Filing tax with foreign income + spouse

[bluetraveller 4]

Apologies if this exact topic has been discussed before, I searched around a bit and didn't find anything conclusive. I also want to mention that I'm more than happy to hire some local CPA to help me with this. I live in Denver, CO.

This is my situation:

Me: legal permanent resident, landed in the US last August. While I was sorting out my immigration paperwork I worked remotely for a company overseas until the end of January of 2014. They paid me in euros that went to my overseas account and I paid my corresponding taxes there.

My wife: US citizen, she was out with me overseas until we moved to the US in August. She was then hired as a contractor and got a few paychecks during 2013. She hasn't paid any taxes yet.

That's it. I don't even know if I'm supposed to report my foreign income. I just want to do the right thing and get taxes sorted out for both my wife and I.

Any suggestions or general advice on how to proceed?

Thanks.

[Ryan E 10]

ALL LPRs and USCs must pay taxes on ALL worldwide income. Fortunately, there is an exemption for a certain amount per year earned while abroad if you qualify. Look for "foreign earned income exclusion" for the details.

Your income earned while in the us will not qualify, the income earned while abroad will probably be difficult to make qualify, but you'll need to take a look.

Even if the income qualifies, you may still be responsible for self employment tax.

You should consider hiring a tax preparer with experience in foreign income.

[CarlosAndSveta 808]

Apologies if this exact topic has been discussed before, I searched around a bit and didn't find anything conclusive. I also want to mention that I'm more than happy to hire some local CPA to help me with this. I live in Denver, CO.

This is my situation:

Me: legal permanent resident, landed in the US last August. While I was sorting out my immigration paperwork I worked remotely for a company overseas until the end of January of 2014. They paid me in euros that went to my overseas account and I paid my corresponding taxes there.

My wife: US citizen, she was out with me overseas until we moved to the US in August. She was then hired as a contractor and got a few paychecks during 2013. She hasn't paid any taxes yet.

That's it. I don't even know if I'm supposed to report my foreign income. I just want to do the right thing and get taxes sorted out for both my wife and I.

Any suggestions or general advice on how to proceed?

Thanks.

Are you planning on making the election to treat yourself as a resident alien for 2013 so that you can file a joint return with your wife? How you decide to file affects what needs to be reported on the return.

[bluetraveller 4]

Are you planning on making the election to treat yourself as a resident alien for 2013 so that you can file a joint return with your wife? How you decide to file affects what needs to be reported on the return.

You make it sound like I have an option. Is it because I was in the US for less than 180 days during 2013? I've come across that number before. If it's up to me, how do I know what's more convenient?

Do you know of any online resources where this is well explained, in the way that all the visa stuff is so well explained here at VJ?

[CarlosAndSveta 808]

You make it sound like I have an option. Is it because I was in the US for less than 180 days during 2013? I've come across that number before. If it's up to me, how do I know what's more convenient?

Do you know of any online resources where this is well explained, in the way that all the visa stuff is so well explained here at VJ?

You always have a choice of filing status when you are married. You can either file Married Filing Separately or Married Filing Jointly or in some cases as Head of Household. The key point for you is whether you are considered as a nonresident alien or resident alien for Federal income tax purposes for 2013. The normal tests for determining whether you are resident alien or nonresident alien are the Green Card Test and the Substantial Presence Test.

You did not have a Green Card during 2013 so you do not meet that test.

The Substantial Presence test requires that you have been in the U.S. 31 days during 2013 and a combined weighted 183 days for 2013, 2012, and 2011. Based on your timeline, I assumed that you have only been in the U.S.since you came in on your K-1 visa on 7-27-2013. You meet the requirement for 31 days in 2013 but do not meet the requirement for a weighted 183 days in 2011 through 2013.

In your case there is a special election that you and your spouse can make to treat you as a resident alien for tax purposes for 2013. If you make that election then you are taxed on your worldwide income and you and your spouse would probably elect to use the foreign earned income exclusion.

If you don't make the election to be treated as a Resident Alien then you will file as Married Filing Separately and only report the income you earned while living and working in the U.S.

There are two IRS publications that you can read to hopefully get a better understanding of the Federal income tax law as it applies to you for 2013. They are Publication 519 - U.S. Tax Guide for Aliens and Publication 54 - Tax Guide for U.S. Citizens and Resident Aliens Abroad.

In Publication 519 you will find a discussion of determining whether or not you are a Resident Alien or Nonresident Alien for 2013. This discussion starts on page 3 and includes a discussion of the Green Card Test and Substantial Presence Test. The election to treat you as a Resident Alien is discussed on page 9 in the section labeled Nonresident Spouse Treated as a Resident. Here is a link to Publication 519: http://www.irs.gov/pub/irs-pdf/p519.pdf

In Publication 54 you will find a discussion about the Foreign Earned Income Exclusion. This is discussed starting on Page 12. Here is a link to that Publication: http://www.irs.gov/pub/irs-pdf/p54.pdf

[bluetraveller 4]

Thanks so much for the detailed response. Ill look into it. But if you can do this for me please send me a PM with a quote.

