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deepak_bagaria · May 18, 2008, 06:51 PM

I was in USA for 198 days in 2007 in L1 visa from June 07. I get my salary in India and get per diem in USA. My salary is taxed both in India and USA. I get married in Nov 2007 but my wife joined in jan 08 in USA. I file with Dual status return taking personal deduction both for me and my wife. I didn't avail standard deduction. IRS disallow personal deduction of my spouse. Question- Can I get standard deduction 2. why do IRS disallow personal deduction of my spouse 3. I get tax credit of taxes paid in USA in India Income tax return. Since, I get the refund of some dollar back from IRS, do it will be taxable back in India. Can I get the tax credit of social security and medicare tax paid in USA.

MukatA · May 18, 2008, 06:55 PM

Your visa and your spouse visa?
When did you enter the U.S. Did you leave U.S. in 2007, if yes departure and arrival dates?
Are you still in the U.S. or have lef the U.S.

deepak_bagaria · May 18, 2008, 06:57 PM

I am in L1 visa and my wife joined me here in L2 visa

deepak_bagaria · May 18, 2008, 07:09 PM

Hi.. IRS says that I have not filed providing my spouse SSO or ITIN. Can I apply for ITIN now and claim the decuction for my spouse. Thanks for your help

MukatA · May 18, 2008, 07:30 PM

Since you completed SPT in 2007, you were eligible to file joint return as resident. You will get standard deduction of $10,700 and exemptions for both of you.
You must both declare your worldwide income for 2007. If you have any foreign income, and on that income you paid taxes in the foreign country, then you can claim foreign tax credit.
You will complete forms W7 (application for ITIN) for your spouse attach with your tax return.
You can also deduct moving expenses. Use form 3903. Read: Your U.S. Tax Return: Moving Expenses

On the dual status you can claim exemption for your spouse but you needed to attach W7. You do not get standard deduction on dual status return. You can deduct moving expenses.

deepak_bagaria · May 18, 2008, 07:38 PM

Thanks MukatA for your response. I was getting per diem here for my stay and my salary get credited to India bank account. My wife did not join me in 2007 but came in usa in Jan 2008.I am not sure why my consultant put me in dual status. I was thinking he did so since I was getting salary in India and was on temorary work visa for the time in 2007. Actually I took foreign tax credit in India for taxes paid here. I have already filed my return and IRS this allow my wife personal deduction. What can I do now. Can I file ITIN for my wife now and claim deduction.

AtlantaTaxExpert · May 19, 2008, 02:36 PM

Deepak:

It does not matter WHERE your wife was in 2007; she could be on Mars for all the IRS cares. You can still file jointly with her and claim the $10,700 standard deduction.

You DO have to claim ALL world-wide income for 2007, but if you can show that you were in your home country for a full year prior to your arrival to the U.S. you can file Form 2555 and exclude the home-based income under the Foreign Income Exclusion.

The reason the IRS disallowed your wife's exemption is because you claimed her as a dependent. To do that, she MUST be physically located in the U.S.

To fix your return, you need to file Form 1040X, filing jointly with your wife and re-submit her Form W-7 (I assume that an ITIN was NOT issued).

If you need professional help doing this, contact me at the email address listed below.