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raghu_1211 · Feb 19, 2007, 03:43 PM

Hi,

I have been in the US since 15th July 06. My wife's here with me on H4. I was not in the US either in 2005 or 2004 - so does this mean that I need to file as a non resident?

Some of the other posts indicate that I can wait a bit longer to file and gain the resident status - is my interpretation correct? If so, how do I go about it?

Any help appreciated?

THanks!
Raghu

AtlantaTaxExpert · Feb 19, 2007, 09:54 PM

Raghu:

Your interpretation is correct. Filing jointly with your wife will allow you to file as resident aliens. Just be aware that ALL your 2006 income will be taxed, not just the U.S.-based income.

You need to complete W-7 for your wife's ITIN, get her passport photocopy notarized, then complete the return. Mail it to the address in the W-7 instructions in mid-May.

You will have to wait until she gets the ITIN back before you can file the state tax return.

raghu_1211 · Feb 20, 2007, 12:52 PM

Hi ATE,

Thanks for the reply... I'm still confused with the SPT - right now, I've been in the US for 169 days in 2006 - so I don't qualify as a resident.

if I file as a non resident, then I cannot file jointly and have to pay a higher amount of tax...

What I am not sure about is that paying the tax later in 2007, does that qualify me as a resident under SPT? Ie, when calculating SPT for 2006, can the period of stay in 2007 also get included? I got tripped up with that...

Also, the sample calculation in pub 519 uses an example to calculate SPT for 2005 with periods of stay for 2005, 2004 and 2003 - I did not find any examples calculating SPT for year X using period of stay for year X+1 and hence am a bit lost.

I'm in Washington - so no state taxes - but what I'd like to know is then, given that April 15th is the last date, how do I go about paying my tax in May? [Did the calculation for SPT using all the period in 2007 and 1/3 of 169 - gives me a date in May]

Also, for FTC, what sort of documentation do I need for my 2006 income out of the US (I will read the tax pub - but am intimidated by the fact that they're so verbose and obtuse :) )

Thanks a lot!
Utterly confused,
Raghu

AtlantaTaxExpert · Feb 20, 2007, 11:28 PM

Raghu:

You can count only one-third of the 2006 days in country towards SPT. So that one-third of your 2006 (56 days) to 7 May 07 and you have 183 days. So you file on or after 7 May 07.

raghu_1211 · Feb 21, 2007, 01:02 AM

Hi ATE,

Your answer helped in clarifying that I can file as resident in May 07... however, now I'm wondering if that means that we become dual- status alien?

I wanted to file as resident to lower my tax liability - but from pub 519, dual status cannot claim either the standard deduction or exemption, so the whole thing seems pointless?

So the next question is whether I can consider myself resident for the full year. Once again Pub 519 goes over my head :confused:

If you are a dual status alien, you can choose to be treated as a resident alien for the entire year if:

You were a nonresident alien at the beginning of the year.
A. :) True.

You are a resident alien or U.S. citizen at the end of the year.
A. :confused: Not sure - SPT passes only on may07, 2007. If I was qualifying via SPT as of Dec 31 2006, then I would have been a resident as is...

You are married to a resident alien or US citizen at the end of the year
A. same as above

Your spouse joins you in making the choice.
Yes... :)

Appreciate your help!
Raghu

AtlantaTaxExpert · Feb 21, 2007, 10:36 AM

Raghu:

If you were H-1 or H-1B for the last month of the year, you met the requirement to be a "resident" at the end of the year.

You are in fact dual-status. However, the provision to file jointly and choose to be treated as resident aliens for the entire year has the effect of allowing you to file as resident alien, but only if you are married.

BOTTOM LINE: Wait until 7 May 2007, then file jointly with your wife as resident aliens.

If you need my professional tax help, contact me at [email protected].

taxsearcher · Feb 21, 2007, 10:42 AM

Actually you are non-residents for 2006 BUT you may wait and then elect to file as residents (once you pass the SPT in 2007).

AtlantaTaxExpert · Feb 21, 2007, 11:14 AM

Details, details! :-)

taxsearcher · Feb 21, 2007, 11:28 AM

Not really... they are NR this year. They are not dual status, and that's a big difference!

raghu_1211 · Feb 21, 2007, 11:54 AM

taxsearcher, ATE - many thanks!

So I file in 2007 May jointly with my wife. We file as Residents for the whole of 2006 - so I will need to get my salary in India for Jan '06 to June 06 and get to claim the standard ded. And exemptions?

Since the salary in India is already taxed, can I show the tax deducted from my indian payroll and claim some exemption?

Yipee!! :)

THANK YOU ONCE MORE>...

taxsearcher · Feb 21, 2007, 12:53 PM

You can either file as a non-resident right now and not report any of your foreign income.

Or you can wait, make 1 election and file as dual status aliens

Or you can wait, make 2 elections and file as residents for the full year but you would need to report world wide income (from all sources). Then you would need to claim a foreign tax credit.

AtlantaTaxExpert · Feb 22, 2007, 11:55 AM

TaxSearcher covered it all! I have nothing to add.

raghu_1211 · Apr 29, 2007, 09:45 AM

Taxsearcher, ATE,
Need your assistance again:

1. My wife(h4) and I (h1) came to the US on 07/15/06 from India. We are filing jointly as residents for the year 2006 as indicated in the thread above
2. Both I and my wife had income in India from Jan - Jul 06.
3. I wanted to know if I could claim the "Foreign earned exemption" for the income in INdia from Jan 06 - Jun 06. We're filing as residents and meet the foreign residence test for the 12 month period from 08/18/05 - 08/18/06?

AtlantaTaxExpert · Apr 30, 2007, 12:30 PM

No, the Foreign Earned Income exemption has other requirements which you will not meet.

raghu_1211 · May 1, 2007, 12:08 PM

Okay - so form 1116 it is and I'm seeing my tax liability if I make two elections and filing as residents for the full year. However, I have some follow-up questions (yet again)

1. Where do I show the income received from Jan 06 to Jul 06 - since the W2 doesn't have this .
2. For claiming foreign tax credit, is a letter from my Indian company showing my wages for Jan 06 - Jul 06 and the tax deducted at source sufficient?
3. Will I be able to use TaxActOnline (or turbo tax) free to file this return?

Thanks for your patience!

AtlantaTaxExpert · May 1, 2007, 10:41 PM

1) You can add the income to Line 7 (Wages) or Line 21 (Other Income). I prepfer Line 21, so I can identify the nature of the income.

2) Yes, that should be adequate.

3) If you are filing it under First Year Choice, you CANNOT file it online, as you and your must attach a signed statement to the return about your resident status and your explicit choice to be treated as resident aliens for the entire year of 2006.