Income Tax frustration

[JudyKCski 12]

Tommy arrives on K1 Visa Nov 20 2011 we - Married Dec 8 2011 filed for AOS in Feb 2012 - received greencard in October 2012

My husband receives money monthly from Norway it goes into his bank account in Norway and the bank transfers each month to our account in the US. Tommy is on permanent disability (NAV). This money is taxed in Norway - I am really struggling as to how to do my income taxes. Tommy has a social security card however has not and will not need to work in the US because of his Norwegian benefits (We got the SSCard to be able to get a NYS drivers license).

Tommy's money is not money made working for any entity it is from his government (he will remain a Norwegian citizen because he has no inclination on becoming a american citizen) - it is not money generated by any American company - I am just at a total loss as to how to classify his money. I have tried turbotax but it wants to know if he was in Norway as he does not WORK and has been in the US for over a year I just do not know what to do nor how to approach this with making any claim to 'worldwide income'.

HELP please

Judy

[X Factor 1,112]

Call Turbo tax help desk and they should provide assistance.

[N-o-l-a 7,167]

Would Norway be giving him that money if they knew he was a permanent resident in America?

[JudyKCski 12]

Would Norway be giving him that money if they knew he was a permanent resident in America?

Yes prior to his leaving there they knew were he was going to be living.

[Nich-Nick 3,354]

Tommy arrives on K1 Visa Nov 20 2011 we - Married Dec 8 2011 filed for AOS in Feb 2012 - received greencard in October 2012

My husband receives money monthly from Norway it goes into his bank account in Norway and the bank transfers each month to our account in the US. Tommy is on permanent disability (NAV). This money is taxed in Norway - I am really struggling as to how to do my income taxes. Tommy has a social security card however has not and will not need to work in the US because of his Norwegian benefits (We got the SSCard to be able to get a NYS drivers license).

Tommy's money is not money made working for any entity it is from his government (he will remain a Norwegian citizen because he has no inclination on becoming a american citizen) - it is not money generated by any American company - I am just at a total loss as to how to classify his money. I have tried turbotax but it wants to know if he was in Norway as he does not WORK and has been in the US for over a year I just do not know what to do nor how to approach this with making any claim to 'worldwide income'.

HELP please

Judy

As a permanent resident, in general all income from any source and any country is considered. Disability payments in the US are income reported on line 7 until a person reaches retirement age, then they get reported on the pension line. But if a tax treaty has specific agreements, then those apply over the general tax code. If the payment isn't considered addressed in the treaty, then follow the tax code and report it on line 7.

Tax treaty with Norway http://www.irs.gov/pub/irs-trty/norway.pdf

Article 18 basically says that pensions or annuities paid because of having worked in one country are generally taxable In the country where the person resides. Article 19 discusses Social Security or similar payments. Does the disability seem to fit that definition? If so, then that reads that it is only taxable in the country where the payment originates (Norway).

ARTICLE 19 Social Security Payments

Social security payments and other public pensions paid by one of the Contracting States to an individual who is a resident of the other Contracting State shall be taxable only in the first- mentioned Contracting State. This article shall not apply to payments described in Article 17 (Governmental Functions).

You are protected from double taxation by the traty. If it is going to be taxed in the US, then Norway would stop taxing it. There's probably forms to stop the taxing over there. There is also an exclusion area of the US tax return for taxes paid to a foreign country.

A tax professional or CPA who is experienced with international clients may be able to help you ferret out the definitions. I wouldn't trust the H&R Block kiosk in Walmart. You might get the benefit of having a professional do taxes one year, then follow it as a template for the future. Is it taxed in the US? Or is it considered a Social Security type benefit and only taxed in Norway. Once you see where things go, you could do it the same way each year on your own.

Edited March 10, 2013 by Nich-Nick

[EAS 45]

You might call or go see the IRS, they have a toll-free number and assistance centers with IRS personnel who should be able to address your questions/concerns.

Free tax help is available from the Internal Revenue Service for taxpayers by telephone, in person and via the Internet where information is available 24 hours a day, seven days a week.

Telephone

Taxpayers may ask tax questions by calling the toll-free customer service line at 1-800-829-1040 for individual tax issues ...

Taxpayer Assistance Centers

IRS Taxpayer Assistance Centers are a source of personal tax help when taxpayers believe their tax issues cannot be handled on-line or by phone, and they want face-to-face assistance. IRS representatives in these offices can help with inquiries, adjustments, letters and notices and payment plans for those who owe tax and cannot pay the full amount. Locations are posted on IRS.gov under the "Individuals" tab. Just click the link Contact My Local Office or type "Contact My Local Office" in the search box on IRS.gov to find availability by state. Also, taxpayers can hear a recorded message detailing office hours and addresses by calling the number listed in their local phone directory.

The IRS provides non-English-speaking taxpayers equal access to all Taxpayer Assistance Centers.

Edited March 10, 2013 by EAS

[JudyKCski 12]

On my husband's yearly statement from 2012 Norwegian Labour and Welfare Service it is classified as "Disability Pension, National Insurance Scheme".

Would wish it would be as simple as claiming this money the same line as our US Disability line.

[X Factor 1,112]

On my husband's yearly statement from 2012 Norwegian Labour and Welfare Service it is classified as "Disability Pension, National Insurance Scheme".

Would wish it would be as simple as claiming this money the same line as our US Disability line.

Yes that would make life simple. The help desk at Turbo tax is usually monitored by CPA, or EA. Try them first.

[Nich-Nick 3,354]

Yes that would make life simple. The help desk at Turbo tax is usually monitored by CPA, or EA. Try them first.

The TurboTax people are not going to be equipped to interpret tax treaties from a specific foreign country, nor will they. I've been round and round with them in the past over the FATCA form and their software last year.

Sometimes the IRS can be helpful if you get bumped up to the speciality tax desk. I talked with one such guy last year for about an hour. His initial response was "we are not equipped to answer that question and the IRS suggests you contact a tax professional.". My response to that was "What do you mean you can't answer the question?? YOU ARE THE IRS. YOU WROTE THE TAX CODE." Then we had a good laugh and he said that was exactly what he told his supervisor when he was told to give that canned answer. After that we had a long discussion about the vagueness of the FATCA guidelines, the real intent, and how it affected regular blokes who had immigrated to the US. For those scratching your head over FATCA, just google it. It's about reporting foreign investments or holdings to the IRS for the first time in 2011. It carries criminal penalties (felony) and $10,000 to $60,000 in fines if convicted for non-compliance. People were confused about pension funds, property owned, etc.

[Darnell 8,478]

I wonder if IRS Form F2555 would help? maybe the instructions there would clarify some things?