I am a resident alien for 2010 tax purposes and require guidance on how to claim my nonresident alien wife (married filing jointly) and nonresident alien son (dependant) for exemptions. I understand that I will need to file a separate W-7 for each of them with my tax return to obtain ITIN's. I am comfortable with completing the W-7 form and the documentation requirements to prove foreign status and identity but have just a couple of questions:

1. Do I have to treat my nonresident wife as a resident to claim my her as exemption? If so how?
2. If yes to #1, are my wife and son are eligible for exemptions with the circumstances described above (I fear that I have completely missed something here).
3. If yes to #1, do I leave my wife's "identification number" as required in the statement to have her treated as a US resident alien for tax purposes blank.
4. If I leave the space blank where my wife and son's SSN's are required on my US tax return or state something else.
5. If/How I declare my wife's foreign income on my US tax return if she does need to be treated as a resident to be claimed as an exemption.

Thanks in advance for your help!

1) Yes, you file jointly with your wife. She is NOT your dependent; she is your co-filer, and must sign a statement that she is a non-resident alien spouse of a resident alien who CHOOSES to be treated as a resident alien for all of 2010.

2) Your wife is eligible to file jointly irrespective of her physical location; she could be on Mars for all the IRS cares. However, your child MUST have spent at least ONE day within the borders of the United States in 2010 to be claimed as a dependent.

3) If she already has an ITIN or SSN, put that on the statement. If you are applying for an ITIN with Form W-7, insert "ITIN BEING APPLIED FOR" next to her name in the statement heading.

4) On the tax return, you leave the SNN area for both your wife and child BLANK. The IRS will insert the ITIN into those areas when the ITINs are issued. For the STATE tax return, you need to delay filing the state return until you get the ITINs back, then insert them into the state return before filing the STATE return.

5) You convert her foreign wages to U.S. dollars and add that amount on Line #7 of Form 1040. You then submit Form 1116 to claim the Foreign Tax Credit for taxes paid on those wages. Other foreign income (interest, dividends, etc.) are added to other parts of the Form 1040.

If you need professional help filing your return, email me at [email protected] or [email protected].

1) I probably will file jointly as I believe I will get a bigger return this way but, if I elected to, couldn't I file "married filing seperatly" and claim my wife as an exemption ( I know she's not a dependant). Taking this route I would not have to claim her foreign income from what I understand; is this correct?

2) Thanks, this I was just looking for comfort from someone with more experience on this one. As my son did not enter the US for the 2010 tax year but did reside in Canada doesn't that make him eligible as en exemption according to Pub 519? I was there when he was born in Canada on Dec 13 and remained there for the remained of 2010.

3) Thanks, for the letter declaring the CHOICE to be treated as a resident I will state "ITIIN BEING APPLIED FOR" against her name.

4) Thanks, I will leave the SSN fields Blank for my wife and son.

5) Do I convert her gross wages to US? What exchange rate do I use (todays, last day of 2010, average closing value for 2010... )? I simply add the value here to my value for line 7? Am I required to get her T-4 (Canadian version of W-2) noterized and submit it with the return/W-7/supporting docs/etc?

Thanks for all of your help!