[darshang]

Hi,

I need to know if I need to file my tax returns as resident alient or non resident.

- I am on H1B visa (married and wife is on H4). Came to US in Aug 2006
- I was in US in 2005 (280 days) and in 2004 (240days). As per the IRS I pass the present test of 183 days in the past 3 years.
- But I also saw that 'If you have stayed less than 183 days in the current year' and show that 'your connection is close to your tax home' then you can eligible for non-resident.

In 2006 I have stayed for less than 183 days (140 to be presice). I am not clear on the 'Close connection to Tax home exception' I work for an indian company but deputed to US currently( I am on US payroll but my company deposits a part of my sal in my Offshore payroll bank account). However I have my permament home in India intend to return back. I have not applied for Green card neither intent to apply.

In 2004 and 2005 I had filed tax online and the returns form is 1040-EZ( I was considered resident then since I was more than 183 days in each year).

My question is that am I eligible for non-resident. If so does this have any additional benefits. I e can I claim exemption on Social securit and medical tax exception or any other exception?

Thanks
Darshan

[AtlantaTaxExpert]

Darsan:

In my opinion, you filed INCORRECTLY in 2004 and 2005. You should have filed dual-status in both years.

Further, you need to file as a non-resident alien in 2006.

H-1Bs, even if they file as non-resident aliens, are STILL liable for Social Security and Medicare taxes.

[darshang]

Thanks AtlantaTaxExpert

But I was there for more than 183 days in both 2004 and 2005. Does this not treat me as Resident alien ?

Also for the current year if I apply the formula (All days present in 2006 + 1/3 of days present in 2005 + 1/6 days present in 2004) I exceed 183 days. Does this not mean that
I am a resident alien for 2006 as well..

Your help in this matter is appreciated

Thanks
Darshan

[AtlantaTaxExpert]

Darshan:

SPT is not the ONLY criteria for filing as a resident alien.

If you are a non-resident for even ONE day, you cannot file as a resident alien unless you are married.

[taxsearcher]

You have not given us the information about your visa status in the earlier years. It looks like you would probably have been dual status return, resident, resident. At this point, it does not appear to me that you have a foreign tax home, which would be required if you are going to try to claim the exception to the SPT.

[AtlantaTaxExpert]

Good point, TaxSearcher!

[darshang]

Thanks guys.. really appreciate your help.. I have one more doudt. In 2006 I came to US in Aug. But I have very small salary component paid in 2006 jan (I was not present in US) and in my W-4 it has been withheld for MI state(in 2005 I was in Michigan but returned back to India in Oct 2005 but one sal component was paid in jan 2006 hence MI tax was withheld). The tax withheld is just 10$ and when I checked it I will get a refund of 3$. Can I just ignore to fill the tax return since the amount is negligible and moreover I don't owe anything to MI.. (Since I am currently in WA there is no state tax). So that I can just file my Fedral tax

[AtlantaTaxExpert]

Yes, you can ignore the Michigan tax return. They will not care because you have a refund coming.