[Asimo]

Hi,

I tried to read through as many posts of this kind and their excellent answers, but still I have some doubts.

My situation is as follows -

1. I arrived to the USA, with my wife, in Oct 2006, and we are present here till rest of 2007, 08.. (on L1 Visa)
- I filed for extension till oct15. '07

2. I am a citizen of India, but was in Japan from Jan-Sept. 2006.

3. I do not satisfy substantial presence test for 2006, but since I am in US for all 2007, I meet it for 2007, and thus I can make the first-year choice to file a dual-status return.

I want to file a Dual-Status Return, because in that case I can claim my wife as a dependent, and get some tax benefit.

However, I don't know if I have to report my income before I arrived to USA. (income in Japan). As per the post -
https://www.askmehelpdesk.com/taxes/...xes-59740.html
I don't have to report.

But as per the 1st paragraph wording in pub519, under section "Dual-Status | Income Subject to Tax "
Publication 519 (2006), U.S. Tax Guide for Aliens

"..... Income from sources outside the United States is taxable if you receive it while you are a resident alien. The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year. "

Of-course they also mention that
"...Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien." .

But then again in the "income" section later - they say
"....Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate. "

This seems very confusing to me, and I would like to know if

1. My income in Japan for my NonResident duration (I was not in US) is taxable ?
(it is not connected to US source.)

2. I transferred some amount after my arrival here in Nov. from Japan, (resident status)
, Is that taxable ? (I think the interest on that is, - and I will put that in the form.)


Please let me know if there are any mistakes in my understanding, and please help me about the questions above.

Thank you,

[AtlantaTaxExpert]

1) If you file a dual-status return, you have to pay taxes ONLY on U.S.-sourced income. The income earned in Japan is subject ONLY to Japan's taxes and (maybe) India, but NOT U.S.

2) The transferred money is NOT taxable. The interest earned while in the U.S. IS taxable.

Email me if you want me to help you prepare the dual-status return, which is NOT a return for layman to prepare. Get professional help.