Archive - US Taxes for Residents

[karmayogi]

THIS THREAD WILL BE USED FOR SIMPLE QUESTIONS ON US TAXES.

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The post below is by member Karmayogi.


Last year I wrote a call option and made money out of it. I was expecting my brokerage to send me a 1099 reporting that income but none came.

When I called my brokerage they said I have to report my option gains as Short term capital gains in the Schedule D and they wont send any forms.

Is this how people report option gains?

Thanks.

[Desi]

[QUOTE]When I called my brokerage they said I have to report my option gains as Short term capital gains in the Schedule D and they wont send any forms.

Is this how people report option gains?

That is how you are required to report it.

[kalpesh145]

Desibabu, Others,
I remember seeing on R2IClub regarding one time credit for phone bill (between 30-60$) bcuz of excess fed.tax taken by telecom companies in last few years.
I couldn't find more details on this, do you have a link. Maybe someone can put more details on how to get the tax credit this year.

sorry, googled and found link explaining details:-->
http://www.snopes.com/business/taxes/excise.asp

[shoonya]

Just came across this on Forbes:
http://www.forbes.com/video/?video=fvn/guru/jd_guru012407

Basically it says that if you meet certain requirements of day-trading type behavior, having significant amount invest in markets and put in few hours every day following your stocks then one can file as a 'Trader' - and deduct trading related expenses as a business expense. Ofcourse I would expect the bar to be set high in terms of active trader v/s regular investor - but just googling around the difference looks like a gray area.

Has anyone taken these deduction? Any rules of thumb on when one should consider taking these deduction v/s not - since to specific rules are given by IRS.

[Desi]

Remember that if you do qualify for this, then your gains will be not capital gains but ordinary gains and treated as business income. You will have to meet certain requirements that will show that you were in this trading as a full / part time business and not as a passive investor.

[cbeanand]

I have question about ITIN / SSN #. My wife was H4 until Oct 06. She then had an ITIN # to file our taxes. She got her H1 in Oct 06. She now has an SSN #. Should we report to IRS that her ITIN number is no more valid and she had received a SSN #. Or do we just use her SSN to file returns for 2006. IF there is process to report new SSN# any info about the Form # would be great.
Thanks,

[Desibabu19]

Just file the taxes using SSN #.

Include a small note, stating that previous year return was filed with ITIN (xxxxxxx) and this year is being filed with SSN (yyyyyyy). If she has no income reported to her on her ITIN, then even the note is unnecessary.

[gxr]

Is it possible to get tax exemption on education expenses (towards an MBA program) ?

-gxr

[sgh]

I would like to find out how have persons who R2I'ed in the middle of the year handled their US Tax filing for that year. i.e.

I R2I'ed in Apr, 2006. For the US Tax year Jan-Dec, 2006 I have to mention my Indian income also. (I am an USC). Also for 2006 as per the rules, I cannot claim Foreign Earned Income deduction of 80K also. (I can claim it from the next year onwards). So I guess the only way to handle the US Tax this year would be to
a) File an extension for the US Tax filing
b) File the Indian Income tax for the year Apr, 2006- Mar 2007.
c) Use DTAA to claim deductions for the Indian Tax paid for the Indian income for the year as the 80K decuction is not applicable.

Is this the right way to do this ? How have others (USC) who R2I'ed in mid year handled their first year tax filing ?

[Desi]

I would like to find out how have persons who R2I'ed in the middle of the year handled their US Tax filing for that year. i.e.

I R2I'ed in Apr, 2006. For the US Tax year Jan-Dec, 2006 I have to mention my Indian income also. (I am an USC). Also for 2006 as per the rules, I cannot claim Foreign Earned Income deduction of 80K also. (I can claim it from the next year onwards). So I guess the only way to handle the US Tax this year would be to
a) File an extension for the US Tax filing
b) File the Indian Income tax for the year Apr, 2006- Mar 2007.
c) Use DTAA to claim deductions for the Indian Tax paid for the Indian income for the year as the 80K decuction is not applicable.

Is this the right way to do this ? How have others (USC) who R2I'ed in mid year handled their first year tax filing ?
[/quote]

No. That would be the wrong way. No matter how much extension you take, whenever your file US 2006 returns, you have to report only activities till Dec 31 2006 (excluding IRA for which you have till April 15 2007).

During 2006, you must have had TDS and you can claim this amount either as a deduction or a foreign tax credit. Foreign tax credit would yield the greatest benefit. Look up IRS instructions on claiming foreign tax credit.

During 2007, you will file Indian taxes and pay more taxes during Jan 1 to March 31 as TDS. The net difference if a refund will be reported on 2007 US taxes as income and if a payment then your 2007 taxes will allow an exclusion for foreign earned income and hence cannot claim the corresponding taxes as credit for 2007.

The process sure is complicated in that during 2007, you will have unearned foreign income and that cannot be excluded and corresponding foreign taxes would have to be claimed per DTAA.

I am not a tax expert but that does not prevent me from giving my input.
The above is how I would do it and then let IRS tell me if they want it differently.