[Sho V]

I see this question many times on this website but still could not find the answer to the following.

IRS rules (http://www.irs.gov/pub/irs-pdf/i1040nre.pdf) say that "Generally, you are considered a resident alien if you meet either the green card test or the substantial presence test for 2007." Say, we rule out the possibility of holding a green card or having a spouse who is U.S. Citizen. Then regarding the substantial presence test, it is further said that "you meet this test if you were present in the United States for at least:

1. 31 days during 2007, and
2. 183 days during the period 2007, 2006, and 2005, counting all the days of physical presence in 2007, but only 1/3 the number of days of presence in 2006 and only 1/6 the number of days in 2005."

But then the "days you are an exempt individual", the definition of which includes an individual who is a "teacher or a trainee," or a "student", cannot be counted toward the substantial presence test.

So, if I came in the US in Aug-2002 and was a full-time student (on F1 visa) till Dec-2006, followed by a trainee (on optional practical training) from Jan-2007 to Sep-2007, then I cannot count any of these days toward substantial presence test.

Many questions asked on this forum have the same or similar situations but they easily claim that they are treated as resident aliens for tax purpose as they satisfy the conditions of substantial presence test. How is that possible? Am I missing something? Please advise.

Thanks!

PS: I am married and currently hold H1B visa (effective date: 1-Oct-2007). My wife is in H4.

[IntlTax]

Because you are married, you and your wife can be treated as resident aliens for the entire year. This is achieved by making two elections. You qualify to make a "first year" election. By making this election you are treated as a resident at the end of the year. Because you will be treated as a resident at the end of the year, you and your wife can then both elect to file a joint tax return and be treated as U.S. residents for the entire year. If your wife has income from outside the U.S. during the year, making the elections can complicate your U.S. tax filings and may increase (or decrease) your U.S. tax, depending on your circumstances.

[MukatA]

5 years on F1 visa are exempt from residency. For you the years are 2002 to 2006. You are resident for 2007.

[IntlTax]

Good catch MukatA. I agree that he is a resident for 2007 even without making any election.

[Sho V]

Is that true? Well that will make things a lot more simple. Thanks both of you for your responses!

[AtlantaTaxExpert]

Note that the wife will probably have to submit Form W-7 (to get an ITIN) WITH the tax return and sign a statement that she is filng jointly as the non-resident alien spouse of a resident alien.

[Sho V]

Thanks!

[AtlantaTaxExpert]

Glad to help!