Hi
I am an Indian Citizen (on H1B), married with 2 small children (they are on H4). We shifted to US in Oct 2011 all together. We came to US from Switzerland where I was working for past 6 years. I have filed my income tax return in Switzerland for the period Jan 2011- 30th Sept 2011.

What is the best way for me to proceed. Should I take an extension and file later when I get the substantial presence. In that case then how will my income from Switzerland be taken. Or for 2011 , I file as Non resident. In that casecan I file jointly with my wife or I have to file it as single. Can I take the deduction for children ?

Choice 1: If you did not complete SPT in 2011, you can file non-resident tax return.
Choice 2: You can file resident tax return as Married Filing Jointly. You will have to wait to file your tax return till you meet the Substantial Presence Test in 2012.
You must both declare your worldwide income for 2011. If you have any foreign income, and on that income you paid taxes in the foreign country, then you can claim foreign tax credit (Form 1116) or you can use Foreign Earned Income Exclusion (Form 2555). Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income
You will complete forms W7 (application for ITIN) for your spouse and attach with your tax return. You can also deduct moving expenses. Use form 3903.

I think if I file as a resident, I can get a amount of refund for at least this year as then can take deductions for spouse and children.
Is the procedure to file as resident with from 2555 simple.
To take extension , I need to fill up a form 4868 , however I have to also fill 1040 to know what is the tax liability . Is this correct.

On joint return you will get standard deduction of $11,600 and exemptions ($3,700 each) for both of you and the kids. You will also get child tax credit of $1,000 each.

Thanks a lot.
What about with Non Resident? What if , in order to avoid complications for 2011 of my foreign income till 30th sept 2011, I file as Non resident with 1040NR for the period of Oct - Dec 2011. What deductions I get or not get.
Also Can I then convert as resident for the next year if I stay here the complete year 2012.?

Thanks a lot for your help and support. .

You could file a dual-status year for 2011.

There is no way should should file as Dual status for 2011.

Dual status is appropriate, and important if you are a NRA at the beginning of a tax year and an RA at the end. It is important because of how each of these statuses treat worldwide income. If you make the first year choice for 2012, you could choose to be an RA for the portion of 2011 that you were present in the US for the first 30-day period (along with some other tests). Thus, you MIGHT find that dual status s the best way for you to file for 2011.I don't know that without knowing much more about your situation. MukatA, would you like to explain further? Your response was rather snippy and rude.

In 2011 you are nonresident as your days of residency are far less than 183. If you complete SPT in 2012, you can choose to be dual status for 2011.But it does not make any sense tax wise to file dual status as you are married and can choose to file joint return as residents for 2011. With dual status you do not even get standard deduction. With joint return both of you get standard deduction and you also get exemption deduction for your spouse.
It appears AliTax loves dual status filing that is why on every post AliTax replies, AliTax recommends dual status filing.

What an unprofessional response from a CPA!

MukatA:

AliTax has a point about doing the returns BOTH ways to determined which is best. MOST of the time, filing jointly with the spouse IS the best way to file, but NOT always.

And he is right, your comment about him being in love with dual-status IS unprofessional.

AliTax:

But YOU do not have to react in such a manner. There are other ways to address this with MukatA, such as a private message.

The idea of this forum is to discuss such tax matters rationally and calmly, without resorting to the calling of names. Let's TRY to act like adults!

Thank you guys for all the effort and answers. Really apprecaite it...

So as I understand from the replies, the best way would be to go for extension with Form 4868. I also fill in form 1040 to fill up the figure in the form 4868.
So then in Oct 2012, I file the return as Resident Alien and file jointly with wife and children with ITIN W-7 form. Also I will need to file form 2555 simple. However with that I can only exclude up to approx $92,000- maximum of my foreign income for year 2011. In case I have higher foreign earnings it will be added to the income of 2011 in form 1040. Is this correct?

OR

The other option is to just file 1040 NR for 2011 and get it over with, In that case I can not file jointly with my wife and also not take standard deductions and also no deductions for children. But I will not be required to file form 2555. So most probably will end up getting no refund...

ManishBack:

You should get professional help and have the return modeled BOTH ways to determine which way is best.

If you want my professional help, double-click on my title above and scroll down to my profile/signature. You will find my email address and websites there.

Yes, ManishBack has three choices:
1. File nonresident tax return.
2. Wait till he completes SPT in 2012 and then file dual status tax return.
3. Wait till he completes SPT in 2012 and then file joint return as residents.