Hi,

My wife and I got married this year. My wife has been on F-1 student status since Aug.2002(She left the US for 6 months in early 2004 and came back in Aug.2004 to continue her study at another university). Given she has been on F1 more than 5 years(2002,2003,2004,2005,2006,2007), if she is to file tax return for the year 2007, should she file as a resident?

Currently I am on F1 as well(I transferred from H1 back to F1 in Aug.2007). If we file joint return this year, can I choose to file as a resident with my wife and deduct the tuition expenses I(or we) paid during the year 2007?


Thanks a lot.

Yes, you both can file jointly, she as a resident alien and you as the non-resident alien spouse of a resident alien.

Yes, if you file jointly, you CAN claim the Education credit/deduction. However, in doing so, you become a resident alien, which means that if you begin working under CPT/OPT on your F-1 visa in successive years, you are liable for Social Security and Medicare taxes.

1. You transferred from H1 to F1 in Aug 2007, that means even when you are on F1 you must file as resident alien if you have even filed as resident alien or has been in the U.S. for more than 183 days on H1.

2. Also normally (unless there is something in tax treaty) a person on F1 can file as nonresident for only 5 years, and after that must file as resident. As resident, you must pay social security and medicare taxes.

3. You can file as Married Filing Separately or Married Filing Jointly. Married Filing Jointly is a better option unless there is some compelling reason.

4. Tuition expenses are not deductible. Tuition loan interest is deductible if it meets certain conditions.

Tax Expert and MukatA,

I am sorry I didn't express myself clearly.

My wife has on F1 for more than 5 years, so she has to file as a resident. I totally understand she has to pay social security and medicare taxes.However, since she is a self-funded student, she only has minimal income. I suppose the tax amount will not be too high. As for me, I am not sure what my status is in 2007 for taxes purposes. I am on F1 but I have not yet been on F1 for more than 5 years(I entered the US as a F1 student in 2003 and was on H1B from Jan.2006 to Aug.2007)

1. If I am dual status and I got married with a resident, shouldn't I be able to elect to be treated as a resident if I file jointly with my wife?

2. If I am resident, can't I deduct education expenses instead of just interest on education expenses? I thought eligible resident is able to deduct up to $4000 of education expenses from his income. Since I paid my tuition for myself, can't I deduct the amount?

Thank you very much.

SKDJDHG:

MukatA's Item #4 is not correct.

If you file JOINTLY, your income is combined and reported on ONE tax document.

If you file JOINTLY, you MUST BOTH file as resident aliens. Hence, you CAN claim BOTH the education expenses incurred in 2007 on your joint return (either as an Education Credit or an education deduction or BOTH if you both had education costs) AND the interest incurred on student loans by EITHER or BOTH of you.

In 2007 you can claim qualified education expenses as adjustment to income up to $4,000 as resident alien for the full year, and must file a joint return. No double benefit is allowed that is if you claim this adjustment can you can get Hope or Lifetime learning credit.

MukatA:

If by double benefit you mean that they cannot claim BOTH the deduction and the credit on just HER or HIS education cost, you are correct.

However, they can claim the deduction on HER tuition and the credit (probably Lifetime Learning) on HIS tuition, or vice versa.

I know this is possible because I have done it on returns this past year.

The qualified education adjustment up to $4,000 is available only for 2007 (paid in 2007). It was not available in 2006 and won't be available in 2008.

I beg to differ.

Congress changed the law at the last minute and allowed the $4,000 qualified education adjustment for 2006.

You had to put the $4,000 on Line #35 of Form 1040 and put the letter "T" on the dotted line to the left of the #35.

As for 2008, it has not yet been extended for 2008, but I suspect that it WILL be sometime in 2008.