Let me start with some quick facts,

1. I'm on L2B visa and had federal tax deductions (no state tax for TX) from my income indicated on my W2 form, with my SSN on it.

2. Have been in US for just 72 days in 2010. And less than 183 days in last three years and hence being treated as “Nonresident Align”. I do not meet Green Card or Substantial Presence Test.

3. Have my spouse with me in US on L2 (not authorized to work) and doesn’t have a SSN/ITIN.

4. Have my son (toddler) with me in US on L2 (not authorized to work ) and doesn’t have a SSN/ITIN and is not availing any day care.

Need help to understand,

1. Is my understanding on my residency status (“Nonresident Align”) correct?

2. What tax filling Form (1040/1040NR/1040NR-EZ/…) should I use to file tax return?

3. What all rebates that I can claim?

4. While filing the return using TurboTax, it indicates that I’m eligible for “Making Work Pay Credit” of $800 apart from other federal credit. What is “Making Work Pay Credit” and am I eligible for this credit given the residency status?

5. How can I get ITIN for my spouse and kid? Should I just submit W7 (with supporting) along with my tax return and it should be taken care? How will I get to know the ITIN for future use?

6. How and by when I should expect the refund in case of paper filling?

Thanks,
Puneet

Right now, you ARE a non-resident alien and would file Form 1040NR-EZ without any involvement of your wife and child.

However, if you think you will be here past mid-June 2011, you can WAIT and file jointly with your wife and you both CHOOSE to be treated as resident aliens. This will allow you to claim the $11,400 joint standard deduction plus two $3,650 personal exemptions (for yourself and your wife), PLUS another $3,650 exemption for your child PLUS the$1,000 Child Tax Credit. Your wife and child will need ITINs.

To apply for an ITIN, you need to complete Form W-7 for your wife and child. You need to make a photocopy of their passports, then get the photocopies notarized. This can be done at your local bank in most states in the U.S.

The downside is that:

• You must wait until 9 June 2011 to meet the Substantial Presence Test before you can file for Tax Year 2010.

• you must declare ALL 2010 world-wide income (your AND yor wife's home country income, if applicable). There is an offset available by either claiming the Foreign Tax Credit (Form 1116) or to claim the Foreign Earned Income Exclusion (Form 2555).

Even with the downside, this is probably the best way for you to file.