[Trishala Raj]

I have been working in US for the last 7 years on H1B visa. In May I have been transferred to Qatar to work for 2 years. How do I file my taxes this year? Should I report world wide income. What if my spouse gets a job in Qatar . Should I report that income? She is currently on h 4 visa. Do I have dual status ? Am I a resident due to substantive presence ?
Please do let me know. Earlier I used to file 1040 .

[AtlantaTaxExpert]

For the 2013 tax return, you ARE eligible to file an expatriate dual-status return by yourself, while claiming your wife as a dependent. In that case, you would be taxed ONLY on income earned while you were INSIDE the borders of the United States.

You can also file jointly with your wife and you both CHOOSE to be treated as U.S. residents for ALL of 2013, in which case ALL income earned in 2013 by you AND your wife would be taxed, while claiming a Foreign Tax Credit for any income taxes paid to state of Qatar.

You would have to model the tax return BOTH ways to determine which method of filing is best.

[Trishala Raj]

For the 2013 tax return, you ARE eligible to file an expatriate dual-status return by yourself, while claiming your wife as a dependent. In that case, you would be taxed ONLY on income earned while you were INSIDE the borders of the United States.
Thanks for the
Pp

You can also file jointly with your wife and you both CHOOSE to be treated as U.S. residents for ALL of 2013, in which case ALL income earned in 2013 by you AND your wife would be taxed, while claiming a Foreign Tax Credit for any income taxes paid to state of Qatar.

You would have to model the tax return BOTH ways to determine which method of filing is best.

Thanks for the response.
Also wanted to clarify
1. I get paid in $ and it's a direct deposit in my US account itself from which taxes are withheld . I do not get paid in any form in Qatar currency.

2. My wife , when we were in US was working on H 1B and converted to h4 visa a month before we came to Qatar

3. I have 2 kids who are my dependents.

4. My wife will be employed shortly. Should I report her Qatar income?

[AtlantaTaxExpert]

1) It does not matter how you get paid; your physical location dictates the tax ability of the pay if file dual status.

2) If you do not file jointly, she will have to file her own dual status return.

3) The children makes filing jointly more likely, but regardless, they WILL be claimed as dependents on either the joint return or the dual status returns.

4) Only on the joint return will her Qatar income be reported.

[Trishala Raj]

1) It does not matter how you get paid; your physical location dictates the tax ability of the pay if file dual status.

2) If you do not file jointly, she will have to file her own dual status return.

3) The children makes filing jointly more likely, but regardless, they WILL be claimed as dependents on either the joint return or the dual status returns.

4) Only on the joint return will her Qatar income be reported.

Thank you for your response. Sorry for the delay in responding. My phones and internet were down.

Do let me know if I have understood this right.

I will file a joint return at the end of the year which would be a dual status return. A dual status return means a 1040 NR for the time I am a non resident alien and attach a 1040 with it for the beginning of 2013 for which I was a resident.
I had read on the IRS site that if you are a non resident alien, you are taxed on income only from US sources for
The Part of The Year You are a Nonresident Alien
"For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources only."
In that case, should I report my wife's Qatar income? In Qatar , no one pays taxes. So there is no credit to claim.

I would appreciate your response. Thanks in advance.

[AtlantaTaxExpert]

No, a joint return and a dual status return are two different types of tax returns.

If you file jointly, you are both choosing to be treated as residents one last time, which allows you to claim the joint standard deduction and claim the $1,000 Child Tax Credit for each child. This MAY result in a larger refund, but DOES require that you claim ALL world-wide income from both spouses earned between 1Jan through 31 Dec 2013.

The dual status return can only be filed by you. On this return, you would claim only your U.S.-sourced income, and would claim your wife and children as dependents, but there will be NO joint standard deduction (you MUST itemize) and NO Child Tax Credit.

I would have to model the return both ways to determine which is best for you.

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