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    techoin's Avatar
    techoin Posts: 5, Reputation: 1
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    #1

    Jan 29, 2007, 12:27 PM
    1040 or 1040 NR - h1b
    Hi ,

    I am from India.
    I came US in aug 2006 on h1b. I am married and my spouse is on h4.

    I need to know which form should I file. 1040 or 1040 NR.
    It seems on 1040 NR I cannot claim standard deduction which results in quite higher taxes.

    Also presently my wife does not have ITIN and I would like to claim exemptions for her.
    Need some guidance on the same.

    Thanks
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Jan 29, 2007, 03:29 PM
    Because you are married, you and your wife have the option of filing jointly and being treated as resident aliens for the entire year of 2006. It will require that your wife apply for an Individual Tax Identification Number (ITIN), but that can be done with Form W-7 and a notarized photocopy of your wife's passport.

    If you make this choice, you CAN claim her exemption AND a double standard deduction of $10,300.

    There IS a potential drawback, however. By claiming resident alien status, ALL of your world-wide income (to include what you and your wife earned in India in 2006) is subject to U.S. taxes. If you paid taxes to India on that income, you can claim a Foreign Tax Credit, but it will be a complicated return.

    If there is no foreign-based income, then you have nothing to worry about. If you earned income in India, you must consider the consequences of paying U.S. taxes on that money.

    If you need professional tax help, contact me at [email protected].
    techoin's Avatar
    techoin Posts: 5, Reputation: 1
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    #3

    Jan 29, 2007, 07:48 PM
    First of all thanks for your prompt reply. It is really very helpful.
    I understood the process of ITIN with the reply clearly.

    I am not quite clear on 1040 and 1040 NR yet. As I came in US in aug 2006, do I have to pass the substantial presence test.

    If no, I will file 1040 with W7 and follow the procedure.
    If yes then I do not have option of filing return jointly on 1040NR and I will loose the benefits of standard deduction. I will be staying well enough in 2007 to pass the substantial presence test.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #4

    Jan 29, 2007, 10:12 PM
    No, the "filing jointly and choosing to be treated as resident alien for the entire year" option means you do NOT have to meet SPT.

    Fill out the W-7 and file jointly.
    techoin's Avatar
    techoin Posts: 5, Reputation: 1
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    #5

    Jan 30, 2007, 07:18 AM
    OK . I will file jointly as suggested.
    Appreciate your help and thanks again!!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #6

    Jan 30, 2007, 07:48 AM
    Glad to help!
    techoin's Avatar
    techoin Posts: 5, Reputation: 1
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    #7

    Jan 30, 2007, 12:51 PM
    Hi,

    I was just browsing through the earlier q&a s and found one post from mad_sudhan.. his case seems to be like mine and he has been suggested to extend the returns till mid-may so that he can make first year choice to file as resident.

    I am not sure do I have to extend and file it in May or later so as to choose first year option as resident or I should not bother at all about SPT (I do not qualify for SPT) and file the returns as resident per regular timelines.

    Guess you understand my confusion...
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #8

    Jan 30, 2007, 08:45 PM
    If that was a positing from early 2006, I was giving that advice erroneously.

    A review of IRS Pub 519 makes it clear that if a married couple chooses the "be treated as a resident alien for the entire year" option, the SPT does NOT have to be met.

    Sorry for the confusion. No one said the U.S. tax system was easy to understand.
    techoin's Avatar
    techoin Posts: 5, Reputation: 1
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    #9

    Jan 30, 2007, 10:18 PM
    Yes. I think the posting is quite old.
    I think it clarifies my confusion. Appreciate your help. Thanks a lot.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #10

    Jan 31, 2007, 11:28 AM
    Glad to help!
    gushoepfner's Avatar
    gushoepfner Posts: 8, Reputation: 1
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    #11

    Feb 6, 2007, 02:46 PM
    I am in the same situation, please "techoin" let me know what are you going to do?

    What you mean by "have to meet SPT"?

    Thanks a lot!!
    avinash_b2007's Avatar
    avinash_b2007 Posts: 4, Reputation: 1
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    #12

    Feb 6, 2007, 06:16 PM
    SPT means substantial presence test. Basically... it's the number of days you have stayed in the US. Google SPT and publication 519.. you can get more details there :)
    taxsearcher's Avatar
    taxsearcher Posts: 222, Reputation: 8
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    #13

    Feb 6, 2007, 07:28 PM
    Actually ATE's original advice was correct. You must meet the SPT in order to qualify to file a Resident return.

    If you both make that satisfy that, then you may make the first year election AND then the election to file as residents for the full year (because you are married to a resident at year end).
    gushoepfner's Avatar
    gushoepfner Posts: 8, Reputation: 1
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    #14

    Feb 7, 2007, 09:06 AM
    Now I am more confuse.

    Atlanta Tax Expert: I do not have to meet SPT

    Tax Searcher: I have to meet the SPT!

    ??

    If I do not meed the SPT, shoul I wait until I meet it?
    Thanks a lot!
    taxsearcher's Avatar
    taxsearcher Posts: 222, Reputation: 8
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    #15

    Feb 7, 2007, 09:33 AM
    There are only 2 ways to become a resident:

    1. You meet the SPT
    2. You have a green card

    If you don't meet either of those, your only other option is to be married to a citizen/resident and file jointly with them as an electing resident.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #16

    Feb 7, 2007, 11:19 AM
    My original posting that you do not have to meet SPT was IN ERROR.

    TaxSearcher was right. To file jointly, at least ONE of the couple filing jointly must meet SPT.
    gushoepfner's Avatar
    gushoepfner Posts: 8, Reputation: 1
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    #17

    Feb 7, 2007, 12:44 PM
    Ok, Thanks a lot!!
    So, can I wait until I meet the SPT and send the 1040 for resident?

    Gustavo.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #18

    Feb 8, 2007, 12:10 AM
    Yes, Gustavo, that is correct!
    gushoepfner's Avatar
    gushoepfner Posts: 8, Reputation: 1
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    #19

    Feb 8, 2007, 07:30 AM
    Thank you for your help!
    Gustavo.
    gushoepfner's Avatar
    gushoepfner Posts: 8, Reputation: 1
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    #20

    Feb 8, 2007, 07:37 AM
    One more think, can I declare the expenses of moving from Brazil to US, as the tickets?

    Thank you.
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