[truman2007]

Hi,

I am wondering how to file my 2006 tax return. I came from P R China in 2004 as an F-1 student. In Oct. 2006 I tranferred to H-1 visa. In Dec. 2006 my wife came to US with H-4 visa. I did not pay social security and medicare taxes before Oct. 2006 because I was in OPT.

My questions are:
1. Can I file tax return jointly with my wife? In which situation can I do so?

2. I should be able to file an extension (f4868) first and wait till July this year to use first-year choice. At that time can I file as dual-status/resident alien? And what are the benefits to do so? I doubt that I cannot have standard deduction in this way.

Could you please help me decide how to file my tax return to minimize my tax payment?

Thanks in advance.

[AtlantaTaxExpert]

1) Yes, as two exercising First Year Choice and choosing to be treated as resident aliens for the entire year. Recognize that by doing so, your wife's China-based income becomes subject to U.S. taxes.

2) Yes, file the extension. If you wait to file as resident aliens, you CAN claim the double standard deduction of $10,300.

It is most likely that filing jointly as resident aliens is the best way to go!

If you need my professional tax help, contact me at [email protected].

[truman2007]

Thanks AtlantaTaxExpert!

Do I need to pay social security and medicare taxes again if I file as resident? I only paid thoese taxes after Oct. 2006.

[truman2007]

By the way, can I have US-China Tax Treaty Benefits and standard deduction at the same time?

[AtlantaTaxExpert]

No, you do NOT need to pay the Social Sceurity and Medicare taxes prior to your H-1B status.

No, you cannot claim the China Tax Treay exemption if you file jointly with your wife as resident aliens.

[truman2007]

AtlantaTaxExpert,

To make first-year choice, I should write a statement to make the first-year choice as per pub 519. Do I need to submit form 8843 as I did in the past two years as an F-1 student?

My second questions is about two forms I received from IRS. I got $819.9 refund from IRS last year and IRS paid me $26.20 tax together with the refund. IRS sent me two forms form 5205 and 1042-S. The forms state that the income to be included on my 2006 return is $26.20 and credit to be claimed is $2.62. Since I file as resident, I don't know how to file 1042-S together with 1040. Do you have any idea on how to file such income?

Thanks a lot!

[AtlantaTaxExpert]

If you are filing dual-status as your first year choice, then file the Form 8843. If you are filing as a resident alien, then no Form 8843 is required.

Report the Form 1042-S income on Line 21 of Form 1040. Attach a copy of the Form 1042-S if taxes have been withheld.