Tax: Dual status vs. tax filing as resident in year of receiving green card

[m_ash]

Could someone help me understand how to think about the dual status tax filing vs. filing as a resident in the year you get your green card?

Scenario:
Jan-April 2018
You earn income of Rs11 lakh in India($18k)
You sell properties in India and make a gain of $80k

May 2018 you get your green card.

May-Dec 2018 - you earn income of $20K



Questions:
1. What is better tax filing option for 2018?
2. Dual Status or as resident and why? What is your tax liability in each case?
3. My understanding is that since your capital gains are so high in the early part of the year, dual status would be better as you do not have to pay tax on the income+ capital gains before you got the green card. You only pay taxes on the income earned in the later part of the year, but you cannot take the standard deduction.

I'm coming up with $2400 (federal income tax) for dual status vs. $3737 (federal income tax) + $2365 (federal capital gains).

Is my understanding correct? Am I missing anything?

Thanks in advance!

[newacct]

Could someone help me understand how to think about the dual status tax filing vs. filing as a resident in the year you get your green card?

Scenario:
Jan-April 2018
You earn income of Rs11 lakh in India($18k)
You sell properties in India and make a gain of $80k

May 2018 you get your green card.

May-Dec 2018 - you earn income of $20K



Questions:
1. What is better tax filing option for 2018?
2. Dual Status or as resident and why? What is your tax liability in each case?
3. My understanding is that since your capital gains are so high in the early part of the year, dual status would be better as you do not have to pay tax on the income+ capital gains before you got the green card. You only pay taxes on the income earned in the later part of the year, but you cannot take the standard deduction.

I'm coming up with $2400 (federal income tax) for dual status vs. $3737 (federal income tax) + $2365 (federal capital gains).

Is my understanding correct? Am I missing anything?

Thanks in advance!

Were you not in the US before May 2018? Are you married?

[m_ash]

Were you not in the US before May 2018? Are you married?

Correct. I was not in the US between Jan 2018 and May 2018.
I have visited the U.S in 2017 and previous years, but do not pass the substantial presence test as I spent 85 days in the U.S in 2017, 96 days in 2016 and 0 days in 2015.
Yes, I am married.

[newacct]

Correct. I was not in the US between Jan 2018 and May 2018.
I have visited the U.S in 2017 and previous years, but do not pass the substantial presence test as I spent 85 days in the U.S in 2017, 96 days in 2016 and 0 days in 2015.
Yes, I am married.

You are by default dual-status -- resident only for the part of 2018 after you entered. If you are dual-status, you can only file as Married Filing Separately, and you cannot get the standard deduction. Also, the tax rates for Married Filing Jointly are worse than Married Filing Jointly if you and your spouse's incomes are very different.

Since you are married, you have the option of treating both you and your spouse as resident for the entire year, and you guys must then file as Married Filing Jointly. Note that being resident means that both of your worldwide incomes the entire year would be subject to US taxes, although you may be able to use the Foreign Earned Income Exclusion to not pay US tax on earned income from the part of the year before you came to the US (if you were outside the US for 330 days in the 12-month period before you came to the US); same with your spouse. I am not sure about capital gains.