[jhoffman]

Hi! I am a Mexican citizen, graduated in June of 2006, and started working on July 5th, I am currently on OPT but will be getting the H1B in October.
I am married to a Mexican citizen (who is not working), and we have a baby (us citizen).
The question is: what is the most advantageous way to file?
Can I take standard deductions, do my medical insurance expenses and health care spending account represent additional deductions?
Can I file as married? Even though my wife is not a us citizen?

Thanks in advance

[AtlantaTaxExpert]

Because you are married and eventually you both will have H visas, you have the option of being treated as resident aliens for the entire year and filing a joint return. That allows you to claim a standard deduction that is over $10,000, PLUS, because of your child, you will probably be eligible for the Earned Income Credit (unless you make too much money). You WILL be eligible for the Child Tax Credit regardless.

If you file dual-status (your only other option), you lose the standard deduction and you must itemize, which may or may not allow you to deduct your medical expenses.

More than likely, filing a joint return should be your best option.

[jhoffman]

Thanks very much it is of much help, only one follow up question. Since I will be filing as resident, then will I have to pay SS and Medicare for the months I work under OPT, even though it is not being deducted now?
Or the SS & Medicare will only be paid on the months under H1B?

Thanks very much, I appreciate your quick response

[AtlantaTaxExpert]

If you file as a resident alien and SS and Medicare taxes were withheld during your OPT, you will NOT be able to claim a refund for the SS and Medicare taxes during your OPT.

Now, if the SS and Medicare taxes were never withheld, then do not worry about it. To my knowledge, the IRS has never come back to a resident alien and asked for SS and Medicare taxes not withheld during their OPT.

If you want to file Form 483 to claim a refund for SS and Medicare taxes withheld during OPT, then you need to file as a dual-status alien and claim your wife as a dependent. You will lose the $10,000+ standard deduction, but that will be mitigated by claiming the state (and local, if applicable) taxes, assuming you live in a state that has a state income tax.

Suggest you do prepare the returns both ways to determine which is most advantageous. Remember that claiming a refund for SS and Medicare taxes withheld during an OPT is NOT GUARANTEED. Your situation may not meet the guidelines of the tax law in the eyes of the IRS.

[jhoffman]

Thanks very much, SS is not being deducted now, so I guess I am all set. Thanks very much Atlanta Tax expert!

[AtlantaTaxExpert]

Glad to help!

[jhoffman]

Hi Atlanta Tax expert!
(I am Mexican citizen, married to mexican citizen- OPT Jan-Sept 2006, H1B Oct-Dec 06)
I am trying to get my taxes prepared taking you reco's- choosing to be treated as resident aliens. But no one appears to know the rules that allow me to choose to be a resident alien. Could you help in advising where can I find the rule to show so they can prepare my taxes as resident alien? Or can you recommend someone to prepare my taxes who knows the rules?
Thanks

[AtlantaTaxExpert]

IRS Pub 519, first chapter.