Filing Tax Return

[AlyssaM 1]

Hi everyone,

I am trying to fill out my tax return. My husband and I filed our AOS in September 2012 and are waiting for our green card, but he has a SSN.

I have seen a few posts about needing to file a form to declare him as a full year resident and claim his worldwide income (he is still paying taxes for 2012 to France).

Can anyone explain why this is the case? How would the IRS know his income from France? It's not like his employer in France sent the IRS a copy of his W-2, obviously.

And about the statement, when would the IRS check into his immigration status? Do they run his SSN or something? His SSN wouldn't match a W-2 or 1099 reported to the IRS, so why would the computer mark his return for further investigation in any way?

I guess I must be missing something....any further explanation would be great.

Thanks.

[newacct 688]

The posts that you saw about declaring the spouse to be a resident for the full year, the purpose of that was to be able to file jointly. If he is a nonresident or dual-status, he cannot file jointly, and thus each of you must do Married Filing Separately. Filing separately is usually disadvantageous compared to filing jointly; that's why people wish to do this to file jointly.

However, if he has income abroad from before he came to the U.S., then you have to factor in the cost of having to report his income from abroad from U.S. taxes. He may be able to use Foreign Tax Credit to pay only the amount not already paid to France, but that might still mean more taxes. You have to consider it both ways (Married Filing Separately, with him being nonresident or dual-status; or Married Filing Jointly, with him having to report his income for the whole year) to see which one is better.

[Nich-Nick 3,354]

Hi everyone,

I am trying to fill out my tax return. My husband and I filed our AOS in September 2012 and are waiting for our green card, but he has a SSN.

I have seen a few posts about needing to file a form to declare him as a full year resident and claim his worldwide income (he is still paying taxes for 2012 to France).

Can anyone explain why this is the case? How would the IRS know his income from France? It's not like his employer in France sent the IRS a copy of his W-2, obviously.

And about the statement, when would the IRS check into his immigration status? Do they run his SSN or something? His SSN wouldn't match a W-2 or 1099 reported to the IRS, so why would the computer mark his return for further investigation in any way?

I guess I must be missing something....any further explanation would be great.

Thanks.

You are missing the fact that the IRS tax code says if you wish to file jointly, you must include worldwide income earned by both parties in 2012. If you don't want to include worldwide income, then the USC can file "married filing separately". MFJ is almost always a better deal than MFS. if you want to get the better deal, then the rule is report worldwide income, and claim the foreign income exclusion. If you want to cheat on your taxes, you can do that too. They would likely not investigate.

If you want help filing jointly the legal way, see this thread http://www.visajourney.com/forums/topic/412125-turbotax-help-for-joint-filing-2012/

It has the statement, and how to get the foreign income tax exclusion.

Edited March 25, 2013 by Nich-Nick

[AlyssaM 1]

Ok thanks for your reply. No, I do want to do it the legal way. I was just wondering if the IRS could get info somehow from USCIS or whatever.

The trouble I'm having is figuring out what the total taxes paid were. I only have a final pay stub from France, not a W-2 or anything. My husband keeps telling me that "taxes" in France are only paid at the end of the year and everything else that is withheld from his paycheck is towards "social services". I'm guessing that means social security and things like that. Does that count in the foreign income exclusion?

[Nich-Nick 3,354]

Ok thanks for your reply. No, I do want to do it the legal way. I was just wondering if the IRS could get info somehow from USCIS or whatever.

The trouble I'm having is figuring out what the total taxes paid were. I only have a final pay stub from France, not a W-2 or anything. My husband keeps telling me that "taxes" in France are only paid at the end of the year and everything else that is withheld from his paycheck is towards "social services". I'm guessing that means social security and things like that. Does that count in the foreign income exclusion?

You do not need to know what taxes have been paid for the foreign income exclusion. You need to know how much money he earned in 2012. Figure it out from the pay stub what his income was if you had a years worth of pay stubs. Make the best estimate you can. Convert to US dollars. Take the income exclusion. Your taxes may be higher than if you were a single person, but you don't get to file single because you married. So compare what your taxes would be if filing --

• Married filing separately
  
• Married filing jointly (with worldwide income)
  

Go with the better deal which is probably jointly.

Edited March 28, 2013 by Nich-Nick

[AlyssaM 1]

So you're not allowed to take the foreign taxes paid credit? If he is going to ask to be considered a resident alien for the entire year then he is subject to the same rules, including credits, as a resident or US citizen, no? When I pay taxes on foreign stock, I get to write off the foreign tax credit...why wouldn't he be able to write off all the taxes he paid to a foreign country?

Obviously I need to read the Publication again. I can't understand why he is expected to declare his earnings from abroad and be subject to all US tax laws but be unable to take a foreign tax credit. It seems extremely unfair.

[AlyssaM 1]

I read more about the income exclusion.

I see that it's either one or the other. Can I choose to file either form 2555, the exclusion or form 1116, the foreign tax credit? I see you cannot do both.

Do you know if I am allowed to choose between the two depending on which is more beneficial to me taxwise?

Thanks....

So you're not allowed to take the foreign taxes paid credit? If he is going to ask to be considered a resident alien for the entire year then he is subject to the same rules, including credits, as a resident or US citizen, no? When I pay taxes on foreign stock, I get to write off the foreign tax credit...why wouldn't he be able to write off all the taxes he paid to a foreign country?

Obviously I need to read the Publication again. I can't understand why he is expected to declare his earnings from abroad and be subject to all US tax laws but be unable to take a foreign tax credit. It seems extremely unfair.

[Nich-Nick 3,354]

I read more about the income exclusion.

I see that it's either one or the other. Can I choose to file either form 2555, the exclusion or form 1116, the foreign tax credit? I see you cannot do both.

Do you know if I am allowed to choose between the two depending on which is more beneficial to me taxwise?

Thanks....

I would have to read it again, but I think you can choose. If you exclude his taxes paid, then you've got all his income added to yours, which might make a bigger tax burden. I also exclude foreign taxes paid on some of my investments, but my income is counted anyway, so it's not like I've got the option to decrease my income. I'm just thinking out loud here throwing out ideas. Seems like excluding his income would work out better.

[AlyssaM 1]

That helps, thanks.

We should all be awarded honorary CPA licenses for all this!! It's so complex..

Anyway, if I am finally comprehending all this, then my husband can exclude up to roughly 90,000 dollars (not like he made even close to that working half of a year over there) so it would be essentially only paying taxes on my income? I hope so, which would mean that I have been freaking out about losing most of my refund for nothing. I am working on all the scenarios this weekend!

[Nich-Nick 3,354]

That helps, thanks.

We should all be awarded honorary CPA licenses for all this!! It's so complex..

Anyway, if I am finally comprehending all this, then my husband can exclude up to roughly 90,000 dollars (not like he made even close to that working half of a year over there) so it would be essentially only paying taxes on my income? I hope so, which would mean that I have been freaking out about losing most of my refund for nothing. I am working on all the scenarios this weekend!

Not quite that simple as only taxing your income. I gave an explanation of how it works in that TurboTax thread, post 6 http://www.visajourney.com/forums/topic/412125-turbotax-help-for-joint-filing-2012/page__view__findpost__p__5953008

[AlyssaM 1]

I began reading that thread, thanks for all your help!

I don't make that much money, and he didn't make that much either.. we will see. Thanks!