[Pooney]

Hello Everyone

Im a British passport holder currently working for a US company in Shanghai for the 5+ years.

My family (3 members in total) now have a opportunity to relocate to our US office in Denver CO. and I was wondering if you can help by offering some advice regarding the topic 'resident alien' as the tax difference is so big compared to non resident aliens. My company originally told me I would be a 'Non resident alien' but we asked for a 2nd opinion and the feedback we got is that I might be able to qualify to be a Resident alien as the UK has some kind of Tax treaty with the US? Not sure if this info is true or not.

So I basically want to know would I qualify to be a 'resident alien'? My company will help me apply for a L1B visa which I hope might be upgraded to a L1A visa not sure if this makes any difference. I don't have a green card and depending on when I relocate to the US, I don't think I would pass the 'Substantial presence test' as I haven't moved there yet.

If the tax year is from Jan-Dec would it make any difference if I planned to move to Denver in Jan 2013 compare to say Nov 2012?

Would this mean for the months of Nov-Dec 2012 I will need to pay tax as a 'non resident alien' and once the following year comes as I would have stayed in the US for a year by that time will I qualify to be a resident alien?

If I don't qualify to be a resident alien, am I correct in saying the only way is to qualify is to get a green card or staying in the US for 183 days + during a period of 3 years or more? Please help confirm.

I have done lots of digging with this but no luck yet.

Many thanks in advance, hughely appreciate any advice given.

Brds

Pooney

[AtlantaTaxExpert]

Pooney:

If you arrive in November 2012, your default filing would be as a non-resident alien, filing Form 1040NR. On this filing you would NOT be able to claim your wife or child, and you would be able to deduct ONLY your personal exemption of $3,800 plus the Colorado state income tax withheld as an itemized deduction. This could result in you paying a significant tax if the moving reimbursements from your company was added to your salary as taxable income.

You DO have the option to file as a resident alien for 2012 by filing jointly with your wife and you both signing a statement that you CHOOSE this option. This will allow you to claim your child as a dependent and be taxed under the JOINT FILING Tax Table which are the most favorable tax rates. However, you MUST declare ALL world-wide income earned in 2012. You can mitigate the extra tax by either EXCLUDING the income using Form 2555 (the timing of your arrival would dictate whether you qualify for this exclusion) or claiming the Foreign Tax Credit by using Form 1116.

The biggest benefit of filing jointly is that you probably will qualify to claim the $1,000 Child Tax Credit, plus you can get the process of getting your wife's and child's ITINs completely in your initial return.

However, you will have to wait until sometime in late June 2012 before you could file. This is due to the requirement that you meet the Substantial Presence Test in 2013 before filing.

I CAN help you with this process regardless of how you file; this IS what I do.

You can email me at the email address in my profile for further details.