[kanag]

I came to US on 2nd April 2007 and worked all through the year. I am with my wife and a 3 yr old kid from day one in the US. I was Non Resident Alien, and eventually became Resident alien (after the 183 days required).
- Can I file tax as Resident alien for the entire year ?
- If I prefer to itemize deductions, can I claim deduction for the mortgage interest that I pay in India?

[AtlantaTaxExpert]

You can file as a resident alien IF you on a work visa like L-1, H-1 or H-1B.

You can file jointly with your wife and you both CHOSE to be treated as resident aliens. This will allow you to claim the $10,700 joint standard deduction plus two $3,400 personal exemption (for yourself and your wife) plus one $3,400 for your child PLUS the $1,000 Child Tax Credit.

The downside is that:

• you must WAIT to meet the Substantial Test before you can file, which means you must wait until 13 May 2008.

• you must declare ALL 2007 world-wide income. There are two offsets available, by either claiming a Foreign Tax Credit (Form 1116) or a Foreign Income Exclusion (Form 2555).

Even with the downside, this is probably the best way for you to file.

Yes, you CAN claim the mortgage interest from India, but only if the itemized deductions exceed the $10,700 standard deduction noted above.

David Kempe

[kanag]

Thanks for your response Dave..

[MukatA]

You have already completed substantial presence test in 2007. If you have work visa, then you can make First Year Choice to file joint return as residents without any waiting period.