Help to choose the right Turbotax product

[Blank_Slate]

I would greatly appreciate some help to select which product of turbotax is suited for my situation.

We are a family of two adults and two dependent children (aged 7 and 9). Only one of the adults has a job in the US.

We relocated to the US from India in 2023 March.

We had income in India in 2023:

• salary from Jan and Feb, before arriving in the US,  - about $10000
• rental income from real estate – about $4000
• capital gains from stocks and mutual funds – about $30000

We have assets in the form of

• stocks, bank accounts, retirement plans and insurances  - about $200000

We have paid the tax in India for all our income.

We filed for an extension of our 2023 US tax filing since we wanted to file it after completing the Indian 2023-24 financial year tax filing.

Now we are ready to file our US returns. My first question is – which turbotax product is most suitable for me?

Thank you in advance!

[tagteam]

First of all, you could always use any desktop (installed on a computer) version of TurboTax; each one contains all of the tax forms.

However, disregarding everything else, if you want to use an online version of TurboTax, you will have to use TurboTax Premium since you have rental income and need Schedule E.

[rjs]

You didn't say whether you are U.S. citizens. If you are not citizens, it's not clear whether you were resident aliens or nonresident aliens for 2023. If you were nonresident aliens you cannot use TurboTax at all. A nonresident alien has to file Form 1040-NR, which is not supported in any TurboTax product.

I will ask @pk to try to clarify your situation. He may first ask you for some additional information.

[Blank_Slate]

Good point, missed that, thanks for bringing it up!

I am here on H1-B, my spouse and kids are here on H4. We are resident aliens for tax-purposes (I arrived in the US on Dec12, 2022 while the rest of the family arrived on March 12, 2023, and all of us have been residing in the US throughout thereafter).

[pk]

@Blank_Slate , having gone through your original post and the interactions with my colleagues  @rjs  and @tagteam ) which I generally agree with,  what I get of your situation :

(a) you arrived in  US with H1-B work visa  in 2022.

(b) your family arrived with H-4  in March of 2023.

(c) You have bank accounts, pension accounts, savings etc. in India and  have paid taxes to India  for the Tax year 2023/2024 per Indian tax rules  and tax calendar.

Question you have asked related to TubroTax product that is suitable for  preparation and filing for your specific situation.  While I am not familiar with the on-line offerings and screens thereof, my personal  pref. is  Windows  down-load/CD version of  Home & Business.  I like this  because it is the most complete and because it keeps everything on my machine ( in case of  amendment or other needs ).  So I would highly recommend this product, even though this is quite expensive ( but a lot lower than what it would cost to employ a tax professional ) compared to on-line product.

Coming to your situation -- 1. how did you file the 2022 return ( assuming that you had US sourced income during  that period ) ?    2. When you talk about income  in India for Jan & Feb of 2023 in India -- is it for you  ( how? ) or your wife ?.  (3) When did you purchase/acquire your rental property ,  when did  put it in service as rental ,  did you recognize it as rental income  for your US return for 2022 ?  (4) your pension account -- is it available to you  or is it like a  trust that you can get distribution from when you reach superannuation or what ?  How did you get the face value that you quoted ?  The more info that you can provide the better focused the answer will be.   So please consider providing details.

Note that because of the US  tax year being Calendar year, you will have to allocate  your Indian  income(s), taxes etc. to Calendar year 2023  ( for the 2023 tax year ).

I will circle back once I hear from you .

Namaste ji

pk

[Blank_Slate]

Hi PK,

Thank you for the response and suggestions. I also have been inclining towards the desktop version.

My answers are below and I will appreciate your further suggestions.

1. how did you file the 2022 return ( assuming that you had US sourced income during that period ) ?

I arrived on Dec 12th 2022 and worked in 2022 from Dec 13 to 31. However, the salary for that part was paid to me in Jan 2023 and is included in the 2023 W2. I received neither salary nor W2 or other forms for 2022 and was informed by my employer that I need to start filing tax from 2023.

1. When you talk about income in India for Jan & Feb of 2023 in India -- is it for you ( how? ) or your wife ?.

My wife. She worked in India in Jan and Feb before resigning and traveling to the US in March. The salary was for those two months (though it was credited to her bank account only in April while she was in the US).

    (3) When did you purchase/acquire your rental property , when did put it in service as rental , did you recognize it as rental income for your US return for 2022 ?

There are two rental properties. Both belong to my wife and she receives the rents. One was purchased in 2018 while the other she inherited in 2012. We plan to show it as rental income in 2023 when we file.

(4) your pension account -- is it available to you or is it like a trust that you can get distribution from when you reach superannuation or what ? How did you get the face value that you quoted ? The more info that you can provide the better focused the answer will be. So please consider providing details.

The pension plan belongs to my wife. It is not available to her. It is called NPS (national pension scheme) in India. She had it as she was a government employee while in India. It is a contributory scheme which acts like a trust or fund for distribution on superannuation and is controlled under the dept of finance of the central govt of India. Since she resigned early, she will not get any distribution now, only after a particular age, which I think is 60, another 15 years down the line.

The value I quoted is the approximate value of the fund on Dec 31 2023. I am not entirely sure how this asset is to be declared in the US.

Similarly, the life insurance policies for which we are paying premiums and have a current value and a defined maturity value on completion of the policy period in future – I am not sure how to declare.

