Taxes and foreign income

[LA80 3]

Here is the situation (short description).

Husband and I filed through DCF for CR1, and since he has not worked while abroad, we had to have a joint sponsor. I was working and had certain foreign income in my home country. We came to the USA in November 2008 and the question is:

Do we have to file taxes for 2008 and how do I report the foreign income (if that is obligatory)?

[Chica Yeyé 41]

You will indeed report all your income; but there is a form for excluding up to certain amount of foreign income. Check the IRS website.

[YuAndDan 153]

Since you were not a green-card holder until after you moved to the USA you do not need to report your foreign income.

US citizen spouse and you still file a joint return to the IRS.

[Chica Yeyé 41]

Since you were not a green-card holder until after you moved to the USA you do not need to report your foreign income.

US citizen spouse and you still file a joint return to the IRS.

Beg your pardon Yu/Dan, but I had to report my world income once we moved. Income from Canada AND the US little bit. And I am the GC holder andit was clear in the IRS instructions to do so; and file the exemption of foreign income worksheet up to whatI think was 68K. This was just last tax season.

[YuAndDan 153]

Since you were not a green-card holder until after you moved to the USA you do not need to report your foreign income.

US citizen spouse and you still file a joint return to the IRS.

Beg your pardon Yu/Dan, but I had to report my world income once we moved. Income from Canada AND the US little bit. And I am the GC holder andit was clear in the IRS instructions to do so; and file the exemption of foreign income worksheet up to whatI think was 68K. This was just last tax season.

US Citizen and LPR's (Green-card holder's) need to report foreign income.

I am not sure if the OP is talking about US citizen's income or Bosnian citizen's income from before entry to the USA on the CR-1 visa. If foreign citizen's income from before becoming an LPR I don't believe that needs to be reported because they were NOT a LPR at the time they made the income.

[Chica Yeyé 41]

Since you were not a green-card holder until after you moved to the USA you do not need to report your foreign income.

US citizen spouse and you still file a joint return to the IRS.

Beg your pardon Yu/Dan, but I had to report my world income once we moved. Income from Canada AND the US little bit. And I am the GC holder andit was clear in the IRS instructions to do so; and file the exemption of foreign income worksheet up to whatI think was 68K. This was just last tax season.

US Citizen and LPR's (Green-card holder's) need to report foreign income.

I am not sure if the OP is talking about US citizen's income or Bosnian citizen's income from before entry to the USA on the CR-1 visa. If foreign citizen's income from before becoming an LPR I don't believe that needs to be reported because they were NOT a LPR at the time they made the income.

That's what I thought; and was advised to the contrary by my tax person (whom I must say; knows double taxation and foreign income like no one else). Turns out I was an LPR for part of the fiscal year. Hence, report you must. (said Yoda the Tax Dude)

[LA80 3]

I wish YuAndDen were right, and that is what my US husband thinks too (sounds logical). However, I found somewhere that they take into account the whole calendar year even if I entered in November and quit my job there in October. For the record, I did not earn a dime here yet...then I tried to find some information on the IRS site, and since the language and terminology is way too complicated for me, I posted here.

Thank you for the replies.

[Nich-Nick 3,354]

LA80

You situation is very complicated. The USC's filing status can be "married filing separately. If he earned less than $3500, then he is not required to file a return. You said your husband earned no income in 2008 so he shouldn't have to file.

You could be classified as a dual status alien...part resident alien and part non-resident alien.. for your first year in the country. It's very complicated and based on the number of days you spent in the US. Or if you didn't have a GC or spend the amount of days specified in the country, then you are still a non-resident alien for tax purposes. A non-resident alien can not file a joint return. Publication 519 goes into all that.

To file jointly, you and your husband would have to declare you a resident alien for tax purposes and show worldwide income for all of 2008. So Yu and Dan are wrong saying you just file jointly, but don't have to claim your foreign income. There's a little more to it. Read my post in this other thread about the joint filing scenario http://www.visajourney.com/forums/index.ph...p;#entry2536435

I don't think you are going to owe any taxes, but you do need to work out if you need to file at all, since your husband doesn't.

