[lunawat07]

I worked in US for 2009 on L1 visa, during my assignment my spouse was not in US with me he does not have SSN or ITN, My status in W-2 form is married but when I am selecting Filing status as 'Married Filing separately' it's asking for mandate SSN field for my husband.Please guide me the correct way to complete the filing process.

[MukatA]

When did you enter and leave U.S.

[lunawat07]

I entered on 02/18/2009 and left on 12/24/2009.

[AtlantaTaxExpert]

You would file Form 1040NR with a Form 2106 to claim daily living expenses.

Form 1040NR would NOT ask for your spouse's SSN or ITIN, so you are probably filing on-line. If so, and if you figured out a way to complete the on-line return, you filed incorrectly!

You need to amend your return. Contact me at [email protected] on how this needs to be done.

[mack20007]

Technically, if she was in the US more than 183 days in 2009 (which she appears to be) on and L1 visa, she's passed the substantial presence test in 2009 to become a resident. So, she is a dual resident; a NRA from 1/1 to 2/17, and resident the remainder of the year. So, she can in fact file form 1040 for the last portion of the year, and can file a 1040nr or a statement for the first portion.

When she files 1040, married filing separately, she does not however need an ID no. for her spouse if he is a NRA, some or most tax filing software don't allow for this event, she made need to check its documentation to see how to enter this way. If she can't efile, she just files by paper, and if IRS asks she just tells them he's a NRA, with no ssn or itin. If her spouse has no gross income for US purposes, she can claim an exemption for him, in which case she will need to apply for an ITIN for him with a W-7 form.

On the other hand she should also be aware she can file MFJ with him if she chooses, in which case an ID would be needed, i.e. ITIN number. Furthermore, when filing MFJ she can elect to be treated as a resident the full year, and file 1040 for the full year, using the rules in Pub 519, Nonresident spouse treated as a resident.

[AtlantaTaxExpert]

Mack2007:

You are correct; dual-status is the proper return, which CANNOT be filed on-line; it must be mailed.

However, a dual-status return requires the spouse be claimed as a dependent with an ITIN. The process by which she can claim her spouse's exemption applies ONLY for resident returns filing Married Filing Separately.

She DOES have the option of filing jointly with her spouse and declare ALL world-wide income for 2009. That way is probably the best way for her to file.

[mack20007]

That's correct Atlanta. However, as you know, a spouse cannot be claimed as a "dependent" of the other spouse, but their spousal "exemption" can be claimed if conditions are met.

On a dual status return, there is no "requirement", for her to claim her spouse's "exemption". She can file MFS on the dual status year (last half), but there is no "requirement" to include her spouse. If she files MFS without him, there is no ITIN or SSN required for him.

She CAN take his"personal exemption"on the MFS return, if she meets the rules (i.e. he has no US gross income and not the dependent of another US taxpayer). If she does want to claim him, he would need an itin or ssn.

[AtlantaTaxExpert]

Mack:

Dual-status returns are somewhat different. On THAT return, spouses MUST be claimed as dependents in order to get the exemption.

Now, the OP does NOT HAVE to claim her spouse's exemption, and thus does not have to claim the spouse as a dependent, but I see no logical reason why she would forego that benefit if the husband was in the U.S. with her.

[mack20007]

Atlanta, I think you're referring to when they mark filing status (Married Resident) boxes 3 or 4 on 1040NR. It states "you must enter your spouses first and last name..."

However, boxes 3 and 4 can only be checked if she is a:

1. Resident of Canada, Mexico, or South Korea,
2. U.S. national, or
3. Student or business apprentice from India

So, this is not for "ALL" filers. If she meets the criteria she can claim her spouse, if the other criteria are met.

For example, line 7b,F 1040NR, which is checked when the spousal exemption is claimed, requires the spouse to have no US gross income, if he has it, she can't claim him, there is no must. The new 2009 form was changed to clearly indicate this, they now have a space to enter the spousal information if boxes 3 and 4 are checked, as opposed to noting your claiming the spouses exemption, line 7b.

IF this is not what you're referring to, you're trying to make a NRA claim a spouse as a dependent, and that can only be claimed if the above rules are met, Pub 519 allows no other special rules for dual status filers. If you can quote that, I'm behind you.

[AtlantaTaxExpert]

Mack:

Claiming the wife and children as dependents is clearly permitted under Page 35 of the IRS Pub 519, as long as those exemption amounts do not exceed the taxable income earned during the "resident" portion of the dual-status. If it does, the exemptions are reduced to the level of taxable income.

The nationality restrictions of which you speak apply for claiming the exemptions during the NON-resident alien portion of the dual-status.

Now, since the OP ended the year as a non-resident, the OP would have to use Form 1040NR as the "dual-status return". He/she must claim the dependency of his/her spouse on the Form 1040NR, because the tax calculations are done on the Form 1040NR.

That being the case, and since we do not know if the OP is Indian, South Korean, Canadian or Mexican, the only 'safe" way to claim the exemption for the spouse is to list the spouse as a dependent.

This points out in graphic detail the appalling lack of concise instructions on HOW to prepare a dual-status return. In my opinion, the IRS should produce a separate IRS Pub that addresses HOW to prepare dual-status returns, with multiple examples dealing with spouses, children and other possible dependency cases.

