007 at 23:59:59 PT(11:59 PM plus 59 seconds).

I am not a professional ebayer, but I do go there time to time. What is it best for? Clean your house, reduce your burden before moving to another apartment…, and use the income to buy a cup of drink after a day of hard work.

What shall I get for Valentine?

My colleagues asked me this question, my husband asked me this question too.

Everyone knows that I am “chocolateholic”, so chocolate is a no brainer.

But I told my husband,

” You do not have to give me the chocolate on Valentine’s day. Go and get it on 15th, or the weekend after the Valentine. All Valentine chocolate will be on sale then. “

A friend screamed ” That’s not very loving”.

Why not? He is buying me chocolate to show his love, I help him save some money to show my love. Love-love situation!

I am happy that I am not a designer-freak, or diamond-lover, or anything like that. Saves both of us a lot of money, energy, and potential for argument.

Happy Valentine!

Moomin Valley: Paying for Grad School