Another Tax Question

[spi9959 1]

My wife came here on a K-1 April 6, 2005. For the three months that she lived in Russia in 2005, she earned approximately $600.00 as a teacher (and our teachers think they have it bad!). We cannot use the foreign income exclusion because she doesn't yet meet the 330 day continuous presence requirement, and, of course, she is not a "bona fide resident". Since her arrival here, she has not been employed. How do we report her $600.00 foreign income with no W-2 or equivalent form to support it?

[motu 6]

Did she not live continuously in Russia for 330 days prior to leaving? The rule is that if she was there for all those days and some part of those days were in 2005 (for practical purposes - the last part) she qualifies to exclude the foreign income. I used Turbo tax and it let me do so. My wife came in August 2005 and worked 5.5 months in 2005 in Colombia prior to that (and she lived in Colombia continuously for 330 days prior to leaving.) Read the rule again (or try out turbo online - you don't have to pay till you file!) Good luck

[kc456 0]

Don't report it. Very simple.

[motu 6]

Why take the chance and "Don't report it." It's incorrect (maybe even illegal) and now that you know how to do it - why do it wrong - being unethical or dishonest for a few dollars - ($500 in additional income at a 15% tax rate is only $75 in taxes (if she doesn't qualify for exclusion.))

You can report all of the income and pay the $75 in taxes if she doesn't qualify - do the right thing - its dishonest and extrtemely petty to lie for a few bucks. Not good advice - I don't want such dishonest people in my country - remember its not just the money, its the inherent fraud mentality you are encouraging. Good luck

[spi9959 1]

Motu:

I'm definitely reporting the entire sum. I couldn't agree with you more; why take the chance of not reporting the sum to save a few dollars, and, I might add, creating a vulnerability in terms of her successful AOS ... who knows if the interviewing officer might inquire whether she had any income in 2005 from Russia, and, if so, why it wasn't reported? Also, when her physical presence requirement is met which should be in early March of this year, I can simply file an amended return or reflect that she met the physical presence test on the 2006 return.