Tax ?

[kcnca 1]

Ok I know that this is one of those questions that is always asked. If it is in the wrong place MOD Please move as needed and I apologize in advance.

Ok so looking at filing jointly, what I need to know is how do we report her foreign income? She did not get any type of Tax Documents from previous employer.

I did see where you could use a Form 2555ez.

Is this the correct or best way to report her income and any tips on how to document anything we may need in the event of future audit.

Thanks

[lubnajavid 20]

i too am interested in getting an answer to this - my wife's pay is not that much in USD but i want to be sure to recognise it (i know its going to be less than the 94000USD allowed of overseas income) - want to be able to show that i did everything by the book when the time comes

[bigdog 376]

IRS website, http://www.irs.gov/b...=180946,00.html I hope this helps.

Edited February 23, 2012 by bigdog

[Penguin_ie 5,993]

*** Moving from AOS to Moving and Your New Life forum as we don; really have a fully fitting forum for this question *****

[Nich-Nick 3,354]

Ok I know that this is one of those questions that is always asked. If it is in the wrong place MOD Please move as needed and I apologize in advance.

Ok so looking at filing jointly, what I need to know is how do we report her foreign income? She did not get any type of Tax Documents from previous employer.

I did see where you could use a Form 2555ez.

Is this the correct or best way to report her income and any tips on how to document anything we may need in the event of future audit.

Thanks

We did this in 2008 when my husband came on a K1. We filed a paper return that year after preparing it on TurboTax (desktop edition). There is no requirement to mail any official documentation to the IRS like you would do with a copy of your W2. We came up with the best guess of his income based on what he knew his salary was. I made notes to keep for our records. If there was a great fluctuation in exchange rates, you can calculate the US$ equivilent based on what it was when the money was earned. The US Treasury keeps a report of what they consider the quarterly exchange rates here http://www.fms.treas.gov/intn.html . There are also historical exchange rates at oanda.com.

Anyway, we made detailed notes on income earned and the exchange rate(s) used to calculate the US$ amount, and the source where we got the exchange rates. That was saved in the files in case we ever had to explain it in an audit because we surely wouldn't remember it for long.

The US value of her income is reported on the same line as your wages, salaries, tips (line 7). It is later excluded by using form 2555EZ. Don't forget the statement where you each elected for her to be treated as a resident alien for tax purposes for the entire year. (Pub. 519, page 10)

[kcnca 1]

We did this in 2008 when my husband came on a K1. We filed a paper return that year after preparing it on TurboTax (desktop edition). There is no requirement to mail any official documentation to the IRS like you would do with a copy of your W2. We came up with the best guess of his income based on what he knew his salary was. I made notes to keep for our records. If there was a great fluctuation in exchange rates, you can calculate the US$ equivilent based on what it was when the money was earned. The US Treasury keeps a report of what they consider the quarterly exchange rates here http://www.fms.treas.gov/intn.html . There are also historical exchange rates at oanda.com.

Anyway, we made detailed notes on income earned and the exchange rate(s) used to calculate the US$ amount, and the source where we got the exchange rates. That was saved in the files in case we ever had to explain it in an audit because we surely wouldn't remember it for long.

The US value of her income is reported on the same line as your wages, salaries, tips (line 7). It is later excluded by using form 2555EZ. Don't forget the statement where you each elected for her to be treated as a resident alien for tax purposes for the entire year. (Pub. 519, page 10)

OK this seems simple enough but how do I add her income into line 7 on the 1040? I am using turbo tax. Maybe we have to manually add it to the total income on line 7? or is there a place to break her income out seperately then it gets added into Line 7?

Taxes is not one of my strong point so bear with me

[Nich-Nick 3,354]

OK this seems simple enough but how do I add her income into line 7 on the 1040? I am using turbo tax. Maybe we have to manually add it to the total income on line 7? or is there a place to break her income out seperately then it gets added into Line 7?

Taxes is not one of my strong point so bear with me

On the page that lists all the possible incomes you can have...salaries, dividends, interest, retirement, etc...way down near the bottom is foreign earned income. Also in this same forum, there is a TurboTax topic where I put a link to a walk-through I posted last year that might help. Don't try to e-file this year since you need to actually mail in that signed statement you will write.

