Hi,
I moved to the US on Jul 7, 2014 and stayed throughout the year until Dec 31, 2014. My wife & the kid joined me on Jul 21, 2014 and stayed throughout the year.
How should I file my tax return 1040 or 1040NR to get maximum benefit?
1. I am not able to add my kid as a dependent or qualifying child as the substantial presence test is not valid.
2. The kid does not have ITIN. I have to apply for her.
3. My spouse has SSN, but did not work last year.
4. How can I make use of First year choice? If I can use this option, can I file my tax returns as Married filing jointly as US Resident Alien (applies to me, spouse & kid)?
5. For q:4, do I have to wait until we all meet substantial presence test in 2015. If so how long? Is it better I apply for an extension of filing.

Thanks,
VR.

You CAN file a joint return with your wife and claim your child as a dependent on that return, but you will have to wait until May 2015 to file in order for you and your CHILD to meet the Substantial Presence Test. Submit Form 2848 to get an extension for filing.

If you file jointly, you will have to declare all world-wide income. You can file Form 1116 to claim the Foreign Tax Credit for taxes paid on your salary in your home country. This applies for your salary AND your wife's salary if she worked.

The IRS also has Tax Assistance Centers through which you may be able to have the passport verified as genuine, then submit the tax return and Form W-7 IN PERSON to be forwarded to the ITIN Processing Center in Austin, Texas for processing.

You go to the TAC with your wife and child, the child's passport, the SIGNED Forms W-7, and the completed and SIGNED tax return with your W-2s.

The IRS official verifies the passports, asks a few questions, completes the certification paperwork, checks the Form W-7 and tax return, then returns the passport with a receipt for the tax return and Forms W-7, which is sent to Austin, Texas for processing.


You leave the TAC with your wife and/or family, the passport and a receipt for the Forms W-7 and the tax return.

You would get the ITIN about six weeks after you left the TAC.

The tax returns are NOT processed at Austin, Texas, but rather forwarded to the regional IRS centers for processing, so the refund will come about one month AFTER you get the ITIN letters.

The list of the TACs are at the link below:

Taxpayer Assistance Center Locations Where In-Person Document Review is Provided

If you need professional help with this process, email me at the email address in my profile.

Thanks for the awesome answer and pretty much what I was hoping for! One quick question: I did work with the same employer in my country until I moved to the USA on intra-company transfer visa (L1). Also the taxes were deducted for the home country. I was paid from Jan-Jul 7 (until I moved to the US) and all taxes were paid. My question: do I have to still declare the full year home country income from Jan-Jul 7 or should I report the home country income from Jul 7-Dec 31,2014 if I was paid in my home country? Thanks for your time, VR

Also, one more last question: How should I treat my IL state tax? Do I have to treat the same way as Federal by applying for an extension OR do I have to file state as SPT is not required? Thanks.

You have to report ALL world-wide income earned in Calendar Year 2014.

You can file the IL return immediately if you omit your child. Otherwise, wait until you get the ITIN back.

The federa extension also applies to IL.

Quote:

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Originally Posted by AtlantaTaxExpert

You have to report ALL world-wide income earned in Calendar Year 2014.

You can file the IL return immediately if you omit your child. Otherwise, wait until you get the ITIN back.

The federa extension also applies to IL.

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Hi, can you please clarify on this:
1. By choosing the above way, will I be treated as Dual Status tax payer? If so, can I NOT go for Standard Deduction? (ref: IRS 519 dual status taxpayer)

2. When I report my foreign income from Jan - Jul 7 2014, do I have to complete form 2555 OR ONLY form 1116?

3. The income from foreign will be added under section Incomes in Foreign earned income?

Thanks,
VR.

Hi, can you please clarify on this:
1. By choosing the above way, will I be treated as Dual Status tax payer? If so, can I NOT go for Standard Deduction? (ref: IRS 519 dual status taxpayer)

2. When I report my foreign income from Jan - Jul 7 2014, do I have to complete form 2555 OR ONLY form 1116?

3. The income from foreign will be added under section Incomes in Foreign earned income?

Thanks,
VR.

1) If you are MARRIED, then you have the option to file a JOINT return as a resident alien. You will actually aign a statement that you CHOOSE to be treated as a resident alien. So, the answer is NO; it is NOT dual-status, but rather it is a joint resident return.

2) Only Form 1116. In order to qualify for Form 2555, you must be out of country for 330 days, and you must START that 330 day period as a resident. The choice option noted in #1 above starts on 1 Jan 14, and that is NOT the start of the 330-day period.

3) Yes, for calculation of the credit, but you must also add it to Line #7 of Form 1040.

Thanks much once again for your quick reply.

Would really appreciate if you could touch about Standard Vs Itemized deduction. As its not dual status and it is a joint resident return, can I assume that I can go for Standard deduction?

Filing jointly, you WILL be allowed to claim the JOINT standard deduction of $12,400. THAT is the reason most people use the Marrued option under First Year Choice.

Thanks much, but I seriously have the question again:
1. Had I not become dual status - why should I declare foreign income?
2. if its dual status, standard deduction is clearly not allowed.
I saw in other forum that only itemized allowed. Please clarify.

this topic is what am referring to => http://www.expat-tax-help.com/all-other-tax-topics/taxation-of-dual-status-aliens/

Sorry for the confusion, I read through the 519 and found that the special restriction do not apply if filed as Married Joint. Thans much for your time!

Really helpful!

Glad to help!

I ll request your help in preparing some forms. Will reach out to you some time in May/ June at your personal email address. Thanks.

Excellent! I will be waiting!

Quote:

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Originally Posted by AtlantaTaxExpert

Excellent! I will be waiting!

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Hi,
I am planning to file the extension some time this month. But when I reviewed the tax, it looks I have to pay additional $250 for the IL state tax.

Should I have to pay before the due date or can I pay the amount when I file the return after May 2015? Please note I had income tax withholding of $1800 as IL state tax.

Thanks.

If your tax computations say you OWE Illinois $250, then make sure you PAY Illinois $250 when you file the Illinois Form IL-505-I.