L1-tax situation question.

[dotnetguru]

This is for my friend who is from India and get paid from company here in US dollars.
She came on L1 visa and will work from Nov 6th to Dec 15 2008.her husband came with her and do not work.their child is in India.after researching the various posts here i came to understand like this.please confirm if i am right.
1) she can claim personal exemptions for her and husband which is $3500+$3500=$7000(India tax treaty). and not for the child as he is in India.am i right?
2) her salary during this might be around $5000.can she let employer know so that they do not deduct federal and state taxes as it will be less than $7000. is that possible? if so does she have to file tax return next year in 2009.
3) in the event if they deduct federal and state taxes she has to file 1040NR and claim only husband as dependent and not the child as he is in India.i mean in 2009 when filing tax returns.am i right?

Thank you very much for ur help.

[Atlanta Tax Guru]

That is NOT correct. If she returns to India before the end of the year, she does NOT qualify for the option of filing jointly with her spouse under First Year Choice. To qualify for that, she must remain in the U.S. for the rest of 2008 and AT LEAST through the middle of July 2009.

Otherwise, she will file as a non-resident alien, filing Form 1040NR or 1040NR-EZ. She CANNOT claim her husband as a dependent.

Further, if she is being paid from her HOME COUNTRY payroll office and the money is just being converted to U.S. dollars, then she has NO LEGAL OBLIGATION to file a U.S. tax rewturn at all, because she was not in the U.S. for over 183 days.

If she was by a U.S. company or a U.S. subsidiary of her Indian employer, then she must file Form 1040NR or 1040NR-EZ and claim ONLY her own personal exemption. She can claim NEITHER her husband nor her child as a dependent.

[dotnetguru]

as always expert answer from a true expert.thank u very much.

[Atlanta Tax Guru]

Glad to help!