Hi ,

I am from India.
I came US in aug 2006 on h1b. I am married and my spouse is on h4.

I need to know which form should I file. 1040 or 1040 NR.
It seems on 1040 NR I cannot claim standard deduction which results in quite higher taxes.

Also presently my wife does not have ITIN and I would like to claim exemptions for her.
Need some guidance on the same.

Thanks

Because you are married, you and your wife have the option of filing jointly and being treated as resident aliens for the entire year of 2006. It will require that your wife apply for an Individual Tax Identification Number (ITIN), but that can be done with Form W-7 and a notarized photocopy of your wife's passport.

If you make this choice, you CAN claim her exemption AND a double standard deduction of $10,300.

There IS a potential drawback, however. By claiming resident alien status, ALL of your world-wide income (to include what you and your wife earned in India in 2006) is subject to U.S. taxes. If you paid taxes to India on that income, you can claim a Foreign Tax Credit, but it will be a complicated return.

If there is no foreign-based income, then you have nothing to worry about. If you earned income in India, you must consider the consequences of paying U.S. taxes on that money.

If you need professional tax help, contact me at [email protected].

First of all thanks for your prompt reply. It is really very helpful.
I understood the process of ITIN with the reply clearly.

I am not quite clear on 1040 and 1040 NR yet. As I came in US in aug 2006, do I have to pass the substantial presence test.

If no, I will file 1040 with W7 and follow the procedure.
If yes then I do not have option of filing return jointly on 1040NR and I will loose the benefits of standard deduction. I will be staying well enough in 2007 to pass the substantial presence test.

No, the "filing jointly and choosing to be treated as resident alien for the entire year" option means you do NOT have to meet SPT.

Fill out the W-7 and file jointly.

OK . I will file jointly as suggested.
Appreciate your help and thanks again!!

Glad to help!

Hi,

I was just browsing through the earlier q&a s and found one post from mad_sudhan.. his case seems to be like mine and he has been suggested to extend the returns till mid-may so that he can make first year choice to file as resident.

I am not sure do I have to extend and file it in May or later so as to choose first year option as resident or I should not bother at all about SPT (I do not qualify for SPT) and file the returns as resident per regular timelines.

Guess you understand my confusion...

If that was a positing from early 2006, I was giving that advice erroneously.

A review of IRS Pub 519 makes it clear that if a married couple chooses the "be treated as a resident alien for the entire year" option, the SPT does NOT have to be met.

Sorry for the confusion. No one said the U.S. tax system was easy to understand.

Yes. I think the posting is quite old.
I think it clarifies my confusion. Appreciate your help. Thanks a lot.

Glad to help!

I am in the same situation, please "techoin" let me know what are you going to do?

What you mean by "have to meet SPT"?

Thanks a lot!!

SPT means substantial presence test. Basically... it's the number of days you have stayed in the US. Google SPT and publication 519.. you can get more details there :)

Actually ATE's original advice was correct. You must meet the SPT in order to qualify to file a Resident return.

If you both make that satisfy that, then you may make the first year election AND then the election to file as residents for the full year (because you are married to a resident at year end).

Now I am more confuse.

Atlanta Tax Expert: I do not have to meet SPT

Tax Searcher: I have to meet the SPT!

??

If I do not meed the SPT, shoul I wait until I meet it?
Thanks a lot!

There are only 2 ways to become a resident:

1. You meet the SPT
2. You have a green card

If you don't meet either of those, your only other option is to be married to a citizen/resident and file jointly with them as an electing resident.

My original posting that you do not have to meet SPT was IN ERROR.

TaxSearcher was right. To file jointly, at least ONE of the couple filing jointly must meet SPT.

Ok, Thanks a lot!!
So, can I wait until I meet the SPT and send the 1040 for resident?

Gustavo.

Yes, Gustavo, that is correct!

Thank you for your help!
Gustavo.

One more think, can I declare the expenses of moving from Brazil to US, as the tickets?

Thank you.

Yes, those are valid moving expenses.

After spend some time trying to understand better the best way to fill out the Tax Return I discovered some useful informations that I would like to share with you. If you have more useful information, please post here to others like us.

I arrived in 8/2006 with H1B with my wife and my daughter in H4 and the basic question was, which one should I fill, the 1040NR (non resident) or 1040 (Resident)?

1) I can chose to be treat as a US resident. To this, I have to fill out the form 1040 as a Dual Status Aliens and opt by First Year Choice (see publication 519 page 8, 9, 10 and 11).

2) Since I am going to meet the conditions of the First-Year Choice only in May, I have to apply for an Application for Automatic Extension of time to file U.S. individual income Tax
Return (form 4868). I am not sure if my wife and/or daughter have to do the same.

3) I can include my wife but the person that talked with me in IRS was not sure about my daughter and they will call me back (I hope so!) in two weeks. When I have the correct answer about it I will post here.

4) I can include the moving expenses (this is such a good think), as you can see in the
Publication 521, to this I have to fill out the form 3903.

All publications and forms you can download from: Internal Revenue Service

I hope that this help you,
Gustavo.

Well done, Gustavo!

In my opinion, the child has to be in the U.S. for at least six months out of the year to be claimed as a dependent.