What is the name of your state (only U.S. law)? I live outside U.S.
I am a Spanish citizen that worked as a postdoc in U.S for a couple of years. During this time I received a W-2 form and I filled my taxes every year. All the federal taxes I paid were refunded after I claimed to IRS that they were exempt of U.S. taxation under the Spain-US tax treaty. The article that applies to my case is:
ARTICLE 22
Students and Trainees
1. (a) An individual who is a resident of a Contracting State at the beginning of his visit to
the other Contracting State and who is temporarily present in that other Contracting State for
the primary purpose of:
(i) studying at a university or other accredited educational institution in that other
Contracting State, or
(ii) securing training required to qualify him to practice a profession or
professional specialty, or
(iii) studying or doing research as a recipient of a grant, allowance, or award
from a governmental, religious, charitable, scientific, literary, or educational organization,
shall be exempt from tax by that other Contracting State with respect to the amounts described in
subparagraph (b) of this paragraph for a period not exceeding five years from the date of his arrival in
that other Contracting State.
(b) The amounts referred to in subparagraph (a) of this paragraph are:
(i) payments from abroad, other than compensation for personal services, for
the purpose of his maintenance, education, study, research, or training;
(ii) the grant, allowance, or award; and
(iii) income from personal services performed in that other Contracting State in
an aggregate amount not in excess of 5,000 United States dollars or its equivalent in
Spanish pesetas for any taxable year.
Now I no longer live or work in the U.S. but last week I received a IRS letter that reports and adjustment to the income that was exempt from taxation for those 2 years. In summary they invite me to pay almost $10000 in terms of adjustment to the income, penalties and interests. They claim that as I received my income with a W2 form, all my wages qualified as personal services and therefore are taxable in the US and not exempt from taxation as they had previously considered (since they had refunded me the federal taxes I had paid). I do not agree with the IRS since as a postdoc I consider I was receiving training as a scientist and not providing any personal service to the university were I stayed, regardless the fact that my income was reported in a W-2.
I would like to know which action should I take to this IRS letter. They say that if I don't respond I will receive a notice of deficiency and later send the case to the U.S Tax Court. I don't have any money or property in the U.S and it would be very difficult for me to pay all what they request. I also wonder if all this can cause me problems to enter in the U.S. if I decide to go there for tourism in the future (I don't plan to work or live there in the future).
I am a Spanish citizen that worked as a postdoc in U.S for a couple of years. During this time I received a W-2 form and I filled my taxes every year. All the federal taxes I paid were refunded after I claimed to IRS that they were exempt of U.S. taxation under the Spain-US tax treaty. The article that applies to my case is:
ARTICLE 22
Students and Trainees
1. (a) An individual who is a resident of a Contracting State at the beginning of his visit to
the other Contracting State and who is temporarily present in that other Contracting State for
the primary purpose of:
(i) studying at a university or other accredited educational institution in that other
Contracting State, or
(ii) securing training required to qualify him to practice a profession or
professional specialty, or
(iii) studying or doing research as a recipient of a grant, allowance, or award
from a governmental, religious, charitable, scientific, literary, or educational organization,
shall be exempt from tax by that other Contracting State with respect to the amounts described in
subparagraph (b) of this paragraph for a period not exceeding five years from the date of his arrival in
that other Contracting State.
(b) The amounts referred to in subparagraph (a) of this paragraph are:
(i) payments from abroad, other than compensation for personal services, for
the purpose of his maintenance, education, study, research, or training;
(ii) the grant, allowance, or award; and
(iii) income from personal services performed in that other Contracting State in
an aggregate amount not in excess of 5,000 United States dollars or its equivalent in
Spanish pesetas for any taxable year.
Now I no longer live or work in the U.S. but last week I received a IRS letter that reports and adjustment to the income that was exempt from taxation for those 2 years. In summary they invite me to pay almost $10000 in terms of adjustment to the income, penalties and interests. They claim that as I received my income with a W2 form, all my wages qualified as personal services and therefore are taxable in the US and not exempt from taxation as they had previously considered (since they had refunded me the federal taxes I had paid). I do not agree with the IRS since as a postdoc I consider I was receiving training as a scientist and not providing any personal service to the university were I stayed, regardless the fact that my income was reported in a W-2.
I would like to know which action should I take to this IRS letter. They say that if I don't respond I will receive a notice of deficiency and later send the case to the U.S Tax Court. I don't have any money or property in the U.S and it would be very difficult for me to pay all what they request. I also wonder if all this can cause me problems to enter in the U.S. if I decide to go there for tourism in the future (I don't plan to work or live there in the future).
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