[edroberts77]

Hi there,

Just moved over from london at the weekend...

I am on a L1 visa, my wife is on a J1 visa...

We have just found out that under a J1 my wife is exempt from many taxes, but it seems we would need to file our taxes seperatly. I am trying to find out if she can remain tax exempt and still file as married to myself who is paying taxes?

The challenge I have is that the beneift she gets is outweighed by the extra money I pay for filing single... All very confusing for someone who just moved over, think I need some expert adive...

Any advice from here would be much appreciated

Many thanks

Ed

[The Texas Tax Expert]

You cannot file single. You would be married filing separately, which is generally a bad option. You can elect to file a joint return (your wife would need to elect to be treated as a resident) and if you don't have much foreign income, that might be the best option.

Also, all this really only applies to 2008. Right now, you're both going to be non-residents for 2007, so you should each file married filing separately for 2007, which will most likely work out not too bad with only a month of US income.

[edroberts77]

You cannot file single. You would be married filing separately, which is generally a bad option. You can elect to file a joint return (your wife would need to elect to be treated as a resident) and if you don't have much foreign income, that might be the best option.

Also, all this really only applies to 2008. Right now, you're both going to be non-residents for 2007, so you should each file married filing separately for 2007, which will most likely work out not too bad with only a month of US income.

Thank you very much, it does shed some light... are you saying that my wife is allowed to filed jointly and for us to get the benfit of the tax exempt on her salary? In terms of foreign income, I have a house that I rent out, he earnings however are minimal.. l

Thank you again

[AtlantaTaxExpert]

Ed:

No, that is NOT what he said.

If you and your wife file jointly, she must sign a statement that she CHOOSES to be treated as a resident alien for ALL of 2008.

By making that choice, she FORFEITS any tax exemption that she may have been entitled to under her J-1 visa.

It is possible that the combination of her personal exemption ($3,500 in 2008) plus her standard deduction (about $5,500), plus being taxed under the Married Filing Jointly tax table, would completely offset any additional income her salary would add to the joint return, resulting in a net positive effect on you tax-wise.

However, that may NOT be the case. The only way to know for sure is to prepare the returns BOTH ways and compare the results.

[The Texas Tax Expert]

A couple of things: Your wife's income is not exempt because she is a J1 (a J1 is an exempt individual but that doesn't mean her income is tax free). Your wife's income may be tax free under a treaty and if so, depending on the income and the treaty, she may still be able to claim the income tax free even if she becomes a US resident.

[AtlantaTaxExpert]

I agree; the TREATY will be the over-riding consideration.