Hi,

I moved to the US (permanent resident) in mid-july of this year and started working in Texas on the 31st July. Prior to this I lived and worked in Australia (ie Aussie citizen moved to the US).

My wife is a US citizen but has never had a job (well, not a paying one, she's a home-maker). To get here with the GC we had to submit a statement regarding why she hadn't furnished any tax returns to the US govt (because she'd never had any taxable income, further complicated by the fact that she "wasn't" a US citizen from ~79 until she applied for it back in 01, was granted it "back" because her parent relinquished it on her behalf but not request when she was a child).

The way I read Publication 519, I am a dual status alien for the tax year 1/1/06-12/31/06. If I file as an individual (rather than jointly) I think my tax rate is likely to be higher than what my employer has been withholding. Another downside is that I can't claim credits for my dependents and spouse. The upside is that my Aust income is not considered at all and therefore my tax should be somewhat straightforward (here and in Aus).

If I was to make the 'first year choice' as I understand it, this will mean that we can file jointly, claim dependent credits etc. The downside is that my income in Aus will need to be declared. As I've already been taxed on this income in Aust, I certainly don't want to be taxed on it again by the US govt.

I'm really not sure what I should do... Any recommendations or suggested readings will be greatly appreciated.

Thanks in advance,

Steve

Steve:

You CAN claim your wife and children as dependents on a dual-status return. That ability is really the only advantage over filing as a non-resident alien. You just cannot file jointly with your wife and you are NOT eligible for certain tax credits.

You can opt to be treated as a resident alien because of your wife's citizenship status, and, yes, your Australian income must be declared. However, if you have paid Australian taxes, you are entitled to claim either a Foreign Tax Exclusion (Form 2555) or a Foreign Tax Credit (Form 1116) which should prevent you from paying double taxes your Australia-based income.

You REALLY need to get professional tax help to determine which is the best way to go. It's likely the only way to determine the best way to file is to prepare the return both ways and compare the results.

You REALLY need to get professional tax help to determine which is the best way to go. It's likely the only way to determine the best way to file is to prepare the return both ways and compare the results.

Thank you for anwering so quickly. Do you know of any professional tax companies that could assist someone in my situation? I know H&R Block etc but having used them for my taxes in Australia and getting nothing more in service or outcome than when I handled my own tax affairs, I'm thinking I'm looking for a specialized service here in the US.

Thanks again,

Steve.

Contact me at [email protected] for details.