Hi,

Good Morning. I hope you are doing well.

I am an Indian citizen. I came to the US on a F1 Visa in August 2006. I graduated in May 2007, and worked on OPT status till Sept 30' 2008, then converted to H1 B status from Oct'2008. While I was on OPT status medicare and social security taxes were not deducted by my employer.

I am married. My spouse came to the US on F1 Visa in August 2008 - he is not working in the US and does not draw any income. I paid his tuition fees from January 2008 till May 2008. I am also repaying my student loan EMIs taken from a bank in India for my own education.

Can you please advise whether I should file as a non-resident or resident, for the entire year or full year? And Whether the return should be under 'single' or 'married filing jointly' or as 'head of household'? Which of these would help in reducing tax liability? Which forms to use?

If I wait to complete SPT and then file joint tax return with my husband will I be able to claim deductions on the tuition paid by me for my husband and my loan repayment? Is there a cap? Or can I anyway claim this as a non-resident without completing SPT? Or would it be better to file on dual status? How will this affect social security and medicare taxe payments?

Thank you very much,
av578

AV578:

You have the option of filing jointly with your spouse and you BOTH choose to be treated as resident aliens for ALL of 2008.

It will required that you wait until early June 2009 to file (in order to meet SPT), but it will allow you to claim either the tuition deduction or one of the education credits (most likely, the Lifetime Learning Credit).

There ARE caps on the amount of the deduction and the amount of the credit.

You CANNOT claim the education deduction/credit on either the dual-status or non-resident alien tax return.

Filing jointly with your spouse will have NO EFFECT on your spouse's exempt status when it comes to Social Security and Medicare taxes. See link below:

Nonresident Spouse Treated as a Resident (http://www.irs.gov/businesses/small/international/article/0,,id=96370,00.html)

If we file jointly, and are both treated as resident aliens for ALL of 2008 to avail of the tuition &/or education loan credits, will I have to pay social security and medicare taxes for the duration that I was on OPT (till September'08 of this year)? My employer did not deduct it during my OPT period...

Will I be able to file as a resident alien in April or May 2009 since my H1B started on Oct 1st 2008? (Since these returns are for the year 2008, will the 183 days be calculated from Oct 1t 2008, or beginning of the new year January 2009?)

Thank you very much Atlanta Tax Expert! :-)

Negative on the paying Social Security and Medicare taxes during OPT. Filing jointly and choosing to be treated as resident aliens does NOT affect your Social Security and Medicare tax exemption during OPT.

You would have to wait until 2 June 2009 to file, because the 92 days in 2008 for the Substantial Presence Test is cut to 30 days, plus 151 days from 1 Jan to 31 May 2009, plus two days for 1-2 June 2009 to equal the required 183 days.