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buck78 · Nov 4, 2007, 09:11 PM

Hi all,

I recently started work on an H1b visa at the beginning of October.
My wife started college on an F1 visa at the beginning of July.
We both had UK earnings up to July 2007, on which all UK taxes were paid.

I need some help on how to file for US income tax, and what allowances I am/we are entitled to.

My employer withheld enough tax assuming I was to file single and with no allowances. I understand that I will probably end up paying too much tax and being able to reclaim, but I would prefer a slightly higher paycheck! I'd rather find a happy medium between withholding enough, and not too much, but I'm not sure what my filing status should be.

From what I can find online, I could file as Married, but not jointly because I am not resident (i.e. less than 183 days) is that correct? I'm also unsure whether my wife has to file at all because she has no US earnings, and none at all since July this year. Therefore, if she doesn't file, do I have to file Single?

Any help would be appreciated

Thanks :confused:

ChihuahuaMomma · Nov 4, 2007, 10:41 PM

I believe that you can file and claim her on your taxes as a tax dependent...

AtlantaTaxExpert · Nov 5, 2007, 02:19 PM

You have two choices:

You can file as a non-resident alien, claiming your OWN exemption ($3,400) and itemizing your deductions using Form 1040NR and the special Schedule A that comes with the Form 1040NR. You are NOT entitled to the $5,300 standard deduction, nor can you claim your wife as a dependent, if you file this way. However, you are NOT liable for any taxes on income earned while in the UK.

The alternative is to file jointly with your wife and you BOTH choose to be treated as resident aliens for all of 2007 under the First Year Choice Program. This will allow you to claim two personal exemptions ($3,400 each) PLUS the double standard deduction of $10,600, for a total tax exemption of $17,400. However, you must claim your combined UK incomes as taxable income on your joint return. You will be able to claim a Foreign Tax Credit, using Form 1116 in conjunction with Form 1040, but that credit is NOT dollar-for-dollar.

The only way to be sure which is best is to model it both ways and compare the results.

If you want help doing this, I can do it for a small fee. If you are interested, contact me at the email address below ([email protected]).