Note that because of the US tax year being Calendar year, you will have to allocate your Indian income(s), taxes etc. to Calendar year 2023 ( for the 2023 tax year ).

I understand. The further questions I was planning to ask were about this reallocation. I find that an absolutely accurate splitting of taxes paid to year 2023 from the 22-23 and the 23-24 tax files of my Indian computation is nearly impossible. A reasonable approximation is the best I think I can do. Is that a generally acceptable situation?

I hope I have answered all questions and please let me know if any further clarification is required. Thank you very much for all your help.

[pk]

@Blank_Slate ,   I would urge you to purchase the 2023 H & B Windows version -- as I said it is the most complete product.  However,  given that the filing dead line  is October 15th.,  your time to file is extremely limited and your  pay ( without  interest and penalty)  was  April 17th.   You can still e-file  ( I think till around 20th of October ) but file by mail is available till around  early Nov.  What I am trying to point out are the difficulties in your way.   While our help board ( all volunteers and TubroTax employees ) will continue till the end of the year.  It depends on you whether you should go to ta professional or prepare and file by yourself --- we will obviously answer all questions  and guide as is required.

From your answers I do understand your situation  -->

1.  You had no  constructive receipt of wages  in 2022.  Also for 2022 you would have had to file a form 1040-NR , if there was any income.

2.  Your status would have changed after meeting the SPT  ( Substantial Presence Test ) sometime in June and thereafter you would be a resident for tax purposes. The  dependent visa holders also would have had the same status.  For 2023 tax year,  you would be resident from the first day present in the country.  And so you are taxed on world income for the year.

3. Thus your wife's  income in India would come under the US tax system  ( ONLY Jan and Feb of 2023).  The tax on this though have to be approximated / allocated based on average tax rate for the Indian Tax Year 2023-2024.

4. Because her tax home was in India  from  March 1 2022 to Feb 28th , 2023 , you may be successful in using Foreign Earned Income exclusion if she had a SSN, else you have to  claim Foreign Tax Credit on the allocated taxes paid to India on the  Jan/Feb India sourced income.

5.  The simplest filing for you would be  to file as Married Filing Separate --- ignore your wife's  income in Jan and Feb but you recognize the rental in come and taxes thereon.

6. For her to allow you a Joint Filing  status, you need Tax IDs for her and your child ( you said you have a daughter ? ).   This would imply you filing by mail ----- you have to prepare the return including all family.  USE dummy SSNs for Spouse  ( e.g.  567-84-5000 ) and Child  ( 567-84-5100 ).  Then when all done, print the return , snowpake out the  dummy SSNs and replace with  NRA .

Then download , PRINT and fill out W-7 from the IRS requesting ITIN for each, attach all the documents required ( see the instructions for W-7  at www.irs.gov ) and mail the whole package.   You can also visit the local IRS office for help on this.

This will result in your return processed and issuance of  retroactive  ITIN.

I though H-4 can work with permission from USCIS  with resultant SSN.

7.  Rental income would be reported on Schedule-E and in TubroTax under business tab.  You would have to recognize  depreciation though -- especially if you intend to settle down here.  Note that the valuation here is not Indexed as in India and when receiving inheritance,  FMV at the time of passing of the decedent  is the basis  for computing gain/loss when disposed of.

8. The pension account is required only for purposes of FATCA   ( form 8938 along with your return ) threshold computation.  Additionally if you have bank accounts in India, then you have  report these  on form 114  ( FBAR form at www.Fin Cen.gov, only on-line reporting and by   tax filing date generally )

I hope I have answered all your queries.  If you need more help you can post here or PM me  ( just NO personally Identifiable Info. )

Namaste ji

pk

[Blank_Slate]

Hi PK,

Thank you so much. The amount of time and effort you are spending to help others is phenomenal!

I agree, time is of the essence for me now and hence I think this time I will go with a tax professional. The fee quoted is a killer, but I will probably use the consultant this time and using the experience start early and work on it myself from next year onwards.

Just to clarify my situation in case it helps someone else following this post:

We have already in anticipation paid sufficient taxes to IRS in 2023 such that we do not owe anything. Hence hopefully penalty won’t be an issue. We took the extension till Oct to have our Indian tax situation clear and accordingly to file the US tax claiming credits for the tax paid in India.

We prefer to file jointly since that will be significantly more tax efficient for us since my spouse is not working and the standard deduction is way higher. SSN is not a problem since we both studied in the US a couple of decades ago and have SSNs. We have two kids, and for them we will be doing the W7 and associated procedure you suggested. I will make use of a local IRS office.

H4 can work in certain very limited conditions. The common one is if the H1 has an I-140 approved by USCIS. That is the case with us.

You have gone over and beyond answering my questions. In fact, your explanation has clarified many follow up questions I was planning to ask. I do not know how to express my gratitude.

Namaskaram!

[pk]

@Blank_Slate  thank you very for you  expressions.  And I agree that going to a tax professional for the first time is often productive.

However, I would still suggest  ( especially if you intend to prepare 2024  by yourself, that you buy the 2023 software and after the tax season is over and/or when you have time prepare the return yourself and match what the tax professional has done for you.  This will not only increase your knowledge of the tax laws, the software but also provide you a basis  for 2024 --- TurboTax for 2024 will suck all data from the 2023 and make it easier to prepare the 2024 return.

Namashkaram

pk