Filing taxes during AOS

[Sean and Kristina 24]

Let me start off by saying that I've already contacted a tax professional and have an appointment scheduled to meet with her soon, but I wanted to post a few details and questions in here so I can gain some knowledge before I visit with her.

I am a US citizen.

My husband is from New Zealand and earned income in New Zealand from January - May 2015.

He entered the US on an F-1 visa in May to be a full time graduate student at MIT.

I moved to Boston to be with him when he arrived.

We got married in August.

Filed for AOS in October.

Received EAD/AP in December.

Interview TBD.

I worked full time for the entire year of 2015 in the US.

So we have three key life events: move, college, marriage. My questions are:

- Is his New Zealand income before he entered the US taxable? According to https://www.irs.gov/pub/irs-trty/newzld.pdf in Article 20 it says students are exempt from double taxation...but not sure if this applies and will show to the tax professional.

- All of our finances, bank accounts, investments, credit cards, health/renters/car/umbrella insurance, lease, EVERYTHING is together... so I would prefer to file jointly, but would there be a benefit to filing separately?

- What exactly IS my husband's status since he's in that awkward stage of adjusting to permanent residency?

- Since he is a full time student and not working, we were waiting to get his SSN after he receives his green card...but do we need his SSN in order to file taxes before April 15th? We could be cutting it close considering we don't have our interview scheduled at this time.

Lastly, if anyone has any advice for newlyweds filing their taxes as a married couple for the first time or any college/higher education deduction suggestions then please let us know!

[MariaR323 199]

Let me start off by saying that I've already contacted a tax professional and have an appointment scheduled to meet with her soon, but I wanted to post a few details and questions in here so I can gain some knowledge before I visit with her.

I am a US citizen.

My husband is from New Zealand and earned income in New Zealand from January - May 2015.

He entered the US on an F-1 visa in May to be a full time graduate student at MIT.

I moved to Boston to be with him when he arrived.

We got married in August.

Filed for AOS in October.

Received EAD/AP in December.

Interview TBD.

I worked full time for the entire year of 2015 in the US.

So we have three key life events: move, college, marriage. My questions are:

- Is his New Zealand income before he entered the US taxable? According to https://www.irs.gov/pub/irs-trty/newzld.pdf in Article 20 it says students are exempt from double taxation...but not sure if this applies and will show to the tax professional.

- All of our finances, bank accounts, investments, credit cards, health/renters/car/umbrella insurance, lease, EVERYTHING is together... so I would prefer to file jointly, but would there be a benefit to filing separately?

- What exactly IS my husband's status since he's in that awkward stage of adjusting to permanent residency?

- Since he is a full time student and not working, we were waiting to get his SSN after he receives his green card...but do we need his SSN in order to file taxes before April 15th? We could be cutting it close considering we don't have our interview scheduled at this time.

Lastly, if anyone has any advice for newlyweds filing their taxes as a married couple for the first time or any college/higher education deduction suggestions then please let us know!

I'm not familiar with the F-1 Visa and what benefits or rules come along with that but I can try and answer some of your questions from a general perspective since much of this information and suggestions would be based on knowledge of income levels.

Most often than not it is always best to file MFJ because it is the most favorable filing status. Generally speaking, with income levels of under 100k it almost always is. Your foreign spouse sounds like he is probably a dual status alien for 2015 since he entered the U.S. mid-year. (This may be affected by the F-1 Visa in some way - that I wouldn't know.) With all that said, if you choose to file MFJ with a dual status foreign spouse you must make sure to include an election statement whereby choosing to treat your foreign spouse as a resident alien for the entire year 2015. That allows you to file MFJ, however, in choosing that election I believe you cannot also choose to apply any foreign treaty agreements... but this shouldn't be a problem since you can include Form 2555 to exclude foreign income. MFJ you are reporting worlwide income, hence having to use form 2555 to apply the foreign income exclusion.

Now with all that said above... your foreign spouse would be treated as a resident alien for the entire year 2015 and as such is able to apply any and all deductions and credits available to a U.S. resident. This would allow you to claim education benefits for expenses paid in 2015. Not the American Opportunity Credit because that is for undergraduate work but look at the other one - the Lifetime Learning Credit.

You definitely need him to obtain his SSN for filing purposes.

Again, all this is based on assuming certain things and we don't know what type of income levels are involved in your financial situation. My best advice is to make sure the tax preparer is competent in this area of taxes involving foreign income and resident/nonresident status determinations and elections. Last but not least, run the numbers both ways, as MFS and MFJ, to make sure you are maximizing your tax benefits.

[Nich-Nick 3,354]

Since you were married in 2015, you can file jointly regardless of his immigration status by electing to be treated as a resident alien for tax purposes for all of 2015. There is a statement to write and both sign. See Publication 519, about page 9 I think, where it tells what to include in your statement. So bingo, he's filing just like any USC as far as the IRS rules go. No alien or non-resident rules to consider.

If he files jointly then worldwide income from either spouse must be reported. That does not mean taxed. So yes his Jan-May NZ income is converted to US$ and reported as income. It is self reported so no W2 type document is asked for. He will be eligible for Form 2555 or the shorter 2555EZ Foreign Income Exclusion which is why I said he won't be taxed on it. The tax is figured a little differently with a foreign exclusion. Many think it just subtracts his income off the total. Not exactly. There is a worksheet or TurboTax will do it do it in the background without you knowing what is happening.

It works like this:

Figure tax on all the income yours and his....$xxxx.xx

Figure what tax would be on just his foreign income....$yyyy,yy

Subtract $xxxxx minus $yyyyy and your actual real tax is the difference.

It is basically letting you take off the amount of tax his added income generates.

It's usually a good deal and better than you filing separately because you get the extra $10,000+ In exemption and standard deduction for adding a spouse and his foreign exclusion means his part of the tax gets subtracted as well.

If your tax professional tells you you can file jointly and ignore the NZ income, then find another one.

He needs an ITIN to file if he will not have a SSN to file with. Your timeline indicates he has an EAD card. Go to a Social Security office and get a SSN. He is eligible for one because he has EAD. You don't have to wait on the greencard.

Just noticed Maria has already replied while I was typing. I agree that taxes are very specific to incomes and this might not be the only option but more than likely it is a good one because of the benefits that US taxpayers get you couldn't claim if he didn't file with you and you had to file Married Separately.

[Sean and Kristina 24]

Thank you so much, both of you! This is incredibly helpful and gets my research started on the right foot.

[Sean and Kristina 24]

I have a follow up question: is it possible to claim any sort of credits or deductions on any of the USCIS filing fees (or attonrey fees) we paid for last year? Probably a stretch, but trying to find every last deduction.

[MariaR323 199]

I have a follow up question: is it possible to claim any sort of credits or deductions on any of the USCIS filing fees (or attonrey fees) we paid for last year? Probably a stretch, but trying to find every last deduction.

I know it's been widely debated but, unfortunately, immigration process fees are not deductible.

[Sean and Kristina 24]

Does anyone have an example for what to write or how to format the resident alien spouse election statement?

[MariaR323 199]

See here I"m attaching my version of the election statement IRC Section 6013g NRA Election for RA.pdf

Feel free to use it. I tried uploading the Word document so you can edit it but apparently I can only upload a PDF version.

[Sean and Kristina 24]

Thank you so much!!! Luckily I have a more upgraded version of Adobe for my work so maybe I'll be able to edit it even though it's a PDF.