Adjusted Gross Income on I-864

[K&E2009 71]

Hello all,

So here's the situation. I'm adjusting from a K-1.

My wife filed her taxes. Her USA earned income for last year was in the mid teens (thousands). Her foreign earned income for last year was also in the mid teens (thousands).

As a result, her taxman came to the conclusion that her Adjusted Gross Income was just over $2,000... How is this possible!?!

I am the first to admit that I don't understand the American tax system... but this just doesn't make sense in my head.

He took the foreign earned income from the USA earned income and came up with the Adjusted Gross Income. Is that correct?

We are filling out form I-864 and it looks pathetic!

Should we put in her Total income instead of the Adjusted one?

Should we put in her USA earned income?

Should we put in the Extremely LOW adjusted income?

Clueless! :bonk:

[Harpa Timsah 13,258]

Um, no, you don't subtract one income from the other to get the total.... Shady shady business.

Put the total income. Also, I would amend your taxes. I believe the concept is to put the total income and then subtract taxes paid abroad from the total taxes due, so that you only have tax liability one time for each country.

Is this tax man competent?

[kcoyclay1 98]

Look at IRS tip 2010-57. There is an exclusion when filing taxes. Based on form F2555EZ, the foreign income is deducted from the US income so that it is not taxed twice. Go to the IRS website and look at line 18 on the form.

[Harpa Timsah 13,258]

This still doesn't make sense to me, because the person needs to pay taxes on the US income, and subtracting both incomes they have almost zero tax liability in the US. It seems like "half tax." However, if I am wrong, I apologize.

[kcoyclay1 98]

http://www.irs.gov/pub/irs-prior/f2555ez--2005.pdf

That was a 2005 edition but it was the link from IRS

Edited April 17, 2012 by kcoyclay1

[kcoyclay1 98]

http://www.irs.gov/pub/irs-pdf/f2555.pdf

This is for 2011. I guessed she qualified for foreign income exclusion based on the income level.

[Harpa Timsah 13,258]

That form also has you determine what percentage of that income is subtracted based on the percentage of the year you lived abroad. You don't subtract all of your income from all of your US income without some sort of factor (unless you lived/earned abroad the whole year).

[K&E2009 71]

Thank you, thank you, thank you for the quick responces!

I'm with Harpa Timsah on this... it just doesn't make sense to me! BUT, maybe we are wrong!

So, you guys are saying put the Total income (USA Income)? Then go back to the tax man and ask him to explain it. 'Cause I'm very confused!

[grrrrreat 109]

Thank you, thank you, thank you for the quick responces!

I'm with Harpa Timsah on this... it just doesn't make sense to me! BUT, maybe we are wrong!

So, you guys are saying put the Total income (USA Income)? Then go back to the tax man and ask him to explain it. 'Cause I'm very confused!

For the question asking about your income, you put ALL of your income, U.S. or non-U.S. For the question asking about your tax returns, use your "Total Income" from your U.S. tax return, not your AGI, as long as you're not self-employed. If the AGI is really that much less than your U.S. Total Income, it's probably because the OP is self-employed and deducts a lot of business expenses. In this case, only the income left over after expenses counts toward the income you need to sponsor.

If your U.S. 1040 doesn't show your non-U.S. income, the I-864 instructions say you can submit a copy of your foreign tax returns showing your non-U.S. income.

Edited April 18, 2012 by grrrrreat