Hi,

I am an indian , who changed from f1 to h1 in oct 05. My husband was in india throughout 2005. I was there in US on h1(b) only for 45 days as I went out of country after that.

My question is :

1) what is my filing status?
2) Can I claim treaty deduction?
3) Can I claim an exemption for my husband?

Thanks,

VSR333:

1) You are dual-status.

2) Because you are an Indian citizen on a F-1 visa for most of the year, you can claim the $5,000 standard deduction allowed under the U.S.-India Tax Treaty.

3) Yes, I believe you can claim an personal exemption for your husband IF he had no income during the 2005 tax year.

Hi Tax Expert,

Thank you very much for the reply. But I still have somemore questions concerning the forms I need to fill. My questions are :

1) Should I file 1040 NR or 1040?
2) What do I do with the income I earned on H1 Status ( three months pay)?
3) My social security and medicare were deducted from oct to dec?
4) Is it true that if I wait till I complete my 183 days on H1 visa, I can file as a resident alien and also claim my husband?

Thanks a lot for your help.
vsr333

VSR333:

1) Since you are dual-status, you must actually prepare both a Form 1040NR and a Form 1040. See IRS Pub 519 (which can be downloaded from www.its.gov) for details.

2) The H-1B income, along with your personal exemption, is claimed on the Form 1040. The F-1 status income, along with the standard deduction and your husband's exemption, is claimed on the Form 1040NR.

3) The withholding of Social Security and Medicare taxes while on H-1B visa is correct.

4) Did you not say you left country after 45 days? If so, then the process you refer to (First Year Choice) will not apply to you.

Hi tax expert,

Thank you very much for your replies. Would you please answer my following questions?

1040 NR (F1 Visa )-
-> What is the standard deduction amount?
-> Is husband's exemption 3200$?
-> Can I not claim my personal exemption here ( another 3200$ here)?
-> Can I use the treaty deduction being in dual status ( 5000$)?

1040 (H1 Visa) -
-> What is the standard deduction amount here?
-> Can I not claim my husband here as I am resident alien during this period? He doesnot have a TIN number but is in US now (H4 visa).
-> Can I itemize my deductions for the whole year here?

Thanks,
vsr333

Before I answer any question, you need to clarify something.

Where are you now? In the U.S. or in India?

Hi tax expert,

I am in US right now on H1(b). My husband was in india last year and he came to US in jan 2006.We got married in Jan 2005. I was in US all throughout the year except for the last 45 days of the year ( H1(b)).

Thanks,
vsr333

VSR333:

Okay, if you file dual-status, you can claim your husband as a dependent.

If you file late in 2006 (no earlier than 15 June 2006) undet the First Year Choice, you will be able to file as a resident alien and file jointly with your husband as a resident alien. He will be treated as a resident alien as well. You would apply for the ITIN using a W-7 and a notarized photocopy of his passport, attached to the Form 1040/1040A/1040EZ and sent to the address on the W-7 instructions. The IRS will issue the ITIN, insert it next to your husband's name, and process the return. They will then mail you your husband's ITIN, at which point you can then file jointly with your husband on your state tax return.

I recommend the First Year Choice option, as that will increase your standard deduction from $5,000 to $10,000, as well as allow you to claim personal exemption for both you and your husband. If you file dual-status, you only get a standard deduction of $5,000 and the two personal exemptions.

You need to file an extension (Form 4868) with the IRS. Do a quick tax return to determine if you owe money. If so, send a check with the extension. Do this no later than April 17, 2006.

Hi Tax Expert,

I'm confused seeing your answer. I remember you saying in previous discussions that if you are in US for more than 183 days on H1b then only you have to apply as dual status if not you have to apply as non resident.

I'm an Indian and I worked in California USA on F1 till July 5th and on H1b from (july 5th-dec 23rd which is not more than 183 days) I left USA for good on dec 23rd 2005.

a) What are the forms I have to submit (actually looking at your previous replies I was planning to submit 1040NREZ as a non resident.)?

b) what all dedcutions I can claim in federal forms and how much are they?

c) what are the state tax forms I have to fill?

d) as I stayed less than 183 days Can I apply for my SSN and Medicare return? If so How can I do that?

I'm right now in india and totally confused. Please help me

Thanks,

Gomathi.

Gomathi:

I did say that some would have the option to filing a non-resident alien even if they had H-1B visa time in 2005. That was NOT correct. In a later post, I corrected that position and have, for about two weeks now, been saying consistently that anyone with both F-1 and H-1/H-1B visa time need to file either as a dual-status or a resident alien (under the First Year Choice).

So...

a) Form 1040NR-EZ is probably your best option since you have left to return to India for good. It is reasonably simple to fill out.

b) You have got to be kidding! The IRS publishes IRS Pub 17 (which is 216 pages long) each year to cover the highpoints of all the deductions and credits available to resident aliens and U.S. citizens. J.K Lassiter writes a tax book each year that retails for about $30 that is 300-400 pages long to cover the same subject in more detail. IRS Pub 519 (which theoretically covers your circumtance, albeit not very well) is over 60 pages long and is nowhere near comprehensive. What makes you think I can answer such a broad question on a tax forum?

c) California has an excellent state government website where you can download all the forms you need; just put "California state goverment" in Google and search until you fine the Franchise Tax Board. You can start with Form 540 or 540_2EZ, and work from there.

d) Not if you were on a H-1B visa. Anyone who comes to the U.S. on such a visa is subject to Social Security and Medicare taxes from the day they arrive to the day they leave. It may not be fair, but that is the law!

Try filling out the Form 1040NR-EZ and the California forms. If you are at your wit's end, contact me at [email protected] with details and I'll try to help!

Hi Tax Expert,

I have few questions regarding the tax returns for F1 - H1 status. Why can't everyone do the first year choice and not dual status return?

In my case, if I plan to file my taxes on April 10 2006:

1) I would have passed the substantial test for 2006
2) The number of days between the first 31 day period to the last day of the year 2005 is more than 75 %.
( My doubt here is the during first 31 day period, I was on F1 visa. Am I correct in this?)

I used the method on page 9 of 519 publication to figure out whether I am eligible to do the first year choice as resident.

What tax table do we use to figure out taxes as residents?

Thanks,
Shruthi

Read the STICKY post. People converting from F-1 to H-1 are not eligible for dual status.

They can file as a non-resident or, under First Year Choice, resident alien.

Tax Expert,

You had earlier asked me to file as dual status. But later you said I need to file as resident alien. You are contradicting what you are saying yourself. Would you please give me proper guidance?

Thanks,

VSR333:

I know I am contradicting my earlier guidance. That is why the STICKY post is on the forum.

Tax work is a complicated business, and occasionally errors are made. When I made the inference that dual-status applied to F-1 to H-1 conversions, it made logical sense, but Dr. Carter proved that the inference was incorrect. I have so stated that fact on the STICKY POST, and have modified my guidance accordingly.

The guidance I gave you Monday at 10:10 P.M. is accurate.