Hi,
I have been in NY since August 2004 under H1B visa and claiming tax exemption for 2 years under a Foreign Tax Treaty for 2 years. This Sept 2006, I have been a RESIDENT for tax purposes, hence I am considered a dual-status tax payer for 2006. Hy husband and four children aged 14-17 joined me here in April 2006 under H-4 Visa. My questions are:
1) Do I have to file both Forms 1040NR and 1040 as married filing jointly? If not which forms do I need to file? Can I file as SINGLE in Form 1040NR from Jan-August and the Form 1040 as married filin jointly fro Sept to Dec. period?
2) My husband and children have no SSNs.
3) My son started college this Spring 2007 in a community college. What is the implications of this to his tax filing. Should he file a tax return? Which form?
4) What deductions, if any, can I claim?
5) Should my husband and children all file tax returns?

Thank you very. Your help is greatly appreciated.

brooklyn2035

Brooklyn2035:

Your filing of a non-resident tax return and claiming the tax exemption for 2004 was valid, since you had not yet met the Substantial Presence Test.

However, in 2005, since an H-1B is a work visa, you should have filed a Form 1040. Recommend you file a Form 1040X and amend the return. It may or may not result in you paying more tax. You even get a refund!

For 2006, you are still considered a resident alien. You probably should file Form 1040, as many NY residents itemize due to the high state and local income taxes. You should claim your four children as dependents. Since he is now a non-resident alien for 2006, you can also claim your husband as a dependent. You can also file jointly with him, which has the effect of doubling your Standard Deduction to $10,300. Unfortunately, if he earned income in your home country, that income becomes subject to U.S. taxes.

You will have to complete Form W-7 for each child and your husband, and attached a notarized photocopy of their passports. You send BOTH documents with your 2006 tax return to the IRS Center addressed in the W-7 instructions. The IRS will issue them ITINs and process the return. When you get the ITINs back in the mail, you can then file your state tax return.

For 2007, you may be able to claim the education credits or deduction for your son's college tuition, provided your income is not too high.

If you need my professional tax help, contact me at [email protected].

Thank you very much. Your explanation greatly helps.

Glad to help! :)