OMG, Could Taxes Get Any More Complicated???

[Love To Teach 161]

Hi--We filed our I-130 and are working on how to file taxes for 2015. I understand how to file for W-7, etc., but as I am reading more and more, it is getting more confusing because my husband is self-employed and he lived in two different countries last year. Even though he lived in one country for 6 months (where he exports to), he maintained his residence in Pakistan (where he exports from).

In looking through the tax issues, if we say we want him treated as a US resident for tax purposes, I am now seeing additional info about self-employment taxes. All of his income is through self-employment. He already pays "social security" type taxes, etc., in Pakistan. He pays income taxes and importing taxes in Serbia. Does he ALSO have to pay self-employment taxes in the US? If so, it seems that all of these taxes are eating up the benefit of filing jointly.

I am still looking for a tax specialist around here who can figure all of this out. Also, I know we can file Form 2555 for foreign earned income exclusion, but what about 1116--foreign tax credit?

Any ideas? All this is making me crazy.

[aaron2020 11,651]

Your husband will need a US domicile to petition for you.

US taxes on worldwide income.

Your husband needs a US accountant.

This is not DIY when your husband is running a foreign based business. You need to reconcile tax issues and immigration issues.

[MariaR323 199]

You may use Form 2555 and Form 1116 on the same return, but cannot use the same earnings (and taxes paid relating to those earnings) on both forms. So, you either take a deduction or credit but cannot do both.

I agree with aaron2020 above and this is not a DIY situation. I highly suggest you hire a CPA knowledgeable in foreign tax issues. There are too many details involved for anybody here to be able to assist you with this.