Hi,

I've been working in US on H1 since 2006 and left to India in October 2007, got married and came back in jan 2008. My wife came to US in may 2008 on H4. Since I'm a resident for tax purpose based on substantial presence test, my spouse chooses to be treated as resident for 2007. So we are planning to file 1040 and w7 and a declaration that we made this choice. 1)Please let me know if there is anything wrong with this approach.

My spouse had some income in 2007 while working in India. So my question is where do I show this on 1040 and can I claim exemption for this income using form 2555? If yes, how do I put this info on 1040?

2555EZ line 17 and line 18 say that I have to add the foreign income to line7 of 1040 and mention the exempted foreign income in parenthesis in line 21 of 1040 and write 2555-ez next to that amount. Then I've to subtract this amount from my income to arrive at my total income on line22 of 1040.2)Please confirm if this is the right way to do this.

Here is the verbatim from 2555EZ:
17 Enter, in U.S. dollars, the total foreign earned income you earned and received in 2007 (see instructions). Be sure to include this amount on Form 1040, line 7
18 Foreign earned income exclusion. Enter the smaller of line 16 or line 17 here and in parentheses on Form 1040, line 21. Next to the amount enter “2555-EZ.” On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22 ©

Thanks
Taxpayer83

Taxpayer83:

Your process seems accurate, but the methodology of how your taxes are determined WILL be different due to the Form 2555-EZ.

I STRONGLY you get professional help doing this. I am available at the email below, and could probably have your return done and mailed to you by Saturday at the latest.