Hi all,

An URGENT question about our tax situation:

I'm a Canadian citizen and my wife is an Indian citizen.
I'm employed (W2) with a US company and my wife is a homemaker.

I have TN status and my wife is here on a dependent TD visa.
Also, I have an SSN and my wife does not - she is not eligible for an SSN.

Initially, I entered USA in Jun-2007 to work for this company.
My gross salary from Jun to Dec 2007 is approximately $ 36,000. We have no other income. For Tax Year 2007, I have been physically present in USA for 179 days.
My wife, however, joined me in USA only in January 2008.

a) I'm filing a Form 1040 NR (non-resident alien).
Should my wife also file her own return for Tax Year 2007?
I was financially supporting my wife in 2007 even though she was outside USA.
What filing status should we use: Married filing jointly OR Married filing separately?

b) Can I claim her as a dependent on my 1040-NR or Should I get an exemption for her?

c) If I can get an exemption for her, what will the total number of exemptions be?
Am I correct in calculating total number of exemptions as 2 ? We don't have kids.
Also, is the total # of exemptions same for Federal and State? We're in North Carolina.

d) On Form 1040 NR, under "Filing status and exemptions" should I select

#3 Married resident of Canada or Mexico or married US national, or,
#5 Other married non-resident alien

If I select #3 and select "Spouse" under 7(b), they ask for spouse's ID number.
So, should she apply for an ITIN number? Does she even need an ITIN number?

e) Should we claim Standard deduction OR itemized deduction?

f) Are we both eligible for the stimulus package?

g) If my wife files a W7 with ITIN operations in Austin, should we include our
Federal return with it, OR should we mail a separate Federal return to another IRS office?

PLEASE NOTE: We filed for an extension to file taxes in April 2007.
I do not owe any taxes and am eligible for a tax refund.
Our tax returns are due now.

Thank you.

Soumya:

The TN visa is a work visa similar to the H-1. For this reason, you have the option of filing JOINTLY with your wife and you BOTH choose to be treated as resident aliens for all of 2007. The fact that your wife only joined you in January 2008 is irrelevent. She could be on Mars for all the IRS cares.

The fact that you have no other income dictates that filing jointly as resident aliens is the BEST OPTION for you.

You need to file Form 1040 with a Form W-7 to apply for an ITIN for your wife. A notarized photocopy of her passport needs to be stapled to the W-7, and both the W-7 and the photocopy needs to paper clipped to the Form 1040.

You need to attach a statement (signed by both of you) stating that you choose to be treated as resident aliens for all of 2007 is required as well.

If you need professional help to do this, contact me at the email address below. You will find my fee to be quite reasonable.

1. Yes, for 2007 you can file as married filing jointly. Both of you must report your worldwide income for 2007. If you paid taxes in a foreign country, you will claim credit by filing Form 1116 or take earned income exclusion by filing form 2555.

2. Also on your tax return you can deduct moving expenses. Your U.S. Tax Return: Moving Expenses (http://taxipay.blogspot.com/2008/02/moving-expenses.html)

Good points about the moving expenses and potential offsets from the Foreign Tax Credits or Foreign Income Exclusion.