Ruth asks…
Dual-Status Taxation-2010?
Hi,
Can you please help me in understanding what my taxes would be for the year 2010, taking my below situations into consideration? I am not able to find any online calculators to help me out considering that I will have dual-status alien status and my wife is non-resident alien.
- I relocated to US from India in Jan 2010
- We had a baby in feb 2010
- My wife was working in India till September 2010 and she left the job in India and moved to US along with my kid in September 2010 and she does not work here
- My gorss salary was $86000
- My wife earned approximately $15000 in India and she has paid the Income taxes in India for all the salary she earned during the period of Jan 2010 to September 2010
- I guess there is some tax treaty between India and US thereby the income in one country is not double taxed at both the countries.
Now, my questions are:
- Am I Dual-Status alien?
- Will we be able to file with Married Jointly status?
- What are the exemptions/deductions that we/I will be eligible for?
- What are the exemptions/deductions that we/I will not be eligible for?
- Can you provide a rough breakup of tax (Federal, FICA, State tax at NJ) calculations?
Thanks a lot for your response.
Regards,
Nicky
Joy answers:
Read IRS pub 519 very, very carefully.
I am assuming your visa is H1B or L1.
Your wife doesn’t have a substantial presence test to file a joint return with you as a resident. You and the baby do.
You meet the test for 2010 because you have 183+ days in the US. You are not a resident for the entire year because you weren’t here 1/1/2010.
Your child arrived in the US 9/2010, so he doesn’t meet the substantial presence test for 2010. If you wait until he passes the test in 2011 (around May), you can, as the parent, make the first year choice for him. This makes him a resident for part of 2010 and then eligble to be claimed as a dependent on your US tax return.
If you and your wife choose to file MFJ for 2010, you must wait until May (get an extension!), attach a first year choice for your son, attach a choice to elect to be treated as a resident by your wife, include worldwide income, attach form 2555-EZ to exclude your wife’s income from India, take standard deduction, 3 exemptions and the MFJ tax rate.
You also have to fill out W-7 forms for your wife and child since they do not have SSNs, and mail the paper return, with W-7s, with W-7 documents to the ITIN unit in Austin. Allow 20 weeks for processing.
*Or* you file a dual status return for 2010 by mail as “MFS” and allow 12 weeks for processing.
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