[toussaintp13]

I've been looking for an answer to my questions and although I've found a bunch of information on aspects of it, they still do not address what I'm specifically looking for. Here's my situation.

I am a US citizen and my wife who is from India was on her F1 OPT when we got married and she got her GC in May of last year. Based on all the information I've read, she would be considered a dual status alien. I have seen that there are a couple options: 1- she can elect to be treated as a resident for the whole year and file with me, 2- She can file as a dual status and we can do married filling separately. My question is in regards to option 2. I've seen that she can do form 1040nr as a statement and attach that to form 1040 (along with the schedule As).

The part that I am confused about deals with the itemized deductions. Since we own a home which is only under my name as we bought it before being married, I itemize deductions for property taxes and mortgage interest. It is my understanding that since I itemize that she also has to itemize and cannot use std deductions. I know that in her case, we can itemize on schedule A for form1040 her state and local taxes for the entire year. However, my question is, when we do the schedule A for form 1040nr, based on examples I've seen, I can include $5950 std deduction based on US-India tax treaty. So, when I do form 1040 and I have to put deductions, do I account for this $5950 that was itemized on the sch A of 1040nr to the sch A of 1040 on the appropriate line and write down that the amount is accounting for tax treaty and itemized deductions on sch A of 1040nr? Do I report this amount again on sch A of 1040 with explanation? Also, do I add to this the itemized deductions for state and local or do I just have the treaty amount alone? Or, can I only do the state and local taxes for the year for itemized deduction and cannot report what's on sch A of1040 nr? The example from pub 519 shows that they combine whatever is itemized from the 1040nr to what they are itemizing on 1040.

Sorry if this is a long post. I appreciate everyone's input on this and thanks in advance.

[AtlantaTaxExpert]

First, my standard warning: Dual-status tax returns are NOT for amateurs; get professional help from someone who has experience filing dual-status returns.

Second, model the return both ways and determine whether filing separately is the best way to file. In about 95% of the cases, filing a joint return is best.

Third, see the extract of Article 21(2) of the U.S.-India Tax Treaty that is the basis for your assumption that your wife can claim the $5,950 standard deduction:

2. In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a student or business apprentice described in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the State which he is visiting.

Essentially, the article says your wife is entitled to the same exemptions as a citizen, which the IRS has interpreted to mean she can claim the standard deduction. HOWEVER, the same restrictions apply as well, which means she MUST itemize if you are itemizing, so she CANNOT claim the $5,950 standard deduction.

I suspect that since she MUST itemize, a JOINT return will be the best option for you, making the rest of your questions moot.

If you believe that you will need professional help filing this year, this IS what I do. Please double-click on my name (Atlanta Tax Expert) above to access my profile. You will find my email address in the signature portion of the profile (scroll down to the BOTTOM of the page).

[toussaintp13]

OK. Thank you for the concise explanation.