Hi,

I am a US Citizen living and working in US. Just married my spouse overseas in 2005. She lived and worked overseas waiting for the green card. She finally got her green card approved to live in US. So she came the US in Nov 8th, 2006. Before she arrive at the US, she worked and have income overseas for 2006. After she arrived in Nov 2006, she also found a job and have income in the US for 2006. In January of 2007, my spouse paid taxes to her home country for 2006 tax.

My questions are the following...
1) What status should I treat my spouse? Resident Alien or Dual status?
2) Should we file a join return for 2006?
3) Can we claim foreign tax credit for the taxes she paid to her home country?

Thanks for the advice.

Hex :confused:

Hex:

You can file either way.

If she files dual-status, she pays taxes only on her U.S.-based income. She cannot claim the standard deduction, but given the length of time she has been here, her personal exemption ($3,300) and itemized deduction may be enough to completely offset her tax liability on her U.S. salary. She does not even have to report her foreign-based income if she files as a dual-status alien.

She can file as a resident alien only if she files jointly with you. She will get to claim her personal exmeption and your standard deduction DOUBLES to $10,300, but you have to declare ALL of her world-wide income. There IS a foreign tax credit (Form 1116) for the taxes she paid in her home country, but it is NOT dollar-for-dollar.

The only way to know which is best is to do a rough return BOTH ways and compare.

If you need my professional tax help, contact me at [email protected].