Tax treaty USA-Italy: scholar/teacher (art. 20) tax exemptions and implications

Question

Suppose I entered US in year x month y with J1 visa, as a scholar/postdoctoral researcher. My question regards my status during year x+2: assuming that I also stay in US during full year x+2, is it true that during such year I will still be considered non-resident alien for tax purposes until month y-1, and therefore

1. I will still benefit from tax treaty article 20, and
2. I won't pay social security/medicare tax

exactly until that month (as opposed to ending in previous calendar year), because art. 20 is protected by saving clause in such treaty?

3. For this same year, which form(s) of 1040 series will I have to file?

EDIT 3: MY CURRENT UNDERSTANDING: answer to 1 is positive, because of exemption from saving clause. For full year x+2, I will however be resident alien and therefore file 1040 and pay social sec/medicare. Now I don't see any contradiction, but please feel free to correct me.

Relevant links: res vs non-res, tax treaty, soc sec.

Answer 1

Well, I know someone in exactly the same situation who is wondering exactly the same thing.

As far as I understand -- I am not a certified tax expert, and this is not a consultation.

According to the Glacier tax system (an electronic system in use at some universities), you would count as a resident alien for taxation purposes for tax year 2016 if you had arrived in US, e.g., in some month of 2014.

Still, according to some people, the tax treaty between Italy and US does extend to 24 months (possibly for the reason that you mention, that Art. 20 is exempt from the "saving clause"). So you would not be required to pay taxes for the period of 2016 covered by the tax treaty.

On the other hand, you may have to pay Social Security and Medicare taxes for the full year, if you count as a resident alien for taxation purposes in 2016. The tax treaty most likely does not cover these taxes.

As we say, there are lots of ifs and buts since I don't have full information and different sources provide contrasting information. I will update my answer if I get to know more.