[mufaddal_g]

Hi,
I cam to US in Aug 2008 on F1 visa.
I was a student till Aug 2013 and was working on-campus. For Aug and Sep I was working on OPT. From Oct to Dec 2013 I was working on H1B.
My total income from Jan 2013 to Sep 2013 was $XX and my income from Oct 2013 to Dec 2013 was $YY

1. Can I file as non-resident (using 1040NR) and use US India Tax Treaty to claim "Total income exempt by a treaty" for my income from Jan to Sep and subtract it from my taxable income?

2. I married in 2012 and my spouse came to US in Jan 2013. Can I claim exemptions for spouse as well.

3. Can I claim standard deduction additional to exemptions and the reduction of taxable income from question 1.

[AtlantaTaxExpert]

1) No. That exemption applies only to income earned OUTSIDE of the U.S. your on-campus job and OPT work WAS inside the United States.

2) Under First Year Choice, you and your wife can file jointly and you both CHOOSE to be treated as resident aliens for 2013. That requires you declare ALL world-wide income on your 2013 tax return, to include any money earned by your wife in India. However, your wife's income can then be excluded using Form 2555. Further, you must WAIT until 1 June 2014 to file in order to meet the Substantial Presence Test.

3) By filing jointly, you get to claim the JOINT $12,200 standard deduction.

You will need to apply for an Individual Tax Identification Number (ITIN) for your wife by submitting Form W-7, and that process underwent some radical procedural changes in 2013. Instead of the simple notarization process, the IRS now requires that your home country certify the photocopy of your passport as a true copy. This is due to rampant fraud in the ITIN submission process. The notaries simply cannot tell the difference between a fake passport and the genuine passport.

FIRST ALTERNATIVE: For Indian clients, this certification can be done by the Indian embassy in Washington, D.C. or at one of the consulates in San Francisco, Chicago, Houston or New York. Assuming you do NOT want to drive there, you need to call the nearest consulate and arrange to have this process done via the mail. Since you usually must wait until June to file, you have time to get this done (the process, done via mail, can take up to three months to complete). My clients to date have had the best results by mail with the San Francisco consulate, getting the certified passport photocopies in less than 3 weeks.

SECOND ALTERNATIVE: The IRS also have Tax Assistance Centers through which you may be able to have the passport verified as genuine, then submit the tax return and Form W-7 IN PERSON to be forwarded to the ITIN Processing Center in Austin, Texas for processing , without having to get the photocopies certified by your home country consulate.

You go to the TAC with your wife, her passport, the SIGNED Forms W-7, and the completed and SIGNED tax return.

The IRS official verifies the passports, asks a few questions, completes the certification paperwork, checks the Forms W-7 and tax return, then returns the passports with a receipt for the tax return and Forms W-7, which is sent to Austin, Texas for processing.

You leave the TAC with your wife and/or family, the passports and a receipt for the Forms W-7 and the tax return.

You would get the ITIN about six weeks after you left the TAC.

The tax returns are NOT processed at Austin, Texas, but rather forwarded to the regional IRS centers for processing, so the refund will come about one month AFTER you get the ITIN letters.

The list of the TACs are at the link below:

]http://www.irs.gov/uac/TAC-Locations-Where-In-Person-Document-Verification-is-Provided

THIRD ALTERNATIVE. I am a Certifying Acceptance Agent, and I can certify the passport if the TACs are not close.

You would mail the passport and the SIGNED Form W-7 and SIGNED tax return to me. I would contact you via SKYPE, conduct a brief interview with your spouse, certify the passport, attach the certification to the SIGNED W-7 and sign both documents. I would also sign the tax return, then paperclip the W-7 with certification to the tax return, and then mail them to the IRS ITIN Processing Center in Austin, Texas.

]The passport I would mail BACK to you via tracked PRIORITY MAIL, so the passport would be out of your possession for about a week.

The FINAL alternative is to mail in the actual passports themselves, something most of my clients are reluctant to do because...

If the IRS gets the passport, they hold it for about TWO months.

If you need professional help with this process, email me at the email address in my profile.

[mufaddal_g]

Thank you for such a quick and detailed response. I have a couple of follow questions -

1. Since I have stayed in USA for more than 5 years (08/02/2008 to present) with more than 300 days every year for 2009, 2010, 2011, 2012 and 2013, can I file as resident alien and file 1040 instead of 1040NR? I believe I can also pass the Substantial Presence Test in this case right?

2. Can I file as Married filing jointly even though my wife only came to US on 01/10/2013 (a year ago) since I am a resident alien for tax purposes? IRS states, "A nonresident alien generally cannot file as married filing jointly. However, a nonresident alien who is married to a U.S. citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ." Since I would have still passed the Substantial Presence Test in 2012 and considered a resident alien and my spouse (who is nonresident alien) married me in 2012, can I file jointly?

3. Why do I need to wait till June 1, 2013 for filing my taxes since I am a resident alien already through the Substantial Presence Test?

[AtlantaTaxExpert]

1) The time under the F-1 visa does not count for the Substantial Presence Test. Hence, you were only under SPT for 92 days in 2013. That means, under the SPT formula, only 31 days count for SPT from 2013. In 2014, Jan through May is 151 days, plus 31 days from 2013, makes 182 days. So 1 June 2104 is the 183rd day.


2) Yes, you CAN file jointly, but only AFTER you meet SPT, which would be on 1 June 2014.

3) See #1 above.

[mufaddal_g]

Thanks again. But then how does days in 2104 make me eligible to file as resident alien for tax year 2013. I though I needed to have 183 days in 2011, 2012 ad 2013 (with the breakups)?

[AtlantaTaxExpert]

First Year Choice allows you use days in 2014 to qualify for the Substantial Presence Test retroactive to the tax return for 2013.

You can read all about in in IRS Pub 519, which can be download from Internal Revenue Service.

[IntlTax]

Since 2013 is his 6th year in the U.S. wouldn't all of his days of presence in the U.S. in 2013 count towards the substantial presence test (including the f-1 days )?

[AtlantaTaxExpert]

IntlTax IS correct. I mis-read the OP's arrival date as 2009.

Muffadl G can submit his paperwork to the IRS TAC tomorrow if he wishes, because he is a resident alien for tax purposes in2013.

Sorry for the confusion.

[mufaddal_g]

Thank you all for helping me clear me mind!!

[AtlantaTaxExpert]

Glad to help!