Self F1 to H1 in 2009, Married in 2009 Spouse on F1

[rnimm2]

Self

Stay in USA -> Status
01-01-2009 till 07-24-2009 -> F1, OPT, Exempted fom SS & Medicare taxes
08-16-2009 till Current -> H1

Married on 07-31-2009

Spouse
Stay in USA -> Status
08-16-2009 till Current -> F1, no income in 2009

Following are my questions:
1)Can I use first year choice & wait till July 3rd and file as a resident?
2)In that case will I be considered as a Dual Status Resident?
3)Can I file jointly?
4)I paid tution fee of $8500 for my spouse education in 2009 can I claim exemption on them?
5)Can you please suggest the best available option for me?

Thanks
rnimm2

[Atlanta Tax Guru]

Mimm:

1 & 3) Yes, but you can file as early as 17 May 2010. You will file JOINTLY with your spouse.

2) No, if you wait until 17 May 2010 and file jointly, you are consided to be a resident alien for ALL of 2009. In fact, you and your spouse will sign a statement to that effect.

4) If you file jointly as specified above, you CAN claim either an education credit or a tuition deduction.

5) You can file jointly with your wife and you both CHOSE to be treated as resident aliens. This will allow you to claim the $11,400 joint standard deduction plus two $3,650 personal exemption (for yourself and your wife).

You will need to submit Form W-7 to apply for an ITIN for your wife. A notarized photocopy of their passport needs to be stapled to the W-7. You can get the photocopy notarized at any local bank or, failing that, at your local IRS office.

The downside is that you must WAIT to meet the Substantial Presence Test before you can file, which means you must wait until 17 May 2010.

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

[rnimm2]

Atlanta Tax Guru, thank you very much for answering my questions.

Again I have the following questions:

1)If I am treated as a resident alien for all of 2009, what about the Social Security and Medicare taxes I did not pay while I was in OPt? will that cause any problem?

2)My spouse has applied for SSN a week ago, I guess she can use SSN instead of applying for ITIN when we file jointly after 17May2010, Is that correct?

3)To summarize,
a)I need to file Form 4868 before April 15, 2010 to get extesion (Do we need to file a similar form for my spouse?)
b)Sign a statement together that we want to file Jointly and treated as residents for all of 2009
c)And file form 1040 jointly after May 17, 2010 with appropriate decutions including tution fee.

Is that correct?

Can you please mail me at rnimm2 at gmail dot com about how much fee you will charge to provide all of these services, and when is the earliest I need to contact you to follow up on this.

Thanks & Regards
rnimm2

[Atlanta Tax Guru]

1) Those taxes will NOT be collected retroactively.

2) Correct! If she has a SSN, she MUST use it to file.

3a) Yes, mail Form 4868 prior to 15 April 2010. Put your wife's SSN on the Form 4868 if she has one when you mail the Form 4868. If not, put "APPLIED FOR" where her SSN goes.

b) Yes

c) Yes

Will send the email shortly.

[rnimm2]

Atlanta Tax Guru,

Thank you very much for answering my questions. Your answers really helped me a lot. I have one more question and would greatly appreciate your answer on this as well.

The source of the income which we used to pay the tution fee of $8000 is from education loan in India.
1) Is it possible to claim tution credit for this $8000?
2) If not, are there any other options to claim deductions on the loan amount?

Also, I did not get any e-mail from you yet.

Thanks & Regards,
RNIMM2

[Atlanta Tax Guru]

Yes, you CAN claim the tuition credit (probably Lifetime Learning Credit) if you file jointly with your spouse.

The Lifetime Learning Credit is 20% of the amount of tuition, which would be $1,600 on the $8,000 payment.

[taxvictim]

Atlanta Tax Guru,

I think my situation is more or less similar to rnimm2 except my wife does not have SSN and my visa dates are different.

Self

07-31-2007 till 02-01-2009 -> F1
02-02-2009 till 09-30-2009 -> F1, OPT.
01-10-2009 till Current -> H1B

Married on 5th Jan 2009.

Spouse
Entered US as F2. Converted to F-1 from August.
No Income in 2009.
Does not have SSN.


I guess I should be following the same process as rnimm2. However I had a few questions.

1. Would the procedure you described to rnimm2 have any impact on my 2008 tax return?
2. In order to get ITIN for my wife we need to submit W-7 along with the tax return. So, should we wait until May for this also?
3. Also, as per W-7 instructions, the form should be mailed along with tax return to a different address specified in the the form. Is there a way for me to first get her ITIN withoug filing tax return and file tax return normally without W-7?

Thanks for your help.

[Atlanta Tax Guru]

TaxVictim (interesting choice of name here) :-)

1) No, you were NOT married in 2008.

2) Yes, because the Form W-7 MUST be submitted with the tax return.

3) There MAY be one way. Go to your local bank and ask to open a bank account for your wife. The Bank will more than likely require she get an ITIN to open that account. Have the bank draft you a letter saying she needs the ITIN to open the bank account. You can then submit the W-7 WITH the bank's letter to get the ITIN without the tax return. You then just use the ITIn to file the return in June 2010.

[taxvictim]

Atlanta Tax Expert,

Your answers were really helpful.

I went throught the procedure to file tax by taking the First Year choice option. As per instructions on form 4868, I am supposed to estimate the tax I might owe as if I were a NRA and use 1040NR to estimate the tax. Does IRS expect a very accurate estimate? Do I have to fill in 1040NR with full accuracy and then come up with the number? I had also traded with stock and made some profit, so estimating tax using 1040NR migth become very complex.

Could you let me know how much you would charge for the whole process if I take the first year choice? My id is adjunctacc@gmail.com

[Atlanta Tax Guru]

I have emailed you a fee quote.