[dkassurant]

Hi

I am on L1 visa in milwaukee, WI. I came here from INDIA in August 2007 along with my wife and baby on L2. My marital status in pay slips from my employer show as 'single' as they say it requires minimum 181 days stay to change it. During these 5 months, my taxes have been deducted as 'single' even though I was here with my wife and baby as dependants.

My W2 form is now available and have to file returns now.

1) Will I be eligible for any refunds from tax returns? What about tax already deducted?
Please recommend appropriate method of filing returns.

2) Do I need to file returns for my wife who does not work and does not have a SSN/ITIN.

3) My wife and baby accompanied me here for 5 months and have gone back to india in Jan 2008 - for some time due to a medical urgency in family. They might come back in a month or so... But, they may not be available now to get ITIN when I have to file returns. Can this create any issue in filing returns? Does having them here in US at the time of filing returns makes any difference in getting refunds?

Please suggest...

[AtlantaTaxExpert]

1) You can file JOINTLY with your wife and claim your child as a dependent IF you are going to be here through May 2008. You must WAIT undtil then to file under the First Year Choice program, but the tax benefits (three tax exemptions of $3,400 each, a $1,000 Child Tax Credit, a standard deduction of $10,700) are worth waiting for.

2) You will have to submit Form W-7 for your wife and child to get them ITINs. You can try to get ITINs issued at the local IRS office, but not EVERY IRS office offers this service.

3) Not a problem, as you must wait until late May 2008 to file in any event.

[dkassurant]

Thanks very much for the info - I really appreciate that!

Can you please clarify further on these points...

1) Yes, I might be here through may. Can you please explain the "May 2008" factor for me
I understand that the last date of filing returns is April 15th. Please give more details...

2) Can I get the ITINs issued [using W7] while they are not in US? I do have some of their original documents [academic/marriage certificates of wife and birth certificate of child] --BUT not the original passports. (I have copies though)

3) For filing JOINTLY under first year choice program, does my wife and baby need to complete 181 days of US stay by may 2008? What if they could not come back by may?

I really appreciate your help and look forward for your detailed answers - hence a definite tip ;-)

Thanks,
Dinesh.

[AtlantaTaxExpert]

Dinesh:

1) You MUST meet the Substantial Presence Test (SPT) before you can file as a resident alien under First Year Choice. That is 183 days, and you can count only ONE day in THREE from 2007.

Assuming you arrived on 16 August 2007, that means you get one-third of 117 days, or 39 days. For 1 Jan through 30 Apr 08, you get 121 days, so on 30 April 2008, you have met ONLY 160 days of the SPT. That means the EARLIEST you can file is 23 May 2008.

2) The notarized passport photocopy is the preferred document, because that document BY ITSELF is all that is needed. Other ID documents are allowed (the list is on page 2 of the W-7 instructions), but you need at least two for each applicant and at least one MUST be a picture ID for your wife (not required for the child). Go to Internal Revenue Service to download the W-7 and its instructions.

The problem is that, even though the W-7 instructions CLEARLY says that passport photocopies that are certified by the Indian givernemt are acceptable, the ITIN Processing Center in Austin, Texas HAS REJECTED such certified documents in 2007 for the 2006 tax returns. For this reason, I advise clients in India to get the photocopies notarized/certified at either the U.S. embassy or at a U.S. consulate office. That CAN be difficult and it is my understanding that the U.S. consulate now CHARGES for the certification process.

Of course, you can submit your wife's and child's actual passport (with the IRS assurance that it will be returned to you), but later in the instructions the IRS states as a TIP:

To avoid any loss of your documents, it is suggested that you do not submit the original documentation.

I read that to mean: "WARNING - We MAY lose your passport if you send it to us!"

3) No; only YOU have to meet SPT.

[WAIndian]

Hi,

I'm also on L1 since October 26, 2007. Also, in Jan 2008 I was in a short trip to India (went alone) for 10 days. So, In my case

1. Will this 10 days be counted in 183 days.

2. When is the earliest I can file returns to claim tax credits and standard dedcution for me, spouse and 2 kids (6ys and 1 yr).

3. Do I need to get ITIN for both the kids (even for infant).

I would appreciate information on these aspects.

Regards

[AtlantaTaxExpert]

1) No. Add 5 days to the end; you get a 5-day grace period.

2) You can file no earlier than 14 June 2008.

3) Yes, submit Form W-7 for your wife and both children.

If you need professional help, contact me at the email address below.