[sorin]

Hi. I am a resident alien in Bronx, NY. I starting (very early, I know :)) to gather information about filing my 2006 tax return, which is due at the beginning of 2007.

Here are a few things about my situation:

• I have two income sources, one from wages, another one is a scholarship
• My wife is non allowed to work in the US, so she has an ITIN
• I have a child who is under 5 and a US citizen (she has a SSN) - I claimed the Child Tax Credit for her last year
• Last year I filed form 1040a and the NY State IT-201 and IT-2 - married filing jointly, with one dependant (my daughter)

My employment and income status will not change. Now, I am expected to leave the US for good in the summer of 2006. I emailed the IRS to ask them about filing early, and they replied that the earliest I could file my tax return for 2006 is at the beginning of 2007. Fine with that, just I want to make sure I get everything right, since I will be filing from abroad...

Here are my questions:

(1) Do I have to file form 8822 - Change of Address? If yes, when and where do I send it (toghether with the federal tax return / before / other)?

(2) My wife's ITIN was issued (as all ITINs) for a specific address abroad, but the mailing address is that in the US (the same as mine, here). Do I include her on the form 8822 as well (if I need to file that form)? If not, do I have to notify the IRS that she is changing mailing addresses, for her ITIN to work? How?

(3) If I file 1040a and ask for Direct Deposit, will the IRS send one to a non-US bank account abroad? They said they will send a check abroad, but how about a Direct Deposit? (Checks from the US take very long and are expensive to cash or deposit where I go). Maybe I need to file a different form ?!?

(4) What mailing address do I use on the NY State IT-201? Maybe I need to file a different form ?!?

I have thought of another idea, but I am not sure whether it is legal and/or safe: to leave a bank account open here in the US, then file as if I am still here at the beginning of 2007, and ask for direct deposit to this bank account, and then wire the money to an account abroad. What I am concerned is that if any problem arises with my tax return, the IRS will mail it back to the address in the US, and I won't be here to correct it.

If any other information is needed to clarify this, please let me know. I would appreciate any thoughts and/or guidance on this (I believe) complicated matter. If someone has a better idea for solving this, I am totally open, as well...

Sorry for the length of the post and thanks a lot in advance.

Hoping to hear from someone soon,
Sorin

[AtlantaTaxExpert]

Sorin:

1 & 2) You CAN file the Change of Address, but it is not really necessary. Your address on your 2006 tax return will update your IRS file. Same logic applies to your wife.

3) The IRS and the state tax departments will NOT direct deposit into non-U.S. bank accounts. You will need to accept a check or re-open an account in a U.S. bank. You will need to file a dual-status return if you left the U.S. in 2006. The dual-status return is, for you, Form 1040NR with a Form 1040 attached to document your U.S.-based income. Filing a resident return will make you liable to pay taxes on income earned in your home country, even though your home country has already taxed this income. You will be able to claim your wife and child as dependents, but you will lose the right to claim the standard deduction for yourself and your wife. You WILL be able to claim the taxes that were withheld for NY state (and NYC?) as an itemized deduction, and you should be able to claim the Child Tax Credit. The dual-status return is somewhat complicated, so I recommend you get professional tax help to file it.

4) Use your current address in your home country. NY state knows how to deal with returns filed from overseas. I believe you will use IT-204 for 2006.

Using a U.S.-based address to file a tax return can be risky for the reasons you state. However, I see no legal reason why you cannot a U.S.-based bank account for direct deposit purposes.

If you have further questions, contact me at [email protected].

[rsermadevi]

Hello,
I held a G-4 visa in the USA from 1991 till 1999 and stayed in the US till Feb 2000. I am living in India since then. I have not been filing any tax in the US since I am an Indian citizen and also a non-resident alien in the USA. However, I have money in my 401(K) account which I could not withdraw when I left the USA since I was only 56 at that time. Now I am 62 and when I asked for the closure of the account, the 401(K) manager says that he would withhold 20% for tax. Should I agree for the withholding or is it possible for me to get exemption from withholding? Please advise me appropriately.
Thank you,

[AtlantaTaxExpert]

The 20% wihholding is required by law. That's to make sure you pay the taxes due and file a non-resident tax return to account for the money.

You may want to try a custodian-to-custodian transfer to a rollover IRA. Virtually any major brojerage house (Charles Schwab, Fidelity, Merrill Lynch) or mutual fund family (Vanguard, T Rowe Price, TIAA-CREF) will help you transfer the money. All of these companies have websites that you can access.

Once the rollover is complete, you can begin gradual withdrawals to reduce and possibility completely eliminate any tax consequences.

How much molney are we talking about?