[ravindra_ameta]

Hi,

I came to US in mid Jul'07 from India with my wife and plan to stay in US for another 5yrs.
I was working in India & have salary income during the period Jan'07-Jul'07.
In India I have paid tax on this income.
In US I have filed for extension to file the taxes Till mid Oct'08.

I wanted to know if :

1. I am eligible for Full Year Resident Return in US based on my status.
2. How can my Indian income & taxes paid in India be accounted in US return ?

I could have filed as Part Yr Resident but willing to file as Full Yr Resident so that I can get the "Bush Stimulus Rebate" which is handsome amount in case I am filing jointly with my wife.

Do suggest what should I do ? Let me know whether I am eligible for Bush Rebate or not.

Thanks
Ravindra

[AtlantaTaxExpert]

Ravindra:

You can file as a resident alien for 2007 while applying for an ITIN for your wife using Form W-7 and attaching a memo stating that you qualify to file jointly as resident aliens and that you both CHOOSE to be treated as resident aliens for all of 2007.

In doing so, you must declare ALL world-wide income for 2007. It is likely you can then exclude your home country income under the Foreign Income Exclusion (Form 2555).

You can also claim moving expenses from your home country using Form 3903.

You will NOT be eligible for the stimulus rebate for 2007, though you MAY be able to claim it for 2008 by filing Married Filing Separately from your wife, get the rebate, then amend the return to file jointly. The procedure is outlined on the IRS website and is perfectly legal.

Contact me if you need professional help to file this 2007 return!

[ravindra_ameta]

Thank you!!

I have few comments to add :

- my wife has SSN as she is on L2 visa (but no income for Yr 2007 for her).
- what is form 1666 about ? It is also related foreign tax credit.

Should I file as Married filing separate ? What is the best status to file ? I want to avail the standard deduction as well as the moving expenses from India.

Do you think in this scenario I am not eligible for Bush Rebate this year (why ?) ?
Can you give me the IRS link for rebate procedure you mentioned ?

Regards
Ravindra

[MukatA]

You did not tell about your visa. Assuming you have work visa L1 or H1-B.
1. For 2007, as AtlantaTaxExpert clearly said, you can file joint return as residents.

2. You must both report your worldwide income. On your India income you can claim foreign tax credit by filing Form 1116 or can file Form 2555 (foreign earned income exclusion) if you meet the requirements. Read: Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income

3. You can claim moving expenses. Read: Your U.S. Tax Return: Moving Expenses

Since you are filing for the first time, it is better that you get professional help to pay minimum possible taxes and file correctly. You can contact AtlantaTaxExpert at [email protected]

[ravindra_ameta]

Thanks Mukat,

I am residing in Arizona. Do you think that I would be eligible to file state tax as FULL year Resident ? I think there are different rules for Federal and State taxes and the State (AZ) may not allow me to do for full yr resident ?

Thanks
Ravindra

[MukatA]

For Arizona you are part year resident for 2007.

[ravindra_ameta]

Thank you.. your answers really helped me.

- Do you thin according to itp 92-1 I can be considered as Full Yr Resident for tax purpose for yr 2007 ? Because my I intent to become a AZ resident and make it my permanent home ?

- Can I credit on tax I paid to Foreign Country (form 309 PY ?)
In this case what is the procedure. Do I need to make any declaration/election as I have to do for Federal ? Templates available online ?

- After I make the election to be assumed as Full Yr Resident & file 1040, do I still need to mark my returns as "DUAL-RESIDENT" ?

- Do I need to do AMT calculations also ? I prepared my Tax Return using "TaxCut" s/w and it is didn't generate any AMT. I am doubtful if I feed some data incorrectly ?

Regards
Ravindra

[MukatA]

Since you will be filing for the first time, in your own interest, you should get professional help. Contact AtlantaTaxExpert at [email protected]