[AMDer912]

Hello,
I was on an H1-B visa and was working in the US till mid July'09. I left the US in the first week of Aug'09. My wife was on and H-4 visa. I own a house in the US and have been making prompt and complete payments. How do I go about filing my taxes from India. 1.)Will I be able to show my wife as dependent till July'09 and get the related tax benefit? 2.)Do I need to appoint a representative to file the taxes in the US or can I do it on my own from here?
3.)What are the things I will need to look out for in order to file taxes without any issues?
Thanks.

[AtlantaTaxExpert]

1) For 2009, if you are willing to report your India-sourced income earned until 31 December 2009, you can file as a resident alien for 2009, filing jointly with your wife (whose income for the entire year must also be reported). Any taxes paid to the home country can be claimed as a credit using Form 1116. You WILL be able to claim a deduction for the mortgage interest paid on your U.S. home.

2) You can file your return from India. If you need help, contact me at [email protected]. We file such returns for Indian residents as a matter of routine.

3) After 2009, if you remain in India, you will file as a non-resident alien if you have rental income from your U.S.-based house. That will require filing Form 1040NR with a Schedule E. You will claim the mortgage interest deduction on the Schedule E. The tax rate will be determined by treaty.

Note that if you rented the house during the last half of 2009, you will claim part of the mortgage deduction on Schedule A and part of the Schedule E.

[AMDer912]

Thanks for the response.
1.) With reference to my income in India, whom do I report to and how? Further, Will I be able to claim my wife as dependent for both US and India incomes. She is a homemaker and did not have any income in both countries.

3.) I have rented the house beginning this December. So I will file the 1040NR with a schedule E.

I also have a question, are there any deductions related to relocation and related expenses?

Thanks again for your help.

[AtlantaTaxExpert]

1) You will report the India-sourced salary on Line #7 of Form 1040. You will file jointly with your wife, which DOUBLES your personal exemptions and the standard deduction (unless your itemized deductions exceed the $11,200 standard deduction). The fact that she is NOT working is irrelevant.

3) Yes, you should file Schedule E for 2009, but with Form 1040, not 1040NR. For 2010 and beyond, you will file Form 1040NR.

Unfortunately, moving expenses back to India are NOT deductible on your 2009 U.S. tax return.