[lilicoco]

Hi ATE,

I read several of your postings and I really appreciate your professional knowledge and your kindly helping everyone here. I did some research myself and I would like to ask your help to solve some of my questions.

My status is:

OPT: 06/01/2005 - 05/31/2006
H1: start at 11/1/2005
Started work: 9/1/2005
My salary is: $20,800

My husband is on his H1 during entire 2005.
My husbands salary is: $42,500

My question are:
1. Should we file jointly, both treated as alien residents or we should file separately, with his status as alien residents but my status as NR or dual status? What do you think will benefit us more?

2. My husband paid MBA tuition in 2005. Can we count total expense in form1040 p1. Line 34 "Tuition and Fees deduction" to be a subtraction of our AGI? If we can, we can do this only when we file jointly, right?

3. I started to work from 9/1/2005. My H1 is valid from 11/03/2005 to 10/01/2008 according to the I129 notice from USCIS. I went back to my hometown with my F1 (OPT) visa and re-entered in Feb 2006 with new H1 visa. Should I say my H1 start from 11/03/2005 but not the date I came back from my hometown with my new visa, right? Could you advise?

Thank you very much. I look forward to hearing back from you :D

LiLiCoCo

[AtlantaTaxExpert]

LiLiCoCo:

File jointly and have you both treated as resident aliens. It's much simpler, and you will get a combined $10,000 standard deduction, plus your husband can claim the education credits. If you file jointly, the date your H-1B started is irrelevant.

[lilicoco]

Thank you so much for your prompt response. I would like to make clear about following points:

1. Can we use ALL the tuition my husband paid for me in 2005 as subtraction of our joint income?

2. You have mentioned SSN and Medicare tax are exclusive from resident/non resident status. I found I misunderstood the relationship between these two taxes and my status before….. I thought in the first year I can choose to be alien resident or NR, so I had my company stop withholding my these two taxes since I can choose to be filed as a NR and I don’t need to pay SSN/Medicare tax. So my SSN/Medicare taxes are not withheld from October 2005 to my last pay period in March 2006. In this case, what will be the impact on my filing tax returns in 2005 and 2006? Since these two taxes are independent from filing status, I should pay them since I got the notice from USCIS in Nov.2005, my reentry to the US in Feb. 2006, or even when my OPT expires in May 2006?

3. To file jointly is a more efficient way for my husband and me. But will it save us more $?

I would like to apologize if I ask same questions as other people did in this forum. I did try to read most of your threads but I guess I still missed some of them. And really, I appreciate your being patently answering our questions. Thank you very much!

:) LiLiCoCo

[AtlantaTaxExpert]

1) There is a $4,000 cap on the deduction. How much tuition did he pay, and did the education help in his current job/position?

2) The collection of Social Security and Medicare taxes by your employer is keyed on your visa status. The day you start H-1B status is the day they should be collecting the tax. You must keep the employer informed, then it is their responsibility to collect the taxes.

3) In aout 90% of the cases, couples pay less tax if they file jointly. There are exceptions to the rule, but it is not likely.

[lilicoco]

Thank you for the answers!

The tuition was paid for me; it's related to my current job. At that time I was his dependent in reality. But at the end of the year I got a job and started to have income. Actually we both paid... sometimes by my check and sometimes by his credit card. We can still claim this deduction right?

[AtlantaTaxExpert]

Yes, you can still claim the deduction if the Form 1098-T shows that, after you subtract the scholarship/granst from the tuition due, you acutally owed money. The fact that you paid it by credit card is irrelevant.