[shots]

First, let me explain my situation:
I am an Spanish citizen and came to US on 27st July 2007 on H1B Visa with my husband (in H4 visa). After that I got my SSN. Yet we have not applied for the ITIN of my husband and he is not eligible for SSN. We do not have Green Card and do not satisfy the Substantial Presence Test for 2007. From January to August 2007 we received income in Spain and we are filing taxes there.

Questions:

1. Do we need to file taxes as a dual-status or as non-residents? Do I need to file as Single or Married filing Jointly or any other type? What is best in terms of return?
2. If I file as non-resident: can I claim my husband as a dependent? Can I deduct moving expenses?
3. To apply for ITIN: Do we need to apply for the ITIN of my husband first and then file taxes? Or can we apply for the ITIN at the same time as filing the taxes?
4. Which forms do we need to file?

Your help is really appreciated. Thank you!

[AtlantaTaxExpert]

1-2) You can file jointly and you BOTH choose to be treated as resident aliens for ALL of 2007. That will require you claim ALL world-wide income on your U.S. tax return, but you can also claim either a Foreign Income Exclusion (Form 2555) or the Foreign Tax Credit (Form 1116). It would require you WAIT until early May 2008 before you can file. You would file Form 1040.

OR

You can file as a non-resident, claiming JUST the U.S.-sourced income, but NOT being able to claim your husband as a dependent. You would file Form 1040NR.

OR

You can file dual-status, which allows you to pay taxes ONLY on your U.S.-sourced income and be allowed to claim your husband as a dependent. Dual-status filing also requires you WAIT until early May 2008 before you can file. You would file Form 1040NR AND Form 1040; BTW, this is NOT a return for amateurs; get professional help if you go this route.


In all three options, you can claim moving expenses (Form 3903).

In the First or Third option, your husband would need an ITIN, which is applied for with Form W-7 and which MUST be submitted with the tax return.

Which is best? Unknown; you have not provided enough information about your U.S.- and Spanish-sourced income to make a reasoned judgement.

[lydiaminn]

I have a similar situation but what I was also wondering is, if you apply as a resident alien, and have to record worldwide income. How much of it should I record? I was only in H1-B status since Oct 2007 and my wife got H4 status in December, but we both worked in our home country before moving here from the Bahamas.

[ashaar]

I have a question, please

I) Making the "first year choice", can I and my wife file a joint return and will we be able to obtain the Standard Deduction if we file as dual status

Thanks

[AtlantaTaxExpert]

There is a Married Filing Jointly option available to most couples who qualify for dual-status reporting. You file such a return as resident aliens, and thus can take the joint standard deduction of $11,100.

If you file dual-status, you CANNOT take the standard deduction.