Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

Tax - First Year Choice

Tax - First Year Choice

Old Feb 1st 2011, 6:24 am
  #1  
Just Joined
Thread Starter
 
Joined: Jun 2010
Posts: 10
kiwi_wait is an unknown quantity at this point
Smile Tax - First Year Choice

Hi all,

Firstly, apologies for asking a cheeky tax question, Ive actually completed the returns (Both as resident and NR), and dont want to engage an accountant for one question.

Essentially 2010 was our first year in the USA, and Im trying to find a way that we can file as residents to get the maximum deductions.

We fall short on the substantial presence test (SPT) by 3 weeks (due to a wedding back in NZ!), and are on L1's.

But I have read about the First Year Choice. From what I understand, once you meet the conditions of the SPT, you can file the first year you were in the country as a resident using the first year choice option.

So in our case, we were in the country for 166 days in 2010, and will be here all year this year. The 166 days from 2010 will count as 83 days according to the SPT formula, can we wait for 100 days in 2011 to meet the 183 day qualification, and then file 2010s return as a resident using first choice?

Can anyone clarify that?

Thanks in advance!
Brett
kiwi_wait is offline  
Old Feb 1st 2011, 3:44 pm
  #2  
Account Closed
 
Joined: Aug 2002
Location: Kentucky
Posts: 38,867
ian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond reputeian-mstm has a reputation beyond repute
Default Re: Tax - First Year Choice

Originally Posted by kiwi_wait View Post
Essentially 2010 was our first year in the USA, and Im trying to find a way that we can file as residents to get the maximum deductions.
I'm sure someone will correct me, but I believe you are always allowed to be considered resident for tax purposes... even if you don't meet the SPT. The difference is that if you meet or exceed the SPT you must be considered resident. In your case, it's a choice.

Ian
ian-mstm is offline  
Old Feb 2nd 2011, 1:02 am
  #3  
Forum Regular
 
Joined: Sep 2005
Location: Andover, MA
Posts: 250
rew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud ofrew1000 has much to be proud of
Default Re: Tax - First Year Choice

I don't believe you can opt-in to being treated as a resident unless you meet the substantial presence test for the following year (we had to file for an extension so that we could wait until that point to file).

An additional thing to consider is whether to opt to be treated as resident for the whole year (in which case you might need to look into "Foreign Earned Income Exclusion" for any non-US earnings), or whether to go for "Dual Status" where you split the year into "Non-Resident" and "Resident".
rew1000 is offline  
Old Feb 2nd 2011, 2:00 am
  #4  
Just Joined
Thread Starter
 
Joined: Jun 2010
Posts: 10
kiwi_wait is an unknown quantity at this point
Default Re: Tax - First Year Choice

Thanks so much for the replies!

Rew_1000, we would use the "Foreign Earned Income Exclusion" as you mention.

It sounds like your scenario was similar to ours.
So we would wait until the 100th day of 2011 in our case (to meet the SPT formula), and then file for 2010?
We would likely apply for an extension as well just to be safe.

Thanks again.
kiwi_wait is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.