[mack20007]

Certainly there is permission to claim a dependent, like any other tax item under the Code, but there is no"requirement"
To claim an exemption.

In my opinion, I'm very familiar with filing dual status returns, I work with them often.

Whichever return is first or last, resident period or nonresident period, it doesn't matter for tax purposes, the tax rules don't change because the residency period reverses.
The tax law doesn't change, you apply nonresidency rules to nonresident return, and residency rules to the resident return.


So, the tp can claim dependents on the NR part if they qualify, and Resident part of the year if they qualify.

The tax rules state, per Pub 519 Dual Status:

"As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Subject to the general rules for qualification, you can claim exemptions for your spouse and dependents when you figure taxable income for the part of the year you are a RESIDENT alien. The amount you can claim for these exemptions is limited to your taxable income (figured before subtracting exemptions) for the part of the year you are a resident alien. You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period.

Special rules apply to exemptions for the part of the tax year you are a NONRESIDENT alien if you are a:
1. Resident of Canada, Mexico, or South Korea,
2. U.S. national, or
3. Student or business apprentice from India.

So, you HAVE TO meet the above rules (as a Nonresident) to claim her exemptions, it's that easy. Items 1,2, and,3 above. If they don't meet these rule they can't claim exemptions.

If the claim them anyway they will be in violation of US tax law.

In my opinion, you're confusing using spousal exemption and claiming a dependent. A taxpayer can never claim their spouse as a dependent, they can take the personal exemption of their spouse if certain conditions are met, but can never claim the spouse as a dependent.

What may be confusing is on the old 1040NR forms, when a NRA did meet the rules to claim the spouse, that spouses name and ID were written in the dependency portion of the form 1040NR. Reason; there was no other place on the form for it, the dependency section was used just to claim the spousal exemption. As it happens, the IRS just corrected this problem on the 2009 version of F1040NR. If you look closely you'll see they've added a new line, just above dependents section for the spouses information, and only used when the spouses exemption is being claimed. As we've stated certain conditions must be met for the nonresident to claim her spouses "exemptions", per above.

You indicate the nonresidency portion of her year is the last part, however under the residency start date for the substantial presence test, Pub 519,p.8; it states the residency start date is the first date in the year they arrive in the US, making her case Feb 2009. Even though she left late in Dec 2009, I believe the IRS views her residency period, the latter half of 2009.

IF you question this information I refer you to the IRS for verification.

[AtlantaTaxExpert]

Mack:

When I first saw the new Form 1040NR, I also thought the area on the new Form 1040NR could be used by Indian students/business apprentices to list their wives and claim their exemptions.

However, the instructions on the Form 1040NR itself specifically states that you can enter the wife's data (first and last name and identifying number) only if Boxes #3 or #4 are checked. Neither Box #3 or #4 included the Indian student/business apprentice case. WHY, I do not know. It seems to me that adding a 7th box for the Indian resident would have been easy enough to do, given that they completely re-designed the form.

I then went to the 61-page instructions for Form 1040NR, but those instructions did NOT over-ride the requirement that Box #3/4 be checked; it only noted that "Residents of India who were students or business apprentices may be able to claim exemptions for their spouse and dependents. See Pub. 519 for details." The only problem was that the IRS Pub 519 then available addressed Tax Year 2008, and (typical of the IRS when it comes to IRS Pub 519), the new IRS Pub 519 for 2009 was not scheduled to be released until late in the tax season.

For this reason, I continue to list the spouse's name and tax ID # in Section 7c per the old instructions, because I did not want to take the chance that the Form 1040NR would be rejected by the IRS because Boc #3/4 was NOT checked.

In the course of the tax season, I received emails from THREE separate Indian students who submitted their own Forms 1040NR and listed their spouse's name in the area for the spouse's name without checking Box #3/4. In all three cases, the IRS disallowed the exemption and rejected the ITIN request. I had to amend the return, attach a Form 1040NR (with the spouse's name listed in Section 7c), and re-submit the W-7 to get the spouse his/her ITIN. All three amendments went through with no problems.

To be fair, though, I do not think the rejection happened because the spouse's name was listed in the new area; it was probably because the Form W-7 was not completed correctly. Since in each case I did NOT see the rejection letter, I can only speculate.

However, the IRS finally released the new IRS Pub 519 for 2009 on 17 April 2010. On page 28, middle column, under the section for Students and business apprentices from India, the IRS says: "List your spouse and dependents on line 7c of Form 1040NR. Enter the total on the appropriate line to the right of line 7c.", so it turns out I was correct to list the spouse as a dependent for Indian students.

I plan to call the IRS and specifically ask if that means the spouses of Indian students/apprentices are dependents or not.

[mack20007]

The individual who left the question did'nt in say she was from India. If this was an Indian student you would be correct.

If she was; putting her spouse in the dependent section maybe the only alternative, you're correct, but it does not mean he's her dependent. Which I was trying to say, but I believe you were just looking at it from another stand point.



If she "qualifies" to claim him, she's under no requirement to claim him, some people don't because it may not be materially effective.
Which what I was trying to say, and I think you were just looking at it from another stand point.

If you've been following these procedures for all "India's" residents, I agree with you. They maybe required to reference their claim on p.6 (as a tax treaty benefits). However it, appears to only allows exempt "income".

On all the other areas we agree

[AtlantaTaxExpert]

Agreed. On to bigger and better issues! :-)