Edited January 9, 2009 by Nich-Nick

[rebeccajo 14]

The IRS isn't going to miss out on taxable income just become someone isn't a permanent resident.

Nich-Nick is right.

If you purchase a tax preparation program like TurboTax, it helps you figure out if the alien is resident or non-resident for tax purposes. *and no I don't work for them or receive compensation from them*

You will have to convert the income to dollars. That get's a bit more harry.

[LA80 3]

Fantastic post Nich-Nick.

I think I qualify as a resident alien because I satisfy the green card test. We can still file jointly even if the husband had no income in 2008, right? Then I will report my income, but also file for exclusion through 2555EZ since it was way below 87.600$. This probably sounds way too simple, but I still have to study all the tricky details.

[Nich-Nick 3,354]

Fantastic post Nich-Nick.

I think I qualify as a resident alien because I satisfy the green card test. We can still file jointly even if the husband had no income in 2008, right? Then I will report my income, but also file for exclusion through 2555EZ since it was way below 87.600$. This probably sounds way too simple, but I still have to study all the tricky details.

Try using Turbo Tax. There is a free online version that I tried out. I didn't go into all the bother to put in full details like address, etc...just kept clicking "Next". I put in an estimates of all the income amounts to see how/if TurboTax handled the non-resident thing. They just ask questions and drill down to your situation. I didn't even register as a user. Just worked through the drill to check it out.

I always buy TurboTax and install it on my computer, just haven't done so this year. I was curious to know how the Basic (cheapest) version would handle the alien stuff. It was good. I think it helps to read the IRS publications and have a general concept of the process in your mind, then you aren't clueless when TurboTax asks questions as to how to answer them. You have an idea of why they are asking, even if you aren't perfectly clear on all the IRS rules.

The problem with IRS publications that did my head in was they start giving you info, then say "see Pub. xyz". So you're jumping from place to place which might say "see Pub abc", which is where you started. And the IRS covers so many scenarios that you get lost in finding what applies to you. Turbo Tax just skips the non-essentials when you answer a question. Like if it says, "are you blind?" and you say "no" then you don't have to wade through everything that applies to blind people...you move on to the next bit.

I'm sure TaxCut does a great job too and it's usually cheaper.

[LA80 3]

Thanks a lot Nich-Nick, but I think i finally solved this puzzle, well at least for the year 2008. I was reading instructions for 1040 and 1040NR, and it seems to me that my Bosnian income (salary to be more precise) is not taxable if I keep dual status.

They say this:

Income Subject to Tax for Dual-Status Year

As a dual-status taxpayer not filing a joint return, you are taxed on income from all sources for the part of the year you were a resident alien. Generally, you are taxed on income only from U.S. sources for the part of the year you were a nonresident alien. However, all income effectively connected with the conduct of a trade or business in the United States is taxable.

-so, I have 0$ income as a resident alien, and the income for the rest of the year is not from U.S. sources and is not effectively connected with the business and trade in the USA. And this is probably my favorite part:

Income you received as a dual-status taxpayer from sources outside the United States while a resident alien is taxable even if you became a nonresident alien after receiving it and before the close of the tax year. Conversely, income you received from sources outside the United States while a nonresident alien is not taxable in most cases even if you became a resident alien after receiving it and before the close of the tax year. Income from U.S. sources is taxable whether you received it while a nonresident alien or a resident alien.

It would be great if IRS instructions were more clear, but they are horrible. The big catch in my case is that the US spouse was not employed in 2008, and that even if we wanted to file jointly, the gross income would be under 17,600$. According to the instructions for 1040, you are not required to file if this is the case and the rule is valid for resident aliens and dual aliens who chose to be treated as resident aliens.

I will definitely use TurboTax, but hopefully, it will be for 2009.

[milimelo 4,477]

LA80,

I just went through IRS training for voluntary tax preparer for TAP program - you may be interested in going through it too (may need a weekend to go through it all) even if you don't volunteer. They have very good explanations of different forms, situations, including foreign earned income, military personnel, international students, living abroad.

Here's the link: http://www.irs.gov/app/vita/

You also may want to file to get the remaining of the Recovery Rebate (last year it was called Economic Stimulus Payment or something like that).

PM me if you have any questions - I believe I know who you are