Stay beyond US-UK tax treaty

[KarenB]

Hi

I am UK citizen that has been working in the US for almost 2 years. I am Research Scholar on a J-1 visa, and I took up the UK-US tax treaty benefits when starting my position in the States. I did not intend to stay longer than 2 years, however, now I have been given another contract by the university for one year. As I understand that the treaty contains a time-based retroactive loss provision, whereby I have paid back the taxes if I stay past 2 years. Obviously, I am not in a position to do this due the amount that I would have to pay. I wanted to know how I could reconcile the situation, if at all position. Is there a way that I can start paying federal tax but not have to pay back 2 years worth? At the bare minimum I would need 6 months to complete my work at the university where I work, but I am currently near the end of a critical project and leaving in November would severely hinder its completion.

Thanks in advance to anyone who can give me advice on this.

Karen

[Jeff4cpa]

Since this two year period is determined from the date he first visits the State, periodic vacations outside the first State, or a brief return to the other State will restart the two-year period. If the two-year period is exceeded, the exemption will be lost retroactively. Thus, if a person comes to a State for the purpose of teaching and stays for more than two years, the exemption will not apply for the first two years.

Treasuray Technical Explanation P. 71.

This sounds like a very good excuse to take a vacation.

[rloach2001]

J1 conundrum

Hi - I am a postdoctoral researcher who has the same problem, as I have been claimaing exemption on the US-UK tax treaty as part of my J1 status. My two year stay on my J1 visa will expire at the end of October but I need to stay at least another 3-4 months to complete my project here. Is there a way to avoid the retroactive tax penalty? My department HR advisor will seek to renew my J1 status at the end of the two years - is there an alternative I can seek?

any advice much appreciated

thanks

Richard