Hello,

I am Karthik. I am new here. I have a question related to tax filing for the year 2012. There are many factors like H1B, Dependents, Residency I need to know about. The answers may help me to decide what is a good time for my wife to join me here in the US.

I am a citizen of India, currently on F1 OPT. My OPT started on June 18th, 2012. My H1B has been approved and the status will start from October 1st, 2012. I have been here in the US since Aug 2010. I just was outside USA for about 30 days during Dec 2011 - Jan 2012 time (I was in India).


Fact 1: F1 - OPT and H1B

Question 1: Should I file Tax returns on Dual Status? One as F1 (non resident) and the other as H1 (resident). I believe, I will become a resident for Tax purposes from Oct 1st because of H1.

Fact 2. My wife and son are in India and are planning to arrive here on H4 VISA in Oct/Nov time frame (after September 31st for sure) and the dates are flexible. My son will be 1 year old. My wife will not work in the USA for the year 2012. Both my son and wife will be in the USA for the whole year of 2013 with me.

Question 2: What status of filing should I use for the period Oct 1st to Dec 31st 2012? Should I file as single or Married filing jointly? What will be the residency status of my wife? I remember reading that if I have to file married jointly then my wife should also be a resident.

Fact 3: My wife is currently working in India and will continue to work till mid September. She has been paying income tax in India. My wife also has some house rent as her income. She has been paying taxes for the rent too. She will include her salary and rent when she files her returns for the year 2012.

Question 3: If both myself and my wife are considered residents for tax purposes for the year 2012, then I read that we have to include our world wide income. I do not have any outside US income. If my wife has already paid taxes in India, should she pay in the USA too? Is there some tax treaty with India that avoids this?

Question 4: If I have a choice to file single or married jointly for the H1B period, which option is better (saves taxes)? Can I include my wife and son as dependents for the OPT period?

Please guide me. Please note that I am from India (there may be different tax rules for different countries.)

Thank you in advance.

Regards,
Karthik

Karthik:

You can file jointly with your wife and you both CHOOSE to be treated as resident aliens. This will allow you to claim the $11,800 joint standard deduction plus two $3,800 personal exemptions (for yourself and your wife), plus an third personal exempt for your child. You can also get the $1,000 Child Tax Credit


To apply for an ITIN, you need to complete Form W-7 for your wife and. You need to make a photocopy of her passport, then get the photocopy CERTIFIED by the Indian government as a TRUE COPY of the passport. Notarized photocopies are NO LONGER ACCEPTED as adequate proof by the IRS.

This can also be done at a Indian notary, but if she will be coming to the U.S. The downside is that:
• You must wait until 1 June 2013 to meet the Substantial Presence Test before you can file for Tax Year 2012.

• You must declare ALL 2012 world-wide income (wife’s home country income, if applicable). There is an offset available by either claiming the Foreign Tax Credit (Form 1116).

Even with the downside, this is probably the best way for you to file.

If you need professional help filing the return and submitting the Form W-7, OI prepare these types of returns routinely. You can find my email address in my profile if you do not see it below.

Thanks so much AtlantaTaxExpert. I have a few more clarification questions.

1. If "we both CHOOSE to be treated as resident aliens", then are we considered residents for the entire year? I ask because, till Sept 31 2012, I am on F1 OPT and my wife will not even be in the US. Will I be a non-resident alien and file non-resident taxes till Sept 31st? If not, I may lose the FICA benefit that I have as a F1 - OPT visa holder.

2. If we fill Form 1116, then we need not pay tax my wife's outside US income? Can you confirm?

Can you point me to some details as to your charges and stuff?

Thank you again.

Regards,
Karthik Iyer

Karthik:

1) Yes, you ARE considered to be residents for the entire year. Your wife's physical locatuion is irrelevent; she could be on Mars for all the IRS cares. You will NOT lose the FICA exemption retroactively for the first nine months of the year.

2) You get a credit for the income taxes paid to your home country. It MAY be a dollar-for-dollar credit, depending on your level of income.

I CANNOT quote fees on this forum. You need to email me for that information.

Thank you so much. I will contact you soon.

What is the latest date that my wife can enter the USA if I want to do what you suggested?

Theoretically, your wife and child can enter on 31 December 2012 and you would still qualify for the Child Tax Credit.

However, the sooner the child gets to the U.S. the less likely it would be for the IRS to challenge the deduction.