CA part-year resident alien & TX part-year resident alien couple?

I have some situation that I cannot figure out for the federal income tax and CA state income tax for year 2006. Following is my understanding. Could some expert read
through them and correct me? Thanks a lot! Sorry for the length... (Both my husband and I are aliens. ) 1) I was a F-1 student from 01/2003 to 09/2006. During 01/2003 - 03/2006, I lived in TX. Then I moved to CA with a permanent job offer in 04/2006 and worked still as F-1 student (OPT status), till 09/2006. After that, I changed to H1-B status starting from 10/2006. But I quit the job and moved back to TX at the end of 10/2006. Then I worked as H1-B employee in TX from 11/2006 till now. So my understanding for federal income tax is: The presence dates I had in 2006 was more than 31 days but I didn't satisfy the substantial presence test. If I file extension and wait until 10/16/2007 to file the tax return form, I would have been resident alien by that time. So although I was non-resident alien from 01/2006 to 09/2006, I can use "First-year choice" to choose either to be treated as partial non-resident and partial resident, or to be treated as resident alien for whole year 2006; 2) My husband has always been a F-1 student from 09/2001 till now. Since he was treated as non-resident alien for his 01-05 tax return (4 calendar years and 4 months?), he was also dual-status alien in 2006: 01/2006-08/2006 as non-resident alien, and 09/2006-12/2006 as resident alien. So he can also choose to be either treated as partial non- residet and partial resident, or to be treated as resident alien for whole year 2006, using "Dual-status statement". 3) For CA income tax. I am a part-year resident for CA, and my husband is non-resident for CA, so we have to file separately. Since both CA and TX are community property states, supposing my income from CA employer was $50,000, and my income from TX employer was $10,000, and my husband's income from TX employer was $20,000, then for column A on form 540NR, my wages should be ($50,000 + $10,000 + $20,000)/2 = $35,000, and the same for his wages. Then what the "CA amounts" should be? And for the bank interests, should we add up all the interests from all accounts (no matter joint account or not) and divide it by 2? And what the "CA amounts" should be if they're global banks, and only 1 of these accounts was opened in a CA branch. << ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >>
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snipped-for-privacy@gmail.com wrote:

I'll pass on the federal questions and deal with California. You were only in California for a short period of time, and you and your husband are both citizens of another country. Unless you intend to settle in Texas and remain there permanently, and not to return to your country of origin, you probably have not created a domicile in Texas. Instead, the division of income between the two of you should be determined in accordance with the laws of your home country, which continues to be your domicile. Therefore, whether your husband (who was a full-year nonresident of California) has any California source income would depend on the laws of your home country, not Texas or California community property law. If your husband is a full year nonresident of California and has no California source income, you may file either jointly or separately in California (on Form 540NR). If you have established a Texas domicile, or if your home country has a community property law, his community half of your California earnings belongs to him, and he has California source income -- so your California filing status is required to mirror your federal filing - joint if you file jointly for federal, separately if you file separately for federal. If you do file separately, interest and dividend income should be reported to California only to the extent it was received or became available to you during your period of California residence -- and only your community 1/2 of that income, if it is community income, or the amount of interest that belongs to you on a separate property basis. It does not matter where the bank or other payer is located. If you file separately for California, and community rules apply, your California income (Schedule CA-540NR, Col. E) includes your community 1/2 of your California earnings, your community 1/2 of your husband's Texas earnings, and your community 1/2 of the interest income. His California income would include only his community 1/2 of your California earnings. If community rules do not apply, then your California source income includes 100% of your California earnings and your share of the interest income. The latter may be hard to determine, and the easiest thing may be just to divide it in half, particularly if it is primarily in joint accounts to which each of you has contributed. You could go back and determined who earned and contributed how much to each account and prorate the interest income that way, but it may be more trouble than it is worth. Your California income would not include any of your husband's Texas earnings. My first thought was that since you were in California only for a few months of 2006, you should consider yourself also a nonresident of California, rather than a part-year resident. If you were a nonresident, your California source income (Col. E) would not include anything but your California earnings. None of your interest income would be taxable in California, and California would not tax any part of your husband's Texas earnings even if it is community income. However, the fact that you came to California to accept employment for an indefinite period lends some credence to your establishing California residence. The question is whether your presence in California was for a purpose that was not temporary or transitory. If the answer is yes, you were a resident, even though you were present for only about six months. If you intended or expected your stay to be limited, you were a nonresident. I know this is complicated, but I hope it helps. You probably should get professional help to do your taxes this year. Katie in San Diego
<< ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >>
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