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Syracuse_TaxPayer · Feb 9, 2008, 10:20 AM

Can anybody suggest where to include Foreign Income and Income Tax in 1040 form.

I am basically dual status alien but want to make "Resident for Full year" choice which necessiates to include my worldwide wages.
I am married.
To make this choice what suppose to provide to IRS and how to terminate this choice during my future nonresidency period.

Please help.

MukatA · Feb 9, 2008, 10:31 AM

1. You can make this choice only if you are married. You must file Married Filing Jointly and declare world wide income for both of you.
2. In future years, you must file as residents (you can't file as nonresident). You can file as Married Filing Jointly or Married Filing Separately.
3. Foreign lncome will be included on line 7 of form 1040.

Syracuse_TaxPayer · Feb 9, 2008, 10:48 AM

Thanks MukatA for Quick reply.

1) Yes, I am married filing jointly. What I need to provide to make "Full year resident" choice to IRS? I came in US 26th Jan 07 and completed 339 Days for year 2007 and my wife also completed 224 days for year 2007.
Or shall I simply proceed with 1040 form + W7 + W2.
2) Also after expiration of visa, (L1 visa), will I be resident or non-resident. Because my visa is expiring on 25th Jan 2010, so for year 2010 will I be resident or non-resident.
3) My Foreign income is not included in W2 form and I think I suppose to enter W2 wages on line 7 of form 1040.
4) Where to include Foreign paid income tax on form 1040
5) Which forms we suppose to fill for Forign income and income tax (1116 or 2225 or both)

Please Help.

MukatA · Feb 9, 2008, 11:25 AM

1. For more on the statement read page 9 (Statement required to Make First Year Choice) of Publication 519: Tax For Aliens.

2. Depends upon if you continue to stay in the U.S. or not. (Resident means resident only for tax purpose).

3. Yes, enter on Line 7
4. You don't show tax on form 1040
5. If you file 2555, the income that you added on line 7 will appear again as other income with negative sign. If you file form 1116, then you will enter the foreign tax paid and it will work out foreign tax credit.

Syracuse_TaxPayer · Feb 9, 2008, 11:40 AM

Thanks for you help MukatA.

Syracuse_TaxPayer · Feb 9, 2008, 04:05 PM

One more question
Is it necessory or mandatory to write statement or nessory to make choice - "Resident for full year" as I already passed SPT.
Please Suggest.

AtlantaTaxExpert · Feb 15, 2008, 02:05 PM

Yes, the statement IS required, especially if you are requesting an ITIN for your spouse.

kaushik · Mar 7, 2009, 06:54 PM

Hello Syracuse Tax payer,

Could you please tell me what's the result of filling out form 2555 or 1116? Did the forms actually reduce your foreign income or foreign tax paid?

Could you please send me a sample with just random numbers on it?

I'm in similar situation as you. I got married in 2008 and will be filing as resident alien for tax purposes and I'll be filing married and joint status.

My wife worked in India in 2008 and hence, we will have to declare that income.

Could you please email me ASAP? I would appreciate it very much.

Thank you.

Kaushik

kaushik · Mar 7, 2009, 06:55 PM

Originally Posted by Syracuse_TaxPayer

One more question
Is it necessory or mandatory to write statement or nessory to make choice - "Resident for full year" as I already passed SPT.
Please Suggest.

Hello Syracuse Tax payer,

Could you please tell me what's the result of filling out form 2555 or 1116? Did the forms actually reduce your foreign income or foreign tax paid?

Could you please send me a sample with just random numbers on it?

I'm in similar situation as you. I got married in 2008 and will be filing as resident alien for tax purposes and I'll be filing married and joint status.

My wife worked in India in 2008 and hence, we will have to declare that income.

Could you please email me ASAP? I would appreciate it very much.

Thank you.

Kaushik

AtlantaTaxExpert · Apr 30, 2009, 11:11 AM

Kaushik:

Most of the time, filing Form 2555 will reduce your tax liability MORE than filing Form 1116, because there is a cap on how much benefit you can get on the Foreign Income Tax Credit for EARNED income.

IntlTax · May 1, 2009, 07:37 PM

There is no cap on claiming foreign tax credits (Form 1116) -- there is a limitation, but no cap. Further, the foreign tax credit does not only apply to earned income. Foreign tax credits can be claimed for any type of income.

There is, however, a cap on claiming the foreign earned income exclusion (Form 2555).

Sometimes it is better to claim the foreign tax credit because you can carry the credits forward to future years to shelter future foreign source income.

Five Rings · May 3, 2009, 11:23 AM

Somehow I get the feeling there is some confusion here about the term "foreign earned income."

If you are a US resident your tax home is America. If you get paid for work while in America, even if it is from an Indian company, it is NOT FOREIGN EARNED INCOME.
You must be working in a foreign country to have foreign earned income and satisfy the rules of the exclusion.

AtlantaTaxExpert · May 4, 2009, 01:19 PM

I concede that the word "cap" in inappropriate in this case. Limitation is the better term.

kaushik · May 27, 2009, 04:43 AM

Hello Sir,

I recently got a mail from IRS with my wife's ITIN mentioned. But, I did not get my refund along with it. Is there a particular time frame when I should be expecting my refund with ITIN application case?

Could you please let me know at the earliest?

Thank you very much

Kaushik

Five Rings · May 27, 2009, 09:29 AM

You should have gotten a letter from the ITIN Unit with your wife's number on special green paper. They have forwarded your tax return to another department.

To check on the status of your refund go to:
https://sa1.www4.irs.gov/irfof/lang/...fgetstatus.jsp