File as resident alien using first-year choice?

[sambhavjain]

I'm in the US on F-1 since September 2014. My spouse entered US in March 2017 on F-2. On October 1st 2017, I changed from F-1 to H-1B and my spouse changed from F-2 to H4. My spouse had no income in 2017 (US or India)

I do not meet the green card test or substantial presence test for 2017. Hence if I were to file 1040NR, I see the following disadvantages:

- cannot file jointly
- cannot claim spouse as exemption (since India-US tax treaty is only for students and I was on H-1B at the end of 2017)
- cannot file for her ITIN (W-7) since no valid reason to file (claiming exemption is a valid reason, but I cannot claim as said above)
- cannot use TurboTax (doesn't support 1040NR) or Sprintax (doesn't support HSA forms)

But I recently read about First-Year Choice (Pub. 519) and I think both of us may qualify to elect as dual-status aliens, and elect to be treated as resident-aliens for entire year of 2017. This is how:

- We were present for at least 31 days in a row in 2017 (October 1st 2017 till Dec 31st 2017)

- We were present for more than 75% of the remaining period (Oct 1 - Dec 31 2017)

- And we may qualify for Substantial Presence Test in 2018 (may not be by April deadline)

If so then I can use TurboTax for 1040, and also file married jointly and claim exemption for my spouse. Is that correct?

Also I'm not sure when we qualify for Substantial presence test in 2018. Do we need to file Form 4868 for an extension, jointly? And my wife doesn't have SSN/ITIN so what should we mention on the Form 4868? We plan to add the form W-7 (ITIN application) to our joint returns that we will file later (when we meet substantial presence for 2018).

[DS30 · Accepted solution]

Yes - you can make the first year choice and then make the choice to jointly file as resident aliens for 2017. You can use TurboTax to prepare your return but you will need to print out the return and attach it to your W-7 filing (for your spouse's ITIN.)

When you file in 2017, a statement, signed by both spouses will need to be attached to your joint return for the first tax year for which the both choices apply.

If you need to wait until after the first filing due date and your spouse does not have an ITIN, you will want to file an extension (Form 4868). You will need to mail in your extension (Form 4868) (You will not be able to efile your extension.)

Since you will be applying for an ITIN, write “ITIN TO BE REQUESTED” on the extension form where her Social Security Number is required.

Here is a link to IRS for Form 4868, it includes the mailing address for filing your 4868.

Additional information for your state income tax filing (if your state has an income tax filing requirement:(

Although many states give an automatic extension when you file the federal extension Form 4868, you may want to check with your State Department of Revenue Contacts to make sure that your state doesn't have a separate state extension filing.

Click here for IRS website  ITIN - Frequently Asked Questions

Click this link for more information from the IRS on US Tax Guide for Aliens

[sambhavjain]

Thanks DeeS. That helps.

[sambhavjain]

I have a follow-up question regarding this statement:
" A declaration that one spouse was a non-resident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year, and that you choose to be treated as U.S. residents for the entire tax year."

In my case isn't it true that both myself and my spouse will have made the first-year choice, and hence will both be resident aliens at end of 2017? In that case we only need to add statement that we would like to be treated as residents for all of 2017. No need to add a separate statement to have one non-resident spouse treated as resident alien. Is that correct?

[DS30]

You can change the wording of the statement to say that both spouses are making the first year choice to be treated as dual-status aliens and since at least one spouse is considered a resident alien as of the last day of the year, that both spouses are also choosing to be treated as US residents for the entire tax year

[sambhavjain]

Perfect - thanks again DeeS.

[DS30]

You are very welcome 🙂

[chetansomani0]

I am in the same boat. so based on the conversation, Sambhav will you will filing your 2017 taxes somewhere in May or June 2018, after you meet SPT test?

[sambhavjain]

Chetan - Yes that is correct. I will also be filing an extension prior to the tax deadline.

[chetansomani0]

Gotcha!! Thanks Sambhav!!

[massarch]

I'm in a same situation. I got couple questions

1. According to 1040NR I owe tax and according to 1040 I will get refund, which one should I consider in my calculation when filling form 4868?

2. In form W-7, should I consider my wife as a spouse of residant or spouse of visa holder?

3. I didn't understand how I can be considered as allian residant for the whole year. What should I say in my statement?

4. In conclusion, I fill W-7 for my wife and mail it with form 4868. Then I can wait till end of Sep to mail my 1040. Am I right?

Thanks

[prinusa]

...

[karthik-dandavat]

@rajkumardhanotiy : I have the same question too. Should we file 1040 NR along with amount we owe and then file for first year choice at the end of September or should we just file 1040. In my case both me and my wife have ssn

[bine22]

@massarch: What is your visa and since when are you in the US? And your spouse?

[massarch]

We came on 2015 with F-1 for me and F-2 for my wife. My status changed to H-1B on October 2017 and my wife changed to H-4 on January 2018.
We went to IRS to apply for ITIN but the agent told us we cannot file W-7 now, so after filing the 4868, we will be eligible to be considered for first-year choice on August and then we can apply for ITIN and sending the 1040. He told us for the 4868, I should mark APPLIED for my wife's ITIN.
As I realized, since I was resident at the end of 2017 my wife was not, we can say in our statement that we want her to be considered as a spouse of resident and as a result, we can file married jointly.

I have two questions know:

1. Is there any sample for the two statement that we should send with our documents?
2. Should I apply for my wife's ITIN on August in person and going to IRS or can I fill the W-7 and send it with 1040?

Thanks