[adhurka]

Hi,
I am confused about my residency/filing-status requirements for 2009 tax return. I am an Indian citizen and here is my current situation:

-- I arrived in California in Sept 2007 on a F1 Visa
-- Got married (in India) in March 2009 and my wife joined me on F2 visa
-- I started a new job after graduation in July 2009
-- We changed our status to H1B and H4 on Oct 1, 2009
-- I have an SSN, but my wife has no SSN/ITIN
-- We have no children

My questions are:
1. Am I a resident-alien/non-resident-alien for federal tax purposes? Substantial presence test suggests that I am a NR-alien.

2a. For Federal return, what filing status should I choose? Married filing jointly or Married filing separately?

2b. If I choose Married filing separately, how should my wife file her taxes? Is she even required to do so? I am already filing a W7 for her ITIN application.

3a. For CA return, what filing status should I choose? I know I am a resident for CA tax purposes. Married filing jointly or Married filing separately?

3b. If I choose Married filing separately, how should my wife file her taxes? Is she even required to do so?

Any help would be really appreciated.

Thanks in advance.

[MukatA]

Choice 1: You can file non-resident tax return.
Choice 2: You can file resident tax return as Married Filing Jointly. You will have to wait for 5 months to file your tax return till you meet the Substantial Presence Test (of 183 days) in 2010. Your U.S. Tax Return: Substantial Presence Test
You will get standard deduction of $11,400 and exemptions ($3,650 each) for both of you.
You must both declare your worldwide income for 2009. If you have any foreign income, and on that income you paid taxes in the foreign country, then you can claim foreign tax credit (Form 1116) or you can use Foreign Earned Income Exclusion (Form 2555). Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income
You will complete forms W7 (application for ITIN) for your spouse and children and attach with your tax return. If you decide to file as Married Filing Jointly as First Year Choice, you must attach a statement signed by both of you to your return stating that you qualify to file as residents as First Year Choice and that you CHOOSE to file this way.

You can not file as married filing separately. For CA also file joint return. For CA you are full year resident and your spouse is part year resident.

[adhurka]

Thanks for your reply MukatA.

If I choose Choice 1: Filing federal as non-resident, I believe, I'll have to file as married filing separately. Is that correct? If that's the case, will I be able to file a joint return for California? I believe that CA rules say that the state and federal filing status should be the same.
Also, since my wife shall be applying for her ITIN with a federal return, what ITIN should I put on the state return for her? (She has no income)

Also, while filing my federal return as non-resident am I allowed to take the following deductions?
-I bought a second-hand car, am I allowed to take a deduction on the tax I paid for that?
-I paid interest (~$2200) on my student loan in 2009. I received form 1098E from my lender. Am I allowed to claim a deduction on that?