[paragb]

Hi,

I was in USA from Mar 2008 to Nov 2008 on L1 B Visa. Unfortunately I was misinformed that one can not apply for spouse SSN until spouse EAD is applied and approved. So we ended up applying for nothing.

I need to know if I can still file for TAX returns jointly and have TAX benefit. Please let me know.

Regards
paragb

[AtlantaTaxExpert]

Paragb:

Assuming this is the ONLY time you have been in the U.S. you CANNOT file jointly because you did not end the 2008 tax year in the U.S.

You must file a dual-status return. You can apply for an Individual Tax Identfication Number by submitting Form W-7 with your tax return in order to claim your wife as a dependent.

[IntlTax]

ATE,

Do you think that Paragb could be considered a resident as of the last day of the year under Reg. 301.7701-4(b)? This regulation provides:

An alien individual who is a United States resident during the current year but who is not a United States resident at any time during the following calendar year will cease to be a resident for tax purposes on the individual's residency termination date. Generally, the residency termination date will be the last day of the calendar year.

If so, could Paragb make an election to be treated as a resident for the full year and file a joint return?

[AtlantaTaxExpert]

IntlTax:

Do not believe so.

This goes back to our extended discussion under which I noted that, if a foreign national is a non-resident alien for even one day, they CANNOT file as a resident alien for the entire year.

Though both you and TTE argued that this rule did not apply in cases where the foreign national stared and ended the tax year as a resident, with only the middle period being in non-resident status (a point I eventually conceded to), this case clearly falls into the definition of First Year or Last Year dual-status. The OP was non-resident for the Jan-Feb 2008 timeframe, in addition to the December 2008 timeframe. The dates he was in country exceeded the 183-day Substantial Presence Test, so filing dual-status is his only option In my opinion.

Now, if the OP returned to the U.S. in late 2008 and stayed in country from 1 Jan 2009 onward, then filing jointly with his spouse may be an option.

However, there is NO indication that he has returned or ever will return.

Hence, I stand by my opinion that he must file dual-status.

[IntlTax]

I thought that if you were a resident as of the last day of the year and you are married that you could elect to be a resident for the entire year and file jointly?

[AtlantaTaxExpert]

At one time, so did I, but the article written by Roger Adams clarified that issue for me. If you email me at the email address below, I can send you a scanned copy of the article for your review.

TTE also reviewed the article and conceded that the "non-resident alien for even one day" DID apply, but further noted that it applies only to the first or last year of the foreign national's stay in the U.S.

The OP was not even here a full year, so it IS his first year and the dual-status rule applies for him.

[IntlTax]

The OP was non-resident for.. . The December 2008 timeframe.

How does this reconcile with the regulation quoted above?

Generally, the residency termination date will be the last day of the calendar year.

[The Texas Tax Expert]

At one time, so did I, but the article written by Roger Adams clarified that issue for me. If you email me at the email address below, I can send you a scanned copy of the article for your review.

TTE also reviewed the article and conceded that the "non-resident alien for even one day" DID apply, but further noted that it applies only to the first or last year of the foreign national's stay in the U.S.

The OP was not even here a full year, so it IS his first year and the dual-status rule applies for him.

Hold on a second, I fear I am being misquoted here :) ATE, you continually use the 'non-resident for even one day' phrase but the phrase is mis-used.

Let me clarify -- if a person becomes resident under the SPT, they are resident at YEAR END. The question is then "when did residency begin" and if it was not Jan 1, they need to file dual status. The same applies in reverse for the year that residency ends.

However, if a person is resident at year end and is married to a citizen or resident, that person may elect to file resident for the full year.

So, to go to IntlTax's position, I can see a default position being that the OP's residency terminates on Dec 31 unless there is further evidence of claiming a foreign tax home etc. However, if the OP is earning income in a foreign jurisdiction in Nov-Dec (or in the Jan-mar) then it might not be a good choice to file as a resident for the full year any way.

[AtlantaTaxExpert]

TTE:

In your analysis of Mr. Adam's article, you pointed out that his contention that someone 'non-resident for even one day' applies only to the first or last year.

I suspect that if he filed jointly with his wife as resident aliens, the combined effect of the TWO personal exemptions ($7,000) and the double standard deduction($10,900) would MORE than offset the addition of the income from Jan-Mar and Nov-Dec, especially if the OP could also claim the Foreign Tax Credit.

All that, In my opinion, is irrelevent. The OP clear states "I was in USA from Mar 2008 to Nov 2008 on L1 B Visa", so this is his first AND last year, so dual-status is really his only legal option.

[The Texas Tax Expert]

ATE - what I am telling you is that the phrase "non-resident for even one day" is a meaningless phrase. By definition you cannot be NON-resident in the middle of two residency periods even if you are not physically present in the US in the sandwich period. Non-residency could occur only prior to the start of residency or after residency termination.

The meaningful way of expressing it is to refer to residency starting or residency ending date. The period outside the start/end date by definition would then be non-residency. If residency does not start on Jan 1 and terminate on Dec 31, then ABSENT AN ELECTION, the individual would file dual status.

In terms of the current discussion, the point that you are missing is that if the OP is resident at the end of the year, and is married to a resident, then the election to be treated as a resident for the full year is available. There is absolutely no question on this.

The only question lies in whether the OP is resident on the last day of the year or not. Intltax correctly points out that the residency termination date is by default Dec 31. I agree with intlTax's point in principle -- my only caveat to that would be that the OP should ensure he is not making different claims to the tax authority in his own country (for example, claiming a closer connection and tax home in his home country).

[AtlantaTaxExpert]

I am so used to working with foreign nationals who have NOT met SPT that I overlooked that fact in considering the OP's case.

Since he HAS met SPT, he DOES have the option of filing jointly with his wife and they both choose to be treated as resident aliens for the entire year.