Tax question

[jkb11 26]

Hi everyone!

Not sure where to post it, since we do not have a dedicated tax related issues forum, so I hope this is the best to ask I have a specific tax related problem I hope someone here can help me solve.

I am a Polish citizen and I have my income and my self-employment based in that country. Right now, I am visiting USA temporarily as a tourist (B2 visa), I have entered the country in November and will be leaving in May.

Later this year, I will be hopefully coming back to the U.S. on a K1 fiance visa and adjust status (not neccessarily in 2012, though). By then, I will most likely accrue enough days to meet the substantial presence test criteria and be treated as a U.S. resident for tax purposes. Here is where my problem lies.

Back in Poland, I am employed and receive salary. I also have a sole proprietorship that generates income. I have been paying Polish social security fees (aka. ZUS) every month. While I understand I can claim foreign tax credit by filing Form 1116, I have no idea how to approach the Social Security Tax obligation that will arise in the United States once I become a tax resident. As far as I am concerned, I would have to back pay SS taxes for the whole 2012 (please correct me if I'm wrong).

I know about the Polish - U.S. treaty regarding Social Security, but to be able to use that, I would have to obtain some sort of SS insurance certificate. I have never acquired it, since before my trip in November, I have not suspected I might fall into U.S. tax residency bracket by the end of 2012 and also, as a tourist, I do not have a Social Security Number.

So, the bottom line is, I'm still paying the SS tax in Poland, and I'm afraid that once I pass the substantial presence test and file the 2012 taxes as a U.S. resident, I will be forced to pay U.S. Social Security Tax on top of all the taxes I have already paid. Hence, double taxation.

How should I approach this issue? Thanks in advance for any helpful answers.

Cheers!

[Gosia & Tito 199]

Hi everyone!

Not sure where to post it, since we do not have a dedicated tax related issues forum, so I hope this is the best to ask I have a specific tax related problem I hope someone here can help me solve.

I am a Polish citizen and I have my income and my self-employment based in that country. Right now, I am visiting USA temporarily as a tourist (B2 visa), I have entered the country in November and will be leaving in May.

Later this year, I will be hopefully coming back to the U.S. on a K1 fiance visa and adjust status (not neccessarily in 2012, though). By then, I will most likely accrue enough days to meet the substantial presence test criteria and be treated as a U.S. resident for tax purposes. Here is where my problem lies.

Back in Poland, I am employed and receive salary. I also have a sole proprietorship that generates income. I have been paying Polish social security fees (aka. ZUS) every month. While I understand I can claim foreign tax credit by filing Form 1116, I have no idea how to approach the Social Security Tax obligation that will arise in the United States once I become a tax resident. As far as I am concerned, I would have to back pay SS taxes for the whole 2012 (please correct me if I'm wrong).

I know about the Polish - U.S. treaty regarding Social Security, but to be able to use that, I would have to obtain some sort of SS insurance certificate. I have never acquired it, since before my trip in November, I have not suspected I might fall into U.S. tax residency bracket by the end of 2012 and also, as a tourist, I do not have a Social Security Number.

So, the bottom line is, I'm still paying the SS tax in Poland, and I'm afraid that once I pass the substantial presence test and file the 2012 taxes as a U.S. resident, I will be forced to pay U.S. Social Security Tax on top of all the taxes I have already paid. Hence, double taxation.

How should I approach this issue? Thanks in advance for any helpful answers.

Cheers!

Couple of things:

Once you get here on the K-1 and married, you can choose to be treated as resident, regardless of presence test; assuming your spouse is a resident/citizen. Even if you were here for just days of the corresponding tax year. Essentially, it is a matter of attaching a page with the tax return stating your intent to do so. Given that part of the ROC, AOS is to show commingling of assets, financials; you want to file jointly from the beginning. But that is still a future issue.

There is not SS tax obligation for individuals; so I guess you are referring to your sole proprietorship. I think Publication 514 and 519 might address your question or at least point you in the right direction. Additionally, you can inquiry IRS and SSA about this specific case, but I'd wait until after the filing date is past, and since you are going to be around until May, should not be a problem. Finally, you might want to check with an accountant that is versed in US-Poland regulations.

