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m_kansal · Dec 26, 2006, 09:07 AM

I am H1 visa holder and working in US since April, 2006. I was alone here. Now my family (wife and 3 yr yound son) will be joining me on 1st Feb, 2007.

While filing my tax return, Can I take some benefit in tax deductions. (Standard deduction etc on behalf of my dependent, wife and son). For year 2006.

AtlantaTaxExpert · Dec 26, 2006, 12:06 PM

N_Kansal:

Based on your name, I assume you are from India. If not, let me know where you are from and I will adjust the guidance below if needed.

Sorry, for the first year, you should file as a non-resident alien, filing Form 1040NR-EZ. Even though you have met the Substantial Presence Test, you cannot file as a resident alien if you are single (you are considered to be single if your wife and child are not with you in the U.S.) and you spend even one day as a non-resident alien. You CAN file a dual-status tax return, but you cannot claim your wife and child on this dual-status tax return because they are not with you AND you are not a student or business apprentice from India (F-1 visa). Because of your visa status (H-1B), the standard deduction of $5,150 is NOT available to you on the dual-status return. Since the dual-status return is much more complicated than a non-resident tax return, I recommend you file the non-resident return; the amount of tax you pay would be the same.

For 2007, because your wife and child will be with you for most of the year, you will be able to file as a resident alien (Form 1040A or Form 1040).

Sorry I did not have better news!

m_kansal · Dec 28, 2006, 03:10 PM

Because of your visa status (H-1B), the standard deduction of $5,150 is NOT available to you on the dual-status return.

What about the tax slab for calculating tax. Will that will be according to single or the tax slab defined for married will be used for calculating tax.

Thanks & regards
Manoj

Originally Posted by AtlantaTaxExpert

N_Kansal:

Based on your name, I assume you are from India. If not, let me know where you are from and I will adjust the guidance below if needed.

Sorry, for the first year, you should file as a non-resident alien, filing Form 1040NR-EZ. Even though you have met the Substantial Presence Test, you cannot file as a resident alien if you are single (you are considered to be single if your wife and child are not with you in the U.S.) and you spend even one day as a non-resident alien. You CAN file a dual-status tax return, but you cannot claim your wife and child on this dual-status tax return because they are not with you AND you are not a student or business apprentice from India (F-1 visa). Because of your visa status (H-1B), the standard deduction of $5,150 is NOT available to you on the dual-status return. Since the dual-status return is much more complicated than a non-resident tax return, I recommend you file the non-resident return; the amount of tax you pay would be the same.

For 2007, because your wife and child will be with you for most of the year, you will be able to file as a resident alien (Form 1040A or Form 1040).

Sorry I did not have better news!

AtlantaTaxExpert · Dec 28, 2006, 06:02 PM

You should file as a married individual, because you are in fact married.

However, if you calculate the tax both ways, I suspect you will find that the tax owed will be the same.

I have to amend my earlier guidance. A technical interpretation of the tax law requires that, for 2006, you should file a dual-status tax return. If you file a non-resident tax return, the tax paid will probably be the same as on a dual-status return, and the IRS will probably never notice, but you will not be in complete compliance with the tax law. This may become an issue if you later decide to apply for immigration status.

Contact me at [email protected], or send me a private message, if you need help with this dual-status return.

m_kansal · Mar 19, 2007, 07:19 PM

What status I must fill. Single or married filing jointly

AtlantaTaxExpert · Mar 22, 2007, 09:00 AM

You can file JOINTLY with your wife, with you BOTH choosing to be treated as resident aliens for ALL of 2006. This is probably the best option, as it allows you to claim a double standard deduction of $10,300 PLUS claim your child as a dependent PLUS claim the $1,000 Child Tax Credit.

m_kansal · Mar 22, 2007, 05:39 PM

Are you sure. Because my family has just arrived this month (march, 2007). I think I cannot claim tax benefit. Also I donot have social security or tax identification so that I could take tax benefit. Please help.

m_kansal · Mar 22, 2007, 05:41 PM

Originally Posted by AtlantaTaxExpert

You can file JOINTLY with your wife, with you BOTH choosing to be treated as resident aliens for ALL of 2006. This is probably the best option, as it allows you to claim a double standard deduction of $10,300 PLUS claim your child as a dependent PLUS claim the $1,000 Child Tax Credit.

Are you sure. Because my family has just arrived this month (march, 2007). I think I cannot claim tax benefit. Also I donot have social security or tax identification so that I could take tax benefit. Please help.

AtlantaTaxExpert · Mar 26, 2007, 10:59 PM

Under this exception, it does not matter that your familt was not in the U.S. in 2006. The choice to be treated as resident aliens extends to the children as well, just as long as the children are with one of the parents throughout 2006.

m_kansal · Mar 27, 2007, 08:49 AM

Originally Posted by AtlantaTaxExpert

Under this exception, it does not matter that your familt was not in the U.S. in 2006. The choice to be treated as resident aliens extends to the children as well, just as long as the children are with one of the parents throughout 2006.

Which form Form 1040A or Form 1040 must I fill.

I am summarising again.

I came here in April, 2006 on H1B. And continuously stayed here. Mywife and 3 yr old son got H4 and arrive here on 9th march, 2007. They have entered first time in US on this march 9th 2007.

Now I must fill form 1040A or form 1040 claiming above benefits.
Also do I need to fill W7 to apply for TIN number for them.

AtlantaTaxExpert · Apr 2, 2007, 11:19 AM

You DO need to file the Form W-7 with the return.

You can use EITHER Form 1040 or 1040A.

m_kansal · Apr 2, 2007, 08:14 PM

Originally Posted by AtlantaTaxExpert

You DO need to file the Form W-7 with the return.

You can use EITHER Form 1040 or 1040A.

However, Still I am not clear, how can my son be a qualifying child. He entered US first time in March, 2007. And therefore not a resident alien in year 2006. How can I claim him as a qualifying child.

Second regarding state tax. - New Jersey

I entered US in April, 2006 and is resident since April, 2006. So will be considered resident part year resident or full year resident. Because in case of full year, person need to maintain home for the complete year and must live for at least 183 days in NJ.

Therefore, I need to reduce exemption prorata per number of months I have stayed in NJ.

Do I need to divide my exemption prorata by month.

AtlantaTaxExpert · Apr 9, 2007, 02:32 PM

Claiming you child when he was never in the U.S. in 2006 IS counter-intuitive; I admit that.

However, I spent over an HOUR discussing this with the IRS, and they said that the option that gives the spouse resident status ALSO APPLIES to the child. Hence, you CAN claim the child as a dependent for 2006.

You are a part-year resident of NJ.

You CAN pro-rate the exemption based on the number of months.