[jk999]

My wife and I were in the US right from the beginning of 2007. I have been on H1B throughout the calendar year. We are citizens of India.

She was on H4 attending school full time starting Sept 2006. We filed for her change of status to F1 visa. Her application was approved on Aug 08, 2007, following which she received school funding for the remainder of 2007 (Sept - Dec) and has some stipend income and tuition waiver during the later part of the year.

She passes the substantial presence test (greater than 183 days on H4). But what about her student income (close to $5000)? Does the tax treaty with India apply to her? Also how can we maximize refund, by filing jointly or filing separately?

Please share your opinion.

Thank you in advance.

[AtlantaTaxExpert]

You can file separately as resident aliens, or jointly as resident aliens, in 2007.

More than likely, filing jointly is best.

For 2008 and beyond, you can continue to file jointly, or you can file separately, you as a resident alien and your wife as a non-resident alien. Your choice!