Hi everybody.

I've spent long days looking at every posts I could find but I still have unanswered questions. If anybody can help, I'd really appreciate.

Background:
French
F1 - Aug. 2005 Sept. 2007
OPT - Sept. 2006 - Sept 2007
H1-B:
Effective start date 1, 2007
Stamped in passport 12/12/07

2007 was a busy year for me, in addition to changing visa status, I got married in June 2007 and bought a home in September in California (with a mortgage).

Questions:
1 - If I want to opt for dual status approach (non-resident from 1/1 to 9/30 and resident from 10/1 to 12/31), what date counts for the change of status date: 10/1/07 - effective start date - or 12/12/07 - date a visa was added to my passport? :confused:

2 - If 10/1/07 is the change of status date, then I've 'been in the US' for more than 31 days in a row in 2007 and I can ask for extension to wait for the 183 days of the SPT under the First Year Choice clause.
a) Am I right so far?
b) Can I then file the 1040 married jointly once I meet the 183 days?
c) Can I deduct the mortgage interest paid? The Property Taxes paid? My wife's IRA contribution? (she did not work and my income from October to December is sufficient)

3 - If I cannot have the dual-status, I understood that I cannot file married jointly since she is not US resident. I know I cannot deduct the mortgage interest but what about the Property Taxes paid? Are they considered local taxes? :confused:

Thanks for your help. I know I am starting late but I never thought I would not be able to file jointly. It will teach me an expensive lesson, I guess...

Thank you in advance for your clarifications, comments, and ideas,

Pyheme

1. Since you are married, you don't have choice of filing as Dual status. You can only file nonresident tax return or joint resident tax return after you complete SPT in 2008.

To a -- yes
B -- yes
C -- yes

3. On your resident return you get same benefits as residents.

Thanks MukatA

So should I assume that - for tax purposes - my H1-B started on October 1 (and not on December 12 as stamped in my passport)?

Do I need to join a copy of the Notice of Action received stating that I was approved for a H1-B starting October 1, 2007?


I realized that I forgot one last question. Filing as resident, I understand that I cannot claim the $5000 US-France tax treaty as deductible, but what about the social security and medicare charges?

I have not paid any social security or medicare for January to September as I was under F1 visa. Do I leave it this way if I file as resident or do I need to correct and pay both charges for all the year?

Will that affect my employer?

Thanks once again

Pyheme

Pyheme, I don't think Visa stamping has any bearing on your start date as your is a change of status situation.

I don't think you are supposed to attach copies of your immigration papers. They are a different matter.

I do not know about Social Security and Medicare things.

Last year, I used Cintax to file my taxes. But you will have to pay upfront and I wasn't sure about the support. It was a very helpful software for me. I have nothing to do with Cintax except that I used to be a customer.

Visataxes is good too.
This tax opinion is not a legal advice. It may have missed facts and could be incorrect.

Thanks Intreprid. I'm going to check Cintax right now.

Quote:

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Originally Posted by pyheme

Thanks MukatA

So should I assume that - for tax purposes - my H1-B started on October 1 (and not on December 12 as stamped in my passport)?

Do I need to join a copy of the Notice of Action received stating that I was approved for a H1-B starting October 1, 2007?


I realized that I forgot one last question. Filing as resident, I understand that I cannot claim the $5000 US-France tax treaty as deductible, but what about the social security and medicare charges?

I have not paid any social security or medicare for january to september as I was under F1 visa. Do I leave it this way if I file as resident or do I need to correct and pay both charges for all the year?

Will that affect my employer?

Thanks once again

Pyheme

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For the start date of H1-B, provide more information. Did you leave U.S. in 2007? Also what was your status when you left U.S.

MukatA,

I was working under the F1 - OPT with my current employer until end of September. On October 1, my H1-B started.
To get the H1-B visa in my passport, so that I could go abroad and re-enter the US, my attorney told me I had to make an appointment in a US Consulate abroad.
I went to the US consulate in Tijuana on December 12 and received my H1-B visa in my passport and my wife received her H4.

Since I'm paying FICA since October 1, I would assume that October 1 is the start date but I just wanted to be sure.

As for the tax filing, the most advantageous for me would be to wait for the 183 days in 2008 and file as dual status married filing separately.
Under the First Year Choice, this is a valid option, correct?

Thanks,

Pyheme

Yes, you should treat October 1, 2007 as your H1-B start date.

Yes, you will save a good amount of tax by filing joint return. On Dual status you will only get one exemption of $3,400 and no standard deduction.
On joint return you will get standard deduction of $10,700 and exemptions for both of you ($6,800).

But filing joint return implies that I will be resident for the full year.

I will then have to pay FICA for the whole year. At 7.68%, my total cash out of pocket will end up being the same as filing the 1040NR (What I save on income tax, I pay it on FICA).
+ I still have not understood how to do to pay FICA retroactively and what is the impact on my employer?

... except if I misunderstood the FICA part for F1 immigrants considered as residents?

I can itemize over $8000 in deductions from October to December (including property tax and mortgage interest expense on home I bought in September) + $4000 in IRA.
My wife has no income in US so no tax for her, I just cannot benefit from the $4000 IRA deduction for her.

So my idea is to file NR until October (so no FICA and no tax on interest income) and resident for October - December to enjoy the deductions that I cannot otherwise use under NR scenario (since I incurred then between Oct. and Dec.).
Counting tax + FICA, I would end up pay 35% less taxes (based upon my current calculations)

I sent my extension form and am waiting for the 183 days...

Thanks for your help throughout the process, and please let me know if I am misunderstanding something.