Filing status for resident alien but part year resident in VA state ?

AtlantaTaxExpert · Apr 28, 2011, 04:35 PM

1) You file as a part-year resident. I believe that Virginia does NOT pro-rate the personal exemption, but I am not sure.

2) You CAN file as a resident in your last year in the U.S., but you must claim ALL world-wide income on the return. You avoid double taxation by filing Form 1116 to claim the Foreign Tax Credit for the Indian income taxes paid.

You also need to submit a Residency Termination Statement to notify the IRS of your changed status.

3) You pro-rate the interest (for BOTH accounts) on the Virginia return for the period you lived and worked in Virginia.

If you need professional tax help with this, email me at dpmtax@mail.com or kempetax@gmail.com.

sachin_24n · Apr 28, 2011, 10:26 PM

Quote:

Originally Posted by AtlantaTaxExpert

1) You file as a part-year resident. I believe that Virginia does NOT pro-rate the personal exemption, but I am not sure.

2) You CAN file as a resident in your last year in the U.S., but you must claim ALL world-wide income on the return. You avoid double taxation by filing Form 1116 to claim the Foreign Tax Credit for the Indian income taxes paid.

You also need to submit a Residency Termination Statement to notify the IRS of your changed status.

3) You pro-rate the interest (for BOTH accounts) on the Virginia return for the period you lived and worked in Virginia.

If you need professional tax help with this, email me at dpmtax@mail.com or kempetax@gmail.com.

As per VA site info below, if I file as PYresident,I get more tax saving since I donot have to show my NRI bank interest in Adj gross income.
Prorating deduction/exemption will not reduce it since there is no other state income to pro-rate.
On other hand if I file as resident I need to pay taxes on complete interest income. Am I correct ?

Part-year residents have several options for reporting and computing Virginia taxable income:
?Filing as a part-year resident: A part-year resident usually files as such on Form 760PY.
You must prorate your personal exemptions and standard deduction. A subtraction is allowed for non-Virginia income.
?Filing as a resident: If you are a part-year resident,but your entire federal adjusted gross income is from Virginia sources,
You can file as a resident on Form 760. Filing as a resident allows you to claim full personal exemption and standard deduction amounts

sachin_24n · Apr 28, 2011, 10:30 PM

Quote:

Originally Posted by AtlantaTaxExpert

1) You file as a part-year resident. I believe that Virginia does NOT pro-rate the personal exemption, but I am not sure.

2) You CAN file as a resident in your last year in the U.S., but you must claim ALL world-wide income on the return. You avoid double taxation by filing Form 1116 to claim the Foreign Tax Credit for the Indian income taxes paid.

You also need to submit a Residency Termination Statement to notify the IRS of your changed status.

3) You pro-rate the interest (for BOTH accounts) on the Virginia return for the period you lived and worked in Virginia.

If you need professional tax help with this, email me at dpmtax@mail.com or kempetax@gmail.com.

Question is that does my NRI 1099-INT remains untaxed in VA state if I file as PY resident ? Or when I prorate deduction/exemtion I do it on basis of interest received in NRI bank account (althougt this is not connected to any State in USA)

AtlantaTaxExpert · Apr 29, 2011, 06:45 AM

While you were a VA resident, the NRI income is considered to be Virginia income, so you need to pro-rate the NRI interest.

All of the states take the same view as the U.S. Government in that ALL world-wide income is subject to state taxation while you are a state resident.

sachin_24n · May 1, 2011, 10:46 AM

Since I qualify to file as all 3 status ie Resident , PY Resident and non-Resident, I think the best status to get max tax benefit will be to file as nonResident. Since filing as PY Resident will reduce by deductions due to prorating. Now to choose between filing as Resident or nonResident, I think if I file as Resident I will have my entire NRI bank interest $5.5k taxable since it comes under world wide income througout the year.. But if I file as nonResident then I will have to just add a part of it to taxable income, it the part received during Jan to June , so I can save around $4k which I received after June saved from VA taxation.. Am I correct ? So $4k gets taxed only in federal return and not in any STATE, while $1.5K gets taxed in both federal and VA return ? Correct ?

AtlantaTaxExpert · May 1, 2011, 05:31 PM

The income (interest and otherwise) has to be pro-rated.

sachin_24n · May 2, 2011, 09:31 AM

Quote:

Originally Posted by AtlantaTaxExpert

The income (interest and otherwise) has to be pro-rated.

Interest in NRI account gets deposited every 5 months , so it got deposited on April , Sept and Dec..
My stay in VA was from Jan to June, so does it means that only April interest needs to be added to VA taxable income ? Or other way is to add all 3 interest and prorate it from jan to June ? Another thing I noticed is that my final payslip was deposited to my account in July and I left VA in June , so does it means that July payslip cannot be taxed in VA as I was non-resident in July...

AtlantaTaxExpert · May 2, 2011, 09:41 AM

You CAN approach that way if the interest is not that significant.

sachin_24n · May 2, 2011, 09:50 AM

Quote:

Originally Posted by AtlantaTaxExpert

You CAN approach that way if the interest is not that significant.

I assume you mean to say , just add April interest and skip Sept and Dec interest.. How do I convert the April interest from Rupee to dollar , which days exchange rate will apply (april or dec or filing date), and is there any common place/website to obtain exchange rate for that day.. I know all banks give diff exchange rate..

Filing status for resident alien but part year resident in VA state ?

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