Hi experts,

I have been in the US since Sept 2003 and graduated from my school in may 2005. I filed as a Non-Resident for 2005 (was on OPT from Jul-Dec 2005)

I was on my OPT (Practical training) with an employer till 1st July 2006, I went back to India as my OPT period had expired. I then came back to the US on a H1B visa on 1st Dec 2005. Now, my employer provided me with 2 W-2 forms, one for OPT one for H1 (1 month).

How do I file taxes as a resident or non-resident? 2 separate forms? 1 form 1040 NR or NR-EZ?

I see that on my F1, I do not include the years in the Substantial Presence Test (5 yrs exepmt?). Is this correct?

If you are married, you have the option of filing as a resident alien with your spouse. You would have to wait until early June to file in order to meet the Substantial Presence Test, and your world-wide income (including whatever you earned in India) will be subject to U.S. taxes.

OR

If you are single (or do not want to pay taxes on your India-based income), you need to file a dual-status tax return (Form 1040 with Form 1040NR attached). This is an exceptionally complex return, so you may need professional help!

If you need professional help preparing your return, please consider using my services. You will find my rates extremely competitve. Contact me at [email protected] if you are interested! I have references from clients who are people just like you.

Hi David,

Thank you for your response. I am single, and the income in India is not a concern as I only received expense reimbursement.

Just a question though, since I clearly fail the substantial presence test, being on the h1b only for 30 days or so. And the rest of 2006 & previous years were exempt because of my F1 status. So, Can I not file just as a non-resident? This would help me avoid the dual filing status.

At one point in time, I thought you would be able to file as a non-resident alien. I agree that it is MUCH simpler than filing the dual-status return.

However, TaxSearcher and I had a lively discussion about this via e-mail, and he convinced me that filing dual-status is REQUIRED by the Internal Revenue Code in case like yours. It is not a pleasant process, but that is the legally correct tax return to file, and you want to be legally correct in case you wish to file for green card status later in your career.

It would help if you could share the reason for your suggestion. What IRS publication should I look into for the information?

As far as being legally correct is concerned, I can see that I fail the substantial presence test. Right?

If this is the case, then I am classified as a non-resident as per the IRS. Why would I need to file a dual status? I don't mind filing the complicated return but I just wanted to be sure of the reasoning.

ATE is misquoting me somewhat :)

The debate that we had was whether a person who is a resident at year end can file as a resident for the whole year, even if they arrived part way through the year. People in that situation must file a dual status return (unless they are married and make the appropriate election).

In your case, if you were a non-resident at year end, you must file as a NR. Alternatively, you could wait, meet the SPT in 2007 and then make the first year election, allowing you to file dual status in 2006. And if you have not had 31 days in the US then you would not even have this option. But certainly your default outcome is NR for 2006.

I will not argue with TaxSearcher on this case. I defaulted to dual-status because you were in the U.S. for the last month of the year.

If he says that you could file as a non-resident alien, then by all means do so. It IS the much easier return to file.

Thank you guys for all your help, I appreciate it.

Glad to help!