Hi,

I am wondering how to file my 2006 tax return. I came from P R China in 2004 as an F-1 student. In Oct. 2006 I tranferred to H-1 visa. In Dec. 2006 my wife came to US with H-4 visa. I did not pay social security and medicare taxes before Oct. 2006 because I was in OPT.

My questions are:
1. Can I file tax return jointly with my wife? In which situation can I do so?

2. I should be able to file an extension (f4868) first and wait till July this year to use first-year choice. At that time can I file as dual-status/resident alien? And what are the benefits to do so? I doubt that I cannot have standard deduction in this way.

Could you please help me decide how to file my tax return to minimize my tax payment?

Thanks in advance.

1) Yes, as two exercising First Year Choice and choosing to be treated as resident aliens for the entire year. Recognize that by doing so, your wife's China-based income becomes subject to U.S. taxes.

2) Yes, file the extension. If you wait to file as resident aliens, you CAN claim the double standard deduction of $10,300.

It is most likely that filing jointly as resident aliens is the best way to go!

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

Thanks AtlantaTaxExpert!

Do I need to pay social security and medicare taxes again if I file as resident? I only paid thoese taxes after Oct. 2006.

By the way, can I have US-China Tax Treaty Benefits and standard deduction at the same time?

No, you do NOT need to pay the Social Sceurity and Medicare taxes prior to your H-1B status.

No, you cannot claim the China Tax Treay exemption if you file jointly with your wife as resident aliens.

AtlantaTaxExpert,

To make first-year choice, I should write a statement to make the first-year choice as per pub 519. Do I need to submit form 8843 as I did in the past two years as an F-1 student?

My second questions is about two forms I received from IRS. I got $819.9 refund from IRS last year and IRS paid me $26.20 tax together with the refund. IRS sent me two forms form 5205 and 1042-S. The forms state that the income to be included on my 2006 return is $26.20 and credit to be claimed is $2.62. Since I file as resident, I don't know how to file 1042-S together with 1040. Do you have any idea on how to file such income?

Thanks a lot!

If you are filing dual-status as your first year choice, then file the Form 8843. If you are filing as a resident alien, then no Form 8843 is required.

Report the Form 1042-S income on Line 21 of Form 1040. Attach a copy of the Form 1042-S if taxes have been withheld.