Determining resident status for an H1B filling W-4 form

Question

I arrived to US a month ago, on May 1st, because of a new work. I have been told by the company to fill W-4 form in. But, it seems that W-4 form must be filled in differently depending on my current status (resident alien or nonresident alien).

The rules to decide which is my status are here: http://www.irs.gov/publications/p519/ch01.html

Basically, it seems I need to pass the substantial presence test (see previous link) to determine whether I am a resident alien or not. At this moment, I definitely do not meet the substantial presence test, since I just arrived to US.

I understand, however, that I will need to file my first tax return on April 2017, and my fiscal year will end on December 2016. At that moment, I believe I will actually meet the substantial presence test.

I also have a spouse that is coming to US (with H4 visa) before July 1st which will also match the criteria for the substantial presence test at that time.

My question is: should I decide if I am a resident alien or not based on the date that I start working, or based on the date I will file my tax return? Can I fill as married, since we will both be resident aliens at that time?

Answer 1

After some research and reading others people situations I concluded that I should be filling the form as a resident alien (since the W-4 should reflect my state for end of the year)

Resident Aliens

If you are a resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax the same way as an U.S. citizen. You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial present test for the calendar year.

I pass the presence test, given the condition:

• 2016: 244 days since arrival
• 2015: 120 days in US (counts 1/3)
• Total presence: 284 which is more than 183 required

Substantial Presence Test

You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting: All the days you were present in the current year, and 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year.

https://www.irs.gov/Individuals/International-Taxpayers/Substantial-Presence-Test

Giving that situation, I can fill jointly with my wife, either she's being a non-resident or resident. Let's aim for the worst case, where she would not be a resident by that time, we have this alternative.

Nonresident Spouse Treated as a Resident

Election to File Joint Return

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident. This includes situations in which one of you is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other is a nonresident alien at the end of the year.

https://www.irs.gov/Individuals/International-Taxpayers/Resident-Aliens

Other resources:

• The Taxation for Dual Status Aliens

• Random people answering in a forum

Answer 2

Your residential status for tax purposes (do not confuse it with your residential status) is decided at the end of the year or when you pass the SPT.

If you are currently not meeting the requirements to pass the SPT I would fill this out this way because you do not know what will happen in the future. Maybe you have to leave the country for unforeseen reasons for several months.

On your tax forms in April 2017 you recheck your residential status for tax purposes and use the appropriate forms 1040 NR or 1040 etc.

Depending on what you enter in this forms you have higher or lower allowances. The money your employer withholds will be returned to with your tax return or you have to pay the extra money if the withheld amount was too little. You should definitely not spend 100% of your salary since there could be significant difference.

In general I fill forms out always as of today. I cannot predict the future and unless the form explicitly asks for an estimate I fill out what is the truth as of today.

I have to add, that I am not a tax professional and this is just the way I personally would fill out the form and how I understand it.

Edit: I just saw this link and there was recommended that you should state Resident for Tax purposes.