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niteshk · Apr 16, 2009, 06:11 PM

Hi,

I came to USA (CA) first time along with my wife (house maker with SSN) and daughter (2.5 years old, no SSN and ITIN) on 2nd Nov. 2008 on L1 visa. I have taken the extension and waiting until I pass the substantial presence test in 2009.

First year choice will treat me as a U.S. resident for part of 2008, but as I was never in USA before 2nd Nov, I should not come under dual-status tax year and therefore restrictions for Dual-Status Taxpayers should not be applicable for me while filling 1040 (means I can claim standard deductions).

Thanks
Nitesh

AtlantaTaxExpert · Apr 17, 2009, 02:04 PM

Nitesh:

The Married Filing Joint option under First Year Choice treats your as a resident alien for ALL of 2008, which means you have to report your home country income as well as any income earned in the U.S.

Even with the extra income being subject to U.S. tax, this is normally the best way to file when you factor in your wife's and child's exemptions, plus the $1,000 Child Tax Credit.

MukatA · Apr 17, 2009, 07:56 PM

You can file resident tax return as Married Filing Jointly after you meet the Substantial Presence Test in 2009.

You will get standard deduction of $10,900 and exemptions for both of you and the child.

You must both declare your worldwide income for 2008. If you have any foreign income, and on that income you paid taxes in the foreign country, then you can claim foreign tax credit (Form 1116) or you can use Foreign Earned Income Exclusion (Form 2555). Read: Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income

You will complete forms W7 (application for ITIN) for your spouse and child and attach with your tax return.
Read about L1 tax filing: Your U.S. Tax Return: The U.S. Visas