Raj:

I am Raj from India entered and working in US from Aug '06 through L1A visa. My spouse(not working) & kid(less than 3 years) joined me in Oct '06 through L2 visa. This is our first visit to US. I have a SSN but my spouse and Kid do not have SSN. I need to file my returns for 2006 jointly and please assist me in doing this.
What are the forms I need to fill? W2 form, W7 forms, Form 1040NR-EZ/Form 1040NR etc..
Do I need to fill two W7 forms for my spouse and 3 years kid? Should I wait to file my returns until they receive their ITIN? Or else, how should I do this?
Should I apply as a non-resident alien, resident alien or dual status?
The W2 form received by the employer did not have the correct mailing address and marital status. Do I need to correct this before filing my returns? Does the employer do the correction in W4 form also?
What are the attachments required along with the filled forms? Can I do the efiling for returns?
Do I need to show my taxation details at India for the remaining months from Jan - July ' 06?
Do I have enough time to file my returns as my spouse and kid need to get ITIN which would require 6 to 8 weeks? What would be the last date to file my returns electronically or manually?

Thanks,
Raj.

Raj:

Yours is a complex situation.

How are you paid, in U.S. dollars or in Indian rupees?

WHO is paying your, your employer from your home country OR a U.S.-based office of your employer?

WHEN are you supposed to rteurn to India?

If you apply for ITINs for your wife and child OR file as a non-resident alien, you CANNOT file electronically.

Please answer these questions.

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

I am being paid in US dollars by US based office of my employer and I will be here for another year.

As this is my first year and I have not passed the test(from Aug '06), I should apply as an NRA and my spouse/kid joined me later. As we all are NRA, can I file jointly with my wife or how should I file? Should I file as Married Filing Separately and include spouse and kid as dependants? Which one will be beneficial?

My kid was with me from Oct '06. Can I claim child tax credit or any other benefit? What are the supporting document I need for it.

What are the forms should I fill for all these?

Raj:

Because you are being paid by a U.S.-based office in U.S. dollars, your salary is subject to U.S. income taxes. Now, how to file?

If you file as a non-resident alien, you do not have the option of claiming your wife and child as dependents. That option is only available for Indian citizens on a J or a F visa.

You CAN file jointly with your wife and choose to be treated as resident aliens for the entire year, but that choice will make ALL of your 2006 income (U.S. or India-based) subject to U.S. taxes. You will be able to claim the Foreign Tax Credit, but that credit is NOT dollar-for-dollar. This will allow you to claim a double standard deduction of $10,300. Your child will be eligible for the $1,000 Child Tax Credit, but NOT the Earned Income Credit.

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

Thanks for the prompt reply!

I shall file jointly with my wife and choose to be treated as resident aliens for the entire year. I have few doubts here.

a. Can I file immediately or should I wait till June/July as my spouse and Kid are here from Oct '06 and me from Aug '06.

b. Do I not get a double personal exemption of $6,600 along with double standard deduction of $10,300?

c. Should I show my kid as dependent? How should I claim child tax credit for my 3 yrs kid. What form should I fill to get child tax credit and do I need to attach any supportive documents for this?

d. What are all the forms I should fill to file my returns jointly to be treated as resident aliens for the entire year with my kid as dependent?

Raj.

Raj:

a. You will need to wait until late May to file, because you have not yet met the Substantial Presence Test.

B & c. Yes, you will get a $3,300 exemption for yourself, your wife AND your child, or a total of $9,900. Your child is eligible for the Child Tax Credit. No special forms or support forms are needed.

d. There is a statement that you and your wife must sign stating that you qualify to be treated as resident aliens for 2006 and that you DO choose to be treated as such. See page 9 of IRS Pub 519.

My Husband and I both have L1A visas. He works at the US office and is paid in USD with withholding ans so forth, he also has some income from the Canada Co. and paid tax there. I am paid from the Canada office and do not receive income from the US office. We have done our Canadian tax returns where we had to report foreign income for him. But in US we are not sure what to do. If we file jointly does my Canadian and his Canadian get filed on his or what is the reporting process.

You will declare all world-wide income and submit Form 1116 for the Foreign Tax Credit for the Canadian taxes.

If you need professional help, this IS what I do. Please email me at the address in my profile.