Income tax filing status

[Susan]

I am here on an L1 visa and spouse on L2 from UK. We arrived on 7/7/12 (177 days in US). We plan to be here about 1 year. I received a W2 and spouse is self employed. Do we file as dual status aliens on a 1040 as married filing jointly (tax software says this is is not allowed)? Or do we qualify as resident aliens or are we non resident aliens? Can we file Married filing jointly? IRS writing are very confusing.

[akhil_agarwal1]

As per IRS you will be considered a Resident Alien, and hence should file your return thru form 1040.

[gregvath]

The IRS rules are very confusing. For 2012 you are a nonresident alien because for the tax year you were not here for 183 days. You would file 1040NR and include your income from U.S. I am assuming you were not in the U.S. in 2011 or 2010. You could add 1/3 of the days you were here in 2011 and 1/6 the number of days you were here in 2010 to your total days. You could also be considered a temporary worker if your stay is less than one year. You would be able to deduct unreimbursed employee business expenses like food and rent. You do have the option to add two elections and file as full year residents; The first-year choice and the election to treat a nonresident spouse as a resident. See IRS Publication 519 for information on both.
greg