[PackerRaider]

Hi,

I have a question regarding the tax filing status. My Wife and I are both on H1-B visa, I'm resident as per Substantial Presence Test and my wife will be a non-resident when we file taxes next year.

As we are planning of filing taxes "Jointly", should we be filling taxes as a non-resident or a resident alien?

If we can file as a resident, will we be eligible for "First-Time Home Buyer Tax Credit" (We are planing to by a house this year)?


Thanks!

[AtlantaTaxExpert]

If you file jointly, you both are CHOOSING to be treated as resident aliens for ALL of 2008.

If you file as a resident, then, yes, you SHOULD be eligible for the credit.

However, you should consider carefully the wisdom of buying a house, given the fact that your job situation under an H-1B visa is NOT very stable. While multiple job changes is a fact of life in the American job market, your job circumstance has the added handicap of requiring that you LEAVE THE COUNTRY if you cannot find another firm that will sponsor your H-1B visa.

Buying a house is an expensive process, with an average cost of 3-to-3.5% of purchase price in closing costs, PLUS the cost of establishing your household (that can be up to $20,000), PLUS the costs of selling your house when you eventually return to your home country. Those sales costs can be as high as 15% of the sales price of your house.

Add to that the fact that the American housing market is undergoing dramatic swings in value at this time due to the credit crunch caused the sub-prime mortgage crisis, and you can see that you may be entering the housing market at the WORST possible time.

I do NOT want to discourage you in buying a house; it is, after all, the Great American Dream. In doing so, however, you are taking some significant risks which could cost you tens of thousands of dollars should you be forced to sell your house quickly prior to your forced return to your home country.

Think about this! Think about it LONG and HARD!