[mrfahrenheit]

I'd appreciate it if anyone can answer my question.

I entered US in 2000 with my wife and had two kids since then.
My status has been J-1 -> H1B -> J-1 (since 07/01/2003)
After finishing my training, I got a job in MI and was supposed to start working in Sep, 2010. I bought a house on 4/20/2010 and moved to MI (first time home buyer credit applicable?) I returned my home counry on 8/8/2010 hoping that I could come back in September. However, new visa paperwork has been significantly delayed, and I am still in home country where I am doing part time job only. All of my stuff are in MI. I had stock, some of which were sold in June 2010 and Dec 2010. I suppose I would be an U.S. resident for tax purposes according to the substantial presence test.

My questions are
- Should I file tax return as a dual status or resident ailen. (It seems to be a dual ailen, but all of my stuff including cars, furniture etc in MI and I have no formal job or house in my home country. I live with my parents.)

- If my status is dual status, can I claim first-time home buyer credit? (It says nonresident ailen can not claim it.)

-Can I claim my wife and kids as dependent in form 1040 and put $3650 x 4 in line 42 (Exemption) if I do dual-status tax return? My wife has no U.S.-soruced income.

-I sold some stocks while I was in the US and some others while I was in my home country. If I do dual-status tax return, should I put one in form 1040 and others in form 1040NR, make two different schedule D (Capital gains and losses) for each form and figure out the tax accordingly?

I understand this is very complicated and nobody might not be able to answer these.
I'd really appreciate it if anybody could answer these.

Thank you very much.

Mr. Fahrenheit

[MukatA]

For 2010 you have completed SPT. If you are not returning back to US in near future, you are dual status for 2010.
On resident form (Statement Form), you will claim exemption for yourself, spouse and kids. About stocks sold during nonresident period, you can report on 1040NR (Dual Status Return).

Normally IRS will like you to treat entire period Jan 1 to Dec 31 as your resident period on your dual status return. Read IRS publication 519.

[mrfahrenheit]

Mr. Or Ms. MukatA.

Thank you very much for your help.
I do have plan to go back to MI soon, but don't know when (hopefully in May 2011). As you mentioned, I wonder if I should not file as a dual status ailen because of this reason.

When I tried to figure out the residency termination date to file as a dual-status ailen, I found an article in Publication 519 (Pub 519) at page 9 saying that “You can use this date (earlier termination date) only if, for the remainder of 2010, your tax home was in a foreign country and you had a closer connection to that foreign country.” Since I have everything including my home, cars, furniture and belongings in the U.S. and do not have those and formal job in my home country, I started to think that I should file as a resident ailen and fill out f1040 only.

I wonder if I could not claim the first time homebuyer credit if I file as a dual status ailen.

I'd appreciate it if anybody can teach me.
Thank you very much.

Mr. Fahrenheit

[mrfahrenheit]

Mr. Or Ms. MukatA.
Thank you very much for your help.
I do have plan to go back to MI soon, but don't know when (hopefully in May 2011). As you mentioned, I wonder if I should not file as a dual status ailen because of this reason. When I tried to figure out the residency termination date to file as a dual-status ailen, I found an article in Publication 519 at page 9 saying that “You can use this date (earlier termination date) only if, for the remainder of 2010, your tax home was in a foreign country and you had a closer connection to that foreign country.” Since I have everything including my home, cars, furniture and belongings in the U.S. and do not have those and formal job in my home country, I started to think that I should file as a resident ailen and fill out f1040 only. I wonder if I could not claim the first time homebuyer credit if I file as a dual status ailen.
I'd appreciate it if anybody can teach me.
Thank you very much.
Mr. Fahrenheit

[MukatA]

If you treat yourself resident up to Dec 31, 2010, I am not sure if you can or can not file resident return. IRS has discussed this situation under Dual status. May be you can contact AtlantaTaxExpert for his opinion.

You have already spent move than 240 days in 2010 and 365 days in 2009.
Now 240/3 + 365/6 = 140 days. If you spend 43 days in US in 2011, you are resident for 2011.
In that case, I think you can safely file resident return for 2010 and claim home buyer credit.

If you do not spend about 43 days in 2011 in US, you are nonresident for 2011. Your nonresident period starts from the date you left US in 2010 or from Jan 1, 2011.

[mrfahrenheit]

Thank you very much for the valuable information. I think I would file as a resident ailen this time, hoping that I could return soon.

[AtlantaTaxExpert]

First, you CANNOT claim the First Time Home Buyer's Credit if you file as a dual-status alien.

However, I agree with MukatA that you can legally file as a resident alien for 2010, especially since it is your intent to return to the U.S. in 2011.

If you need professional help filing your return, email me at [email protected] or [email protected].

[mrfahrenheit]

Thank you very much for the comment. I understand your point. I filed my tax return as a resident ailen with a letter explaining my situation. I am waiting to see what happens now. Thanks again.

[AtlantaTaxExpert]

Mr. Fahrenheit:

Your conclusion is accurate in my opinion. You should file as a resident for 2010.

If you need professional help filing your return, email me at [email protected] or [email protected].