[ericpat]

Hello,

I realize this topic is queried on occasion, but I have not seen an answer to the particular question I have in mind. I'd greatly appreciate some guidance.

I'm H1B and my wife is H4 and we arrived in the U.S. (from Canada) in August 2007. Since I don't fall under the 183 day rule, I would like to know what my options are in terms of filing in the U.S.; should I opt to be a nonresident alien for this year or a resident alien?

I had no income in Canada from Jan to July except for a bursary of about 5K. My wife worked full time in Canada from Jan to July 2007, but obviously has had no income since we moved to the US. So basically, I have US income from August to December 2007, and she has Canadian income from January to July 2007, and we have both been living (with our two kids) in the US since August. We also have a house here in the US (we sold everything in Canada).

Any advice on if I can choose to be a resident vs. non-resident alien for 2007 US taxation would be greatly appreciated. Advice on what type of tax forms my wife would need to fill out (I'm guessing a W7 and a 1040NR) would also help a lot.

Thanks so much.


EP

[LittleGuy]

I also have similar questions. I was in OPT (F1) until the end of Sept 30, 2007 in 2007 and in H1b from October 1 to Dec 31, 2007. I am married in 2006 and my wife also came to US in F2 but now she also is in H4.

Last year (2006) I filed on form 1040 NR EZ as I was in F1 and OPT during that year. I didn't claim Exception for my wife. Now I want to know what are the options for me to minimize the tax for 2007. It seems like I should use dual status return. However, looks like there is an option of first year election for married people. I appreciate any suggestion that helps to minimize the tax return.

Thank you for your time and suggestion.

LittleGuy

[AtlantaTaxExpert]

EP:

You can file jointly and you both CHOOSE to be treated as resident aliens for ALL of 2007. That makes her Canadian income subject to U.S. taxes, but there will be at least a partial offset by claiming the Foreign Tax Credit. You DO get to claim your children as depedents, PLUS get a $1,000 tax credit per child, PLUS claim a $10,700 standard deduction.

OR

You can file dual-status and claim your wife and children as dependents against the U.S. income. You CANNOT claim any tax credits nor can you claim the standad deduction.

In either case, you probably have to file a Canadian tax return for the income she earned.

You need to get a tax professional who can do BOTH the U.S. and Canadian tax returns for you, then have him model it to determine which is the best course of action.

LittleGuy:

You too can file jointly with your spouse for 2007. See above for benefits, all of which apply to you except the Child Tax Credit.

Now, from what country do you originate?

[LittleGuy]

AtlantaTaxExpert:

Thank you for your reply. I came in the US in 2003 in F1 and I got married in 2006 and my wife (F2) joined me in the US in August 2006 and we are living here together. Starting October 2007, I am in H1 and my wife in H4.

I come from Nepal, we don't have tax treaty with the US. I would be glad to file as Resident aliens but I am not sure since I was in H1 only for 92 days in 2007. I do not qualify for SPT if F1 (OPT) days are not counted. However, if F1 days are counted, I am here for entire 365 days with my spouse.

Please confirm whether I can file 1040 as resident alien. Otherwise, it would be a complete nightmare for me filing the tax.

Thanks for clarifying.

LittleGuy

[AtlantaTaxExpert]

LittleGuy:

You CAN file jointly with your wife, but you must wait until early June, 2008 to file.

The wait is required so that you FIRST qualify under the Substantial Presence Test before filing.

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

[ericpat]

Thanks for the advice ATE. I guess doing different scenarios is the way to go. I know for Canada, I have to pay taxes for Jan to July.

On a related note, does anyone know when the IRS is going to come on with the 2007 version of Pub 519 - US taxe guides for aliens?

EP

[LittleGuy]

Thank you ATE very much. I will wait until I meet the substantial presence test in 2008. I have another question about SPT, can I add 1/3 of my 2007 H1B stay to meet the SPT in 2008? In that case, I will be qualified to file in the first week of May since I can add about 30 days from 2007.

It's in my favor to file as a resident alien. Thank you very much for your time and efforts.

[AtlantaTaxExpert]

Yes, you DO count one-third of your 2007 H-1B, which, for you, is 30 days (one-third of 92 is 30.666, which you truncate to 30). You STILL have to wait until June 2008 to file (see below).

1 Jan 08 to 31 May 2008 is 152 days (31 + 29 + 31 + 30 + 31).

Add 30 to 152 for 182. So 1 June 2008 is your 183rd day, which is the day you can file.

Simple grade school arithmetic!

[LittleGuy]

Thank you very much clarifying. I never realized that I was that bad in mathematics. You're right, ATE.

I will now have to file for extension of filing period. It helped me a lot buddy. Thanks.

[AtlantaTaxExpert]

Glad to help!

[davidoff]

[hi All

[davidoff]

Hi,
I got married on feb 10th 2008,and my spouse arrived here in us on march 17th.i didn't file my tax returns for 2007 yet.now i'm ready to file for 2007 tax returns.can i add my spouse as dependent for 2007 tax returns.

Help me on this

Thanks,
Dav

LittleGuy:

You CAN file jointly with your wife, but you must wait until early June, 2008 to file.

The wait is required so that you FIRST qualify under the Substantial Presence Test before filing.

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