You always have a choice of filing status when you are married. You can either file Married Filing Separately or Married Filing Jointly or in some cases as Head of Household. The key point for you is whether you are considered as a nonresident alien or resident alien for Federal income tax purposes for 2013. The normal tests for determining whether you are resident alien or nonresident alien are the Green Card Test and the Substantial Presence Test.

You did not have a Green Card during 2013 so you do not meet that test.

The Substantial Presence test requires that you have been in the U.S. 31 days during 2013 and a combined weighted 183 days for 2013, 2012, and 2011. Based on your timeline, I assumed that you have only been in the U.S.since you came in on your K-1 visa on 7-27-2013. You meet the requirement for 31 days in 2013 but do not meet the requirement for a weighted 183 days in 2011 through 2013.

In your case there is a special election that you and your spouse can make to treat you as a resident alien for tax purposes for 2013. If you make that election then you are taxed on your worldwide income and you and your spouse would probably elect to use the foreign earned income exclusion.

If you don't make the election to be treated as a Resident Alien then you will file as Married Filing Separately and only report the income you earned while living and working in the U.S.

There are two IRS publications that you can read to hopefully get a better understanding of the Federal income tax law as it applies to you for 2013. They are Publication 519 - U.S. Tax Guide for Aliens and Publication 54 - Tax Guide for U.S. Citizens and Resident Aliens Abroad.

In Publication 519 you will find a discussion of determining whether or not you are a Resident Alien or Nonresident Alien for 2013. This discussion starts on page 3 and includes a discussion of the Green Card Test and Substantial Presence Test. The election to treat you as a Resident Alien is discussed on page 9 in the section labeled Nonresident Spouse Treated as a Resident. Here is a link to Publication 519: http://www.irs.gov/pub/irs-pdf/p519.pdf

In Publication 54 you will find a discussion about the Foreign Earned Income Exclusion. This is discussed starting on Page 12. Here is a link to that Publication: http://www.irs.gov/pub/irs-pdf/p54.pdf

[gwenstar 66]

In your case there is a special election that you and your spouse can make to treat you as a resident alien for tax purposes for 2013. If you make that election then you are taxed on your worldwide income and you and your spouse would probably elect to use the foreign earned income exclusion.

If you don't make the election to be treated as a Resident Alien then you will file as Married Filing Separately and only report the income you earned while living and working in the U.S.

There are two IRS publications that you can read to hopefully get a better understanding of the Federal income tax law as it applies to you for 2013. They are Publication 519 - U.S. Tax Guide for Aliens and Publication 54 - Tax Guide for U.S. Citizens and Resident Aliens Abroad.

In Publication 519 you will find a discussion of determining whether or not you are a Resident Alien or Nonresident Alien for 2013. This discussion starts on page 3 and includes a discussion of the Green Card Test and Substantial Presence Test. The election to treat you as a Resident Alien is discussed on page 9 in the section labeled Nonresident Spouse Treated as a Resident. Here is a link to Publication 519: http://www.irs.gov/pub/irs-pdf/p519.pdf

In Publication 54 you will find a discussion about the Foreign Earned Income Exclusion. This is discussed starting on Page 12. Here is a link to that Publication: http://www.irs.gov/pub/irs-pdf/p54.pdf

I have read through these publications and seems like I have some to same conclusion as you? A person can to claim resident alien status even if not residing in the US during the tax year as long as they are filing jointly and treat the "non resident alien spouse a resident for tax purposes" on the tax return. Then the household income is taxed on the worldwide rate ....but then by using Form 2555 the non resident alien spouses income can be excluded up to around $97,000. Correct?

My situation is not as complex as OP - but I was researching on my own trying to find the most monetarily beneficial route. I ended up just filing married/separate for year 2013, but if I am right about being able to use Form 2555 I can amend it after my spouse moves to the US and has an SSN. That's my plan....

[CarlosAndSveta 808]

I have read through these publications and seems like I have some to same conclusion as you? A person can to claim resident alien status even if not residing in the US during the tax year as long as they are filing jointly and treat the "non resident alien spouse a resident for tax purposes" on the tax return. Then the household income is taxed on the worldwide rate ....but then by using Form 2555 the non resident alien spouses income can be excluded up to around $97,000. Correct?

That is correct.

[gwenstar 66]

That is correct.

Awesome. Thanks for your reply!

[MAXX1 8]

ALL LPRs and USCs must pay taxes on ALL worldwide income. Fortunately, there is an exemption for a certain amount per year earned while abroad if you qualify. Look for "foreign earned income exclusion" for the details.

Your income earned while in the us will not qualify, the income earned while abroad will probably be difficult to make qualify, but you'll need to take a look.

Even if the income qualifies, you may still be responsible for self employment tax.

You should consider hiring a tax preparer with experience in foreign income.

Hi, Go to the IRS web site and get forms 2555ez and 1040 there are also instructions for these forms. Pretty simple forms.