[kssr]

Hi, We came to US on July 20, 2013 on L1. In order to claim excemption for my child and apply for child tax credit, do I have to wait till we meet substantial presence test in 2014. What would be my filing status in 2013 if I do not submit returns now ? Dual Status Alien or Resident Alien ? If it's dual status Alien, do I need to submit two forms Form 1040NR and Form 1040? Please note that I do not have any income in US from Jan to July 20 and similarly no indian income from July till Dec.

[AtlantaTaxExpert]

If you file a joint return as a resident, you must claim ALL world-wide income (U.S. AND Indian) on the return, then submit Form 1116 to claim the Foreign Tax Credit for income taxes paid to India.

If you file immediately, you will file as a non-resident alien and pay taxes ONLY on the U.S. income, but doing that will likely result in a MUCH larger tax bill.

Best you file Form 4868 to get an extension to file to 15 October 2014, and file the joint return sometime in May 2014.

If you need professional help, this IS what I do! Email me at the email address in my profile.

[kssr]

Hi,

Thanks for your reply.
The process would be

1) Submit form 4868 now for extension.
2) Wait till May 2014 and submit a join return with filing status as Resident. Claim excemptions for dependants ( have a child) and include standard deduction / itemized as applicable. Include all income for 2013 ( US + Indian) in the return.
3) Submit Form 1116 to claim Foreign Tax Credit.

Does this come under first year of choice category or dual status alien category ?

Do I need to submit any other documents ?

[AtlantaTaxExpert]

The Form 1116 is submitted WITH the tax return. You also attach a SIGNED statement to the return that you and your wife CHOOSE to be treated as resident aliens for all of 2013. It is the First Year Choice Married Joint option.

The tax return is submitted WITH the Form W-7 to get ITINs for your wife and child.

Do you need guidance on HOW to apply for the ITINs?

[kssr]

Hi,

Thanks for your reply.
I am aware of the process to apply for I-TIN using Form W7.

Just confirming what I need to do now

1) Submit form 4868 now for extension.
2) Wait till May 2014 and submit a join return with filing status as Resident. Claim excemptions for dependants ( have a child) and include standard deduction / itemized as applicable. Include all income for 2013 ( US + Indian) in the return.
3) Submit Form 1116 to claim Foreign Tax Credit along with the return.
4) Submit W7 for ITIN's for Family
5) Submit a separate statement that we are opting for 2013 be first year of choice and be treated as Resident Alien for whole year and be filing as Married filing Jointly

[AtlantaTaxExpert]

Okay, you say you are aware of the ITIN submission process.

Please tell me what needs to be submitted WITH the Form W-7.

[kssr]

Hi,

I am not sure if I got the question but application for I-TIN's / W7 have to be submitted in IRS office personally (family needs to be physically present with I-94, Passport) along with your returns / Form 1040.

Am I missing anything ?

[AtlantaTaxExpert]

That IS one way of submitting for ITINs. You just need to make sure it is an office that can authenticate the passports.