Future Tax Hell???

[Love To Teach 161]

Hi..I'm happy to say that I finally married my fiance while in Pakistan. We have been trying to manage getting married for 2 years. We will be filing our CR1 as soon as he gets everything translated and we can get our paperwork put together. I know that it is best to file income taxes jointly. That's the good news. However, he has two businesses in Pakistan, a tour business that he has had for years, and a business exporting to Serbia. He pays taxes in both countries already.

My question is: How complicated is this going to be? He does already have his tax papers that he files in both countries. He pays quarterly taxes in both countries. Does his income have to be combined with mine? He has joint custody of his kids, but he ends up paying most of their bills. They live most of the time with him, but will stay there to continue schooling, etc.

Will we be able to deduct his formidable business expenses in the future when he gets to the US? His business is based in Pakistan and will continue to be. He will do most of his business by computer and phone. Will he eventually have to get a business license here, even though both are based overseas? OMG, this seems so complicated.

There doesn't seem to be anyone around here who knows a thing about taxes involving foreigners. Is this going to be as complicated as it seems? He has some kind of international tax number, but I don't think that is the same as the one required here. Can we go ahead and apply for an ITN in anticipation of having to file joint taxes this year?

All advice and help are appreciated. Thanks!

[MariaR323 199]

Hi..I'm happy to say that I finally married my fiance while in Pakistan. We have been trying to manage getting married for 2 years. We will be filing our CR1 as soon as he gets everything translated and we can get our paperwork put together. I know that it is best to file income taxes jointly. CORRECT, FILING JOINTLY IS THE MOST FAVORABLE. That's the good news. However, he has two businesses in Pakistan, a tour business that he has had for years, and a business exporting to Serbia. He pays taxes in both countries already.

My question is: How complicated is this going to be? He does already have his tax papers that he files in both countries. He pays quarterly taxes in both countries. Does his income have to be combined with mine? IF FILING AS MFJ, YES, YOU COMBINE INCOME AND REPORT WORLDWIDE INCOME. He has joint custody of his kids, but he ends up paying most of their bills. They live most of the time with him, but will stay there to continue schooling, etc

Will we be able to deduct his formidable business expenses in the future when he gets to the US? YES His business is based in Pakistan and will continue to be. He will do most of his business by computer and phone. Will he eventually have to get a business license here, even though both are based overseas? YES OMG, this seems so complicated.

There doesn't seem to be anyone around here who knows a thing about taxes involving foreigners. Is this going to be as complicated as it seems? He has some kind of international tax number, but I don't think that is the same as the one required here. NOT THE SAME, HE WILL NEED TO APPLY FOR AN EIN Can we go ahead and apply for an ITN in anticipation of having to file joint taxes this year? YOU CAN IN CERTAIN SITUATIONS, BUT IN THIS CASE YOU APPLY FOR THE ITIN WHEN YOU FILE YOUR RETURN

All advice and help are appreciated. Thanks!

It's not as complicated as it sounds. Basically, you would first need to decide how you would like to file... MFJ or MFS with or without claiming an exception for your spouse.

As far as his businesses, he can maintain his businesses and he would report business income and expenses as any other business would. Keep proper records and proof of foreign taxes paid so that he can claim foreign tax credit and not be subject to double taxation. He would need to apply for an EIN (employer identification number) here so that he can properly file.

Back to the personal side, there's alot of details here that you would need to discuss in detail with your tax preparer so they can advise what's the best filing status because it all depends on income levels and so forth. Even though MFJ is the most favorable, there may be cases where the MFS would give you the best bottom line. Again, it all depends on income levels and personal (financial) situation.

Edited October 24, 2015 by MariaR323

[LBeachey 44]

Couple Thoughts as my wife had a small business in China when we got married though my income dwarfed hers:

1. Until he is a permanent resident, in order to file Married Filing Jointly, he has to voluntarily agree to pay US taxes. If he does not agree to voluntarily pay taxes you will need to file Married Filing Singly. While it seems strange to volunteer to pay taxes, it may be to your advantage, you really have to run the numbers both ways. In my wife and I case, since her income was so low, it made sense to voluntarily pay on her income so we could file jointly.

2. Keep in mind, any taxes paid to foreign gov't can be credited against your US taxes. You can either take the actual credit for taxes paid or exclude up to a certain amount of income, it used to be around $95K but that may have been adjusted.

3. I would suggest you find a good accountant/CPA in the US who is familiar with foreign income as this can be a tough thing to do yourself.

4. Getting an ITIN can be difficult, depending on the exact timing here, you may be better off filing Married Filing Singly until he actually immigrates and gets a SSN and then amend your taxes, again a tax advisor would likely be helpful.

[Boiler 45,482]

Agree you definitely need a CPA and yes it will be complicated. Begs the question if there is a tax treaty involved here and I sort of assume local taxes may be minimal.

Once he is resident for tax purposes the US will tax him on his world wide income. Actually it gets even more complicated as far as reporting requirements for foreign accounts and businesses, a book not a paragraph and a book I am not competent to write.