[pmdomadia]

Hi,

This is my situation;

a. Iam an Indian citizen. I have been in US(Massachusetts) since Sept 2010 on H1B Visa and my wife is on H4 visa. This is our first time in US.

b. Since I have not been here for more than 183 days I was told that I need to file as a non resident alien and form 1040NR-EZ.

So my questions are:

1. Can I claim exemption for my wife while filing 1040NR-EZ?

2. If not, can I still get an ITIN Number for her using the W-7 form along with 1040NR-EZ?

3. Regarding the MA state tax, I believe I have to fill form 1NR/PY.. correct? How can I determine if I have to fill this as a Non-Resident or as a Partial Year resident?

I have been only in MA all this time.

Would appreciate your assistance on this.

[MukatA]

You have two choices:
Choice 1: You can file non-resident tax return. You will not get exemption for your spouse. You can deduct moving expenses.
Choice 2: You can file resident tax return as Married Filing Jointly. You will have to wait for 5 months in 2011 to file your tax return till you meet the Substantial Presence Test in 2010. Read Your U.S. Tax Return: Substantial Presence Test
You will get standard deduction of $11,400 and exemptions ($3,650 each) for both of you. You must both declare your worldwide income for 2010. If you have any foreign income, and on that income you paid taxes in the foreign country, then you can claim foreign tax credit (Form 1116) or you can use Foreign Earned Income Exclusion (Form 2555).
You will complete forms W7 (application for ITIN) for your spouse and attach with your tax return.
You can also deduct moving expenses. Use form 3903.

[pmdomadia]

Thanks Mukat for the prompt response!

So as per my understanding if I have to go by choice 2 I need to:
1. File for an extension.. for 4868 both for Federal and State.
2. Wait till May 2011 till I meet SPT and then file 1040 and form 2555 alongwith W-7 for my wife.
3. Once I get the ITIN for my wife then file the state returns.

My question is...

1. is it valid and legal to go by choice 2?
2. Even if I file an extension (4868).. can I still file as non-resident alien before 15th April 2011?

Thanks again
Paresh

[pmdomadia]

Also, is the choice 2 that you have mentioned same as "first year of choice" and that I have to file a statement for that?

[MukatA]

Yes, choice 2 is valid. Yes, you should attach "First Year Choice." Read IRS publication 519. US Tax Guilde for Aliens.

[santosh.sas]

Hi Mukat, Thank you for helping folks like us, just to add to this how % difference will it make in refund if we file as NRA? Or wait for SPT is worth my total income in 2010 was 22300$

[MukatA]

Do your tax return both ways and you will find out.

[pmdomadia]

Hi Mukat,

You rock!

A few more

1. If both of us had foreign income.. do we need to fill 2 form 2555s?

2. And do we add all this income alongwith US wages(w2) and enter on line 7 of form 1040?

3. And then enter the foreign income on line 21 of 1040 as negative?

4. Can we get some sample 1040 and 2555 forms with sample data? That would help enormously.

5. And can somebody assist me in the entire process?

[AtlantaTaxExpert]

The use of Form 2555 is NOT legal unless you both START and END the exclusion period as a resident alien.

You will need to file Form 1116 to claim the Foreign Tax Credit, and the income can be combined on ONE Form 1116.

[santosh.sas]

1) Are there any down sides if a person selects first choice of year option but down the line while he applys for green card?
2) Is it not possible to first fill 1040 NR and once SPT pass amend as Married jointly so that he can get refund in slots

[pmdomadia]

Hi,

I did not understand this part: "The use of Form 2555 is NOT legal unless you both START and END the exclusion period as a resident alien"

[AtlantaTaxExpert]

You are coming to the U.S. and, if filing jointly, choosing to be treated as resident for ALL of 2010.

However, the exclusion period under Form 2555 must be at least 330 days long, and it ENDS the date you and your wife left India. Hence, the exclusion period would extend back into 2009, when you mist definitely were NOT a resident of the United States.

[pmdomadia]

So what you are saying is that in 2009 also I should have been a Resident alien in US to be able to fill form 2555?

Since I was not in US in 2009 are you saying that I cannot fill form 2555 and instead should file Form 1116?

[AtlantaTaxExpert]

That is EXACTLY what I am saying!

[deep786]

HI

I'm indian resident, now in USA since ast 1.5 yrs(L1 Visa). Would like to know which form I need fill for Tax return for AY 2012-13 in india.

Deepak

[AtlantaTaxExpert]

Probably Form 1040.