[jkb11 26]

Couple of things:

Once you get here on the K-1 and married, you can choose to be treated as resident, regardless of presence test; assuming your spouse is a resident/citizen. Even if you were here for just days of the corresponding tax year. Essentially, it is a matter of attaching a page with the tax return stating your intent to do so. Given that part of the ROC, AOS is to show commingling of assets, financials; you want to file jointly from the beginning. But that is still a future issue.

There is not SS tax obligation for individuals; so I guess you are referring to your sole proprietorship. I think Publication 514 and 519 might address your question or at least point you in the right direction. Additionally, you can inquiry IRS and SSA about this specific case, but I'd wait until after the filing date is past, and since you are going to be around until May, should not be a problem. Finally, you might want to check with an accountant that is versed in US-Poland regulations.

To be honest, my first choice would be to elect filing as a non-resident, if I only had such option. This would generally get rid of all my tax problems for 2012. However, due to the substantial presence test, I can't do that. As far as I'm concerned, filing jointly or separately is a choice of the couple and one choice is not "better" than another for immigration purposes as long as the returns are filed as married. But that is not what is bugging me. I've been also looking at Form 8840, "Closer Connection Statement For Aliens", but in case we file for AOS later in 2012, I would not be eligible to file that form.

I am indeed refering to my self employment in Poland, and concerned about the double SS tax. If I indeed inquired IRS / SSA about the issue after the filing date, that would be around april 2013. That means not taking any actions that could possibly mitigate the tax due now (like obtaining the certificate from ZUS).

I'll read the publications you have posted, but I don't think I will be able to address these concerns on my own. Do you know any accountant that might know the answers?

Cheers!

[Gosia & Tito 199]

To be honest, my first choice would be to elect filing as a non-resident, if I only had such option. This would generally get rid of all my tax problems for 2012. However, due to the substantial presence test, I can't do that. As far as I'm concerned, filing jointly or separately is a choice of the couple and one choice is not "better" than another for immigration purposes as long as the returns are filed as married. But that is not what is bugging me. I've been also looking at Form 8840, "Closer Connection Statement For Aliens", but in case we file for AOS later in 2012, I would not be eligible to file that form.

I am indeed refering to my self employment in Poland, and concerned about the double SS tax. If I indeed inquired IRS / SSA about the issue after the filing date, that would be around april 2013. That means not taking any actions that could possibly mitigate the tax due now (like obtaining the certificate from ZUS).

I'll read the publications you have posted, but I don't think I will be able to address these concerns on my own. Do you know any accountant that might know the answers?

Cheers!

Just in case you are not aware. IRS themselves recommends to file under the category the lessens your taxes. So perhaps the first year, you might be able to avoid the burden the first year.

Also, you can manage to 'avoid the problems' by choosing to move in 2013. When we did our K-1, it took about 8 1/2 months, end-to-end until she had the visa in hand (no RFEs, we had things ready before hand, etc; it's just how long process takes); but then my now wife needed another 4-6 weeks to make all the arrangements before she would leave the country for a long time. I see you guys filed in December, with current estimates, it could be about August before you have visa in hand.

BTW, you can manage the visa issuance by "delaying" the request for interview, but watch out what is the expiration date you will get in NOA2 and plan accordingly, at same time, once you have visa in hand, it usually is valid for 6 months. With all that, you could very likely postpone moving until early 2013; of course, there is the future spouse not wanting to wait longer.

FYI, the Embassy in Warsaw schedules the entire month of interviews in the last week of prior month, so if you send you packet 4 (which triggers the interview schedule), anytime say July, your interview will be in August. For us, since time petition arrived at Embassy, to sending packet 4, it was a good 6 weeks; because the doctor we had for the medical exam only had specific available times. And we had everything planned, even if had shortened some of the delays, it would have not made much of a difference

Even if you end up coming in 2012, you can't file AOS until married, and you have 90 days to do that as you know, so the presence test would not apply just yet I believe.

Sorry, I do not know an accountant that could address US-Poland taxation to the level you need; but your thinking is sound, there are probably things you can start doing now to reduce the burden later. In the area where you are, is there a Polish community?? Likely, some independent professionals -like an accountant- might be advertising in the local news gazette and could help or point to someone that could.

For us, it is going to be the filing jointly as that will get me easy a 7-8k refund as she has not worked since she moved to the US.

I'd think you can inquiry this year, after Apr 15, as the heavy workload would be past.