Form 2555 after entering on a K1/AOS - would I fill in Part II or Part III?

[simonschus 58]

Hi all,

I'm trying to understand Form 2555 slightly assuming that I came over on a K1 and was filing at the end of the tax year of my first year of residence

Would I fill in Part II: Taxpayers Qualifying Under Bona Fide Residence Test or Part III: Taxpayers Qualifying Under Physical Presence Test? I'm aware that I'd fill in Part I, Part IV, V, VII, and VIII.

In case we need any assumptions explicitly announced to answer this question then I'm including everything relevant that I could of here. Let's assume that, I:

a) had moved over to the US on a K1 at the end of May, and had filed for AOS in early June.

b) earned a foreign income prior to moving to the US in May, which was taxed in a country with a double taxation treaty (UK)

c) had begun a job in the US around September after receiving EAD

d) earned $55,000 over the course of the year including both foreign and US domestic income (roughly 40/60% split)

e) would be filing jointly with my USC partner who earns around $66,000 (so her $66,000 + my $55,000 = $121,000 joint income).

f) would be filing as a Resident Alien rather than Dual Status, solely for simplicity.

Any help in clarifying would be really kind.

Simon.

Edited February 27, 2016 by simonschus

[Nich-Nick 3,354]

Form 2555EZ is easier.

You may qualify under both tests. The thing that confuses people is because this form is primarily designed and written for an American working abroad and asking if he qualifies to exclude the income he earns while there. So the qualifier is has that American got a visa or other official authorization to live/work in that country (bonafide resident in the UK for example). Or has that American been in the UK for a long time and can add up all those days present rules to qualify under physical presence in the UK.

You too can also use the form to exclude your UK income. You are, I assume, a Btitish citizen so yes you are a bonafide resident of the foreign country (UK) probably since birth. You have better than a visa that allows you to work in the UK. You have British citizenship. You have also been living in the UK for Way more than the 12 month period they describeto be physically present in the UK. Pick either one, or both to fill out.

Your form may look like this:

Date bona fide residence began [date you were born], and ended [date you moved on your K1]

Or

Were you physically present in a foreign country or countries for at least 330 full days during

2016 or any other period of 12 months in a row starting or ending in 2016

Yes, you were present in the UK your whole life until you moved in 2016. You didn't have any days last year where you worked in the US two months, then back to the UK to work four months, then work in US. Remember this is written where it makes sense to Americans who may work weeks abroad then back to US to work six weeks and want to try to skip paying taxes on their weeks abroad this all the detailed questions to catch them out.

You will have to read all the details because it sounds like you are going to continue work in the UK while you are in the US waiting on your EAD. Most people end their foreign employment when they enter the US. So you've got a situation that you may not be able to exclude that time period in the US.

[simonschus 58]

Thank you for your help Nich-Nick. This question didn't relate specifically to the UK whereas my other question did hence why I posted in separate forums, which I hope was appropriate! Yes, I was debating between Form 2555 and Form 2555EZ but the decision between those mostly depends on the situation at the end of the US tax year. I was getting stuck in the language written from a US perspective but glad I've had somebody to scaffold my learning for me, Vygