From: muthu@mecad.uta.edu (S.N. Muthukrishnan)
Subject: Re: I-Tax on RA/TA salary: Followup
Keywords: Tax, RA/TA
Reply-To: muthu@mecad.uta.edu
Organization: University of Texas at Arlington
Distribution: usa
Date: Fri, 25 Dec 1992 18:27:24 GMT

In article <92357.125501MITRA@PURCCVM.BITNET> <MITRA@PURCCVM.BITNET> writes:
> Would be grateful if you can clarify some issues regarding Income
> tax payable by Indian Students on assistantship at U.S univs.
> 
> 1. In discussions with the Student Advisers at USEFI it was made
..
>    stopped later and the total sum deducted since Oct' 90 was refunded.

The reason is the tax exemption is only for those who earn a fellowship. That
is, you NEED NOT work to earn. Only these cases are exempt. That is true with
all tax treaties, unless otherwise specified.

> 
> 2. Here at Purdue we still pay I-tax on assistantship salary at the
..
>    and state taxes.

True. You have paid and will continue to pay as long the US government thinks
that student's earnings have to be taxed (period).

> 
> 3. When the Oct'90 tax treaty was brought to the notice of the authorities
..
>    earned outside the U.S.

Yes. They can only cause confusion. However, you can request the IRS for all
related tax laws. They will be more than happy to send them to you.

> 
> 4. Two reasons we doubt that something is wrong
>    - This is totally contrary to the information given at USEFI
>      and also given by some Indian students studying on RA/TA ship here.
> 
>    - A single page of a tax treaty does not give the full picture and
>      can sometimes be misleading
> 
> We will be very grateful if you can throw light on the issue. We are
> specially interested if
> 
> - Your RA/TA salary is not taxed. What is the reason as stated by
>   the univ. authorities ?

When you file tax return the first year, and you HAVE paid tax, then it is
incorrect to state that you do not want tax to be withheld. That is if
1989 was the first year you were employed in US and you did not pay any tax
then in 1990 you can request that no tax be with held. However, if in 1990
your final earnings exceed the maximum tax free income (which means you have
to pay tax), you cannot request for the 'do not withhold' option.

> - If your univ. used to deduct tax even after Oct'90 but later stopped
>   and refunded the money. What made them do so ? ( we are looking for
>   supporting arguments that we can duplicate here )

No such thing happened :-(

> - Any idea where I can get hold of this tax treaty

Call IRS for all tax info.

> 
> 
> Thanks

You are welcome.
> 
> Shubhashish Mitra

Muthu

Standard disclaimer that all opinions above are mine and only mine. These
are not the views of my employers.

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S. N. Muthukrishnan                | muthu@mecad.uta.edu |
Dept.of Mech. Engg., UT, Arlington | muthu@fem.uta.edu   |(NeXT mail)
Arlington, TX  76019               | muthu@newton.uta.edu|
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