TurboTax has some bugs with foreign stuff because of a new form for reporting foreign investments that only applies to you if she has over $100K in a foreign account. But their interview is a little muddled on the foreign topic because of new Form 8938 for foreign investments. They have corrected a few issues. Next year it will all be smooth sailing and normal.

[rick313 5]

We did this in 2008 when my husband came on a K1. We filed a paper return that year after preparing it on TurboTax (desktop edition). There is no requirement to mail any official documentation to the IRS like you would do with a copy of your W2. We came up with the best guess of his income based on what he knew his salary was. I made notes to keep for our records. If there was a great fluctuation in exchange rates, you can calculate the US$ equivilent based on what it was when the money was earned. The US Treasury keeps a report of what they consider the quarterly exchange rates here http://www.fms.treas.gov/intn.html . There are also historical exchange rates at oanda.com.

Anyway, we made detailed notes on income earned and the exchange rate(s) used to calculate the US$ amount, and the source where we got the exchange rates. That was saved in the files in case we ever had to explain it in an audit because we surely wouldn't remember it for long.

The US value of her income is reported on the same line as your wages, salaries, tips (line 7). It is later excluded by using form 2555EZ. Don't forget the statement where you each elected for her to be treated as a resident alien for tax purposes for the entire year. (Pub. 519, page 10)

Hi Nich-Nick. Thanks for your advice on this matter. I notice you are one of the few posters who have gotten this figured out.

Just to clarify then, was your husband able to qualify for this as a resident alien who resided 330 consecutive days in a foreign country? I'm just trying to figure how my wife would qualify. She is a Thai national and moved to the US last year at the end of October, and we were married by the end of the year. If my reading of the regulations is correct, she would qualify because we would elect to have her treated as a resident alien because we were married by the end of the year, and because she had resided in Thailand for 330 consecutive days within a one year period (and I assume that can be any one year period and not the 2011 calendar year). Is that right? Thanks in advance.

[Nich-Nick 3,354]

Hi Nich-Nick. Thanks for your advice on this matter. I notice you are one of the few posters who have gotten this figured out.

Just to clarify then, was your husband able to qualify for this as a resident alien who resided 330 consecutive days in a foreign country? I'm just trying to figure how my wife would qualify. She is a Thai national and moved to the US last year at the end of October, and we were married by the end of the year. If my reading of the regulations is correct, she would qualify because we would elect to have her treated as a resident alien because we were married by the end of the year, and because she had resided in Thailand for 330 consecutive days within a one year period (and I assume that can be any one year period and not the 2011 calendar year). Is that right? Thanks in advance.

In 2008 I could have quoted chapter and verse to you I read that Pub 519 so many times. Now I'm winging it because I don't want to look it up and you can't copy/paste from their pdf pages anyway.

First get your head around this--The form and two tests are mainly written at Americans abroad making sure they don't try to skip out on the IRS and taxes by saying they were a foreign residents. They have to have some residency credentials or a long time in that country. So when you read their instructions you'll see how they can be confusing to fit the other way around for a person like your wife who is Thai just entering the states. She was definitely a real bonafide resident of Thailand. Probably born and bred and a Thai citizen. She's not an American who spent a summer in Thailand doing odd jobs she doesn't want to be taxed on her US tax return. The instructions are a little skewed in my opinion toward Americans working abroad.

So being a bonafide resident counts and nothing further is needed. As far as the physical presence in the country, that can be any 12 month period, not the calendar year 2011. There are many examples given in Pub 519 but they are long-winded and make you crazy.

The hard thing is tricking TurboTax to continue because of the way they word their some of their interview questions. I posted a walk-through last year http://www.visajourney.com/forums/topic/293088-filing-taxes-as-married/page__st__75__p__4525477#entry4525477 but I don'tknow if the questions are worded the same. I keep saying I'll check out 2011 but haven't. I did get my taxes filed so maybe soon. I'll PM you if I do.

[kcnca 1]

Well I gave it a shot, filled out everything using the guide and it guided me through all the questions and forms, I answered them and filed electronicly and it was accepted electronicly. So looks like TT has the gude working but you do have to get the right step before it takes you through the right guide section to add the forigen income

[Nich-Nick 3,354]

Well I gave it a shot, filled out everything using the guide and it guided me through all the questions and forms, I answered them and filed electronicly and it was accepted electronicly. So looks like TT has the gude working but you do have to get the right step before it takes you through the right guide section to add the forigen income

I did do a new guide for 2011 tax year in this forum. Is that the one you used?

So how are you submitting your statement if you e-filed? The IRS told me last week people who do the election for their non-resident alien spouse to be treated as a resident alien for taxes should paper file.

Edited February 28, 2012 by Nich-Nick

[kcnca 1]

I did do a new guide for 2011 tax year in this forum. Is that the one you used?

So how are you submitting your statement if you e-filed? The IRS told me last week people who do the election for their non-resident alien spouse to be treated as a resident alien for taxes should paper file.

No I didn't follow your guide. I did use your info here as to where the information gets put into the forms. I went back to TT and found the section in the guided section and there I answered the questions as asked and then submitted and it was accepted. Checking the forms it has form 2555 for my spouse filled out and so far it has been ok

the main thing was when you go though the guided tour it does not ask you the questions for foreign income but there is a section in the guide where you can select that section for Foreign Income and then I just followed the questions it was lengthy but not too bad.

[kcnca 1]

From the point where you login you get a guided option or explore on your own

In the explore on your own it shows you all the sections

At the bottom in the Less Common Income section

you will find the Foreign Earned Income and Exclusion

There follow the prompts and answer the questions

[Nich-Nick 3,354]

From the point where you login you get a guided option or explore on your own

In the explore on your own it shows you all the sections

At the bottom in the Less Common Income section

you will find the Foreign Earned Income and Exclusion

There follow the prompts and answer the questions

I posted it Monday morning here http://www.visajourney.com/forums/topic/354422-2011-turbotax-w-foreign-income-to-report/page__p__5186213__fromsearch__1#entry5186213

Glad you figured it out on your own.

Edited February 29, 2012 by Nich-Nick

[rick313 5]

In 2008 I could have quoted chapter and verse to you I read that Pub 519 so many times. Now I'm winging it because I don't want to look it up and you can't copy/paste from their pdf pages anyway.

First get your head around this--The form and two tests are mainly written at Americans abroad making sure they don't try to skip out on the IRS and taxes by saying they were a foreign residents. They have to have some residency credentials or a long time in that country. So when you read their instructions you'll see how they can be confusing to fit the other way around for a person like your wife who is Thai just entering the states. She was definitely a real bonafide resident of Thailand. Probably born and bred and a Thai citizen. She's not an American who spent a summer in Thailand doing odd jobs she doesn't want to be taxed on her US tax return. The instructions are a little skewed in my opinion toward Americans working abroad.

So being a bonafide resident counts and nothing further is needed. As far as the physical presence in the country, that can be any 12 month period, not the calendar year 2011. There are many examples given in Pub 519 but they are long-winded and make you crazy.

The hard thing is tricking TurboTax to continue because of the way they word their some of their interview questions. I posted a walk-through last year http://www.visajourney.com/forums/topic/293088-filing-taxes-as-married/page__st__75__p__4525477#entry4525477 but I don'tknow if the questions are worded the same. I keep saying I'll check out 2011 but haven't. I did get my taxes filed so maybe soon. I'll PM you if I do.

Nich-Nick, you know I found IRS publication 54 to actually be pretty helpful. I just pretty much read the entire thing. So it looks like ,y wife will qualify as a resident for tax purposes, and for her salaried income, we'll just include that as foreign income and write it off under the exemption. Hopefully, pretty straightforward. The only problem is that it looks like we'll have to file in paper since I have to include the statement where we elect for her to be treated as a resident since we got married last year. That will kind of suck, but I guess its the only way we can do it unless Turbo Tax has that ability.

I'll definitely check out your walk-through too. Thanks for being such a helpful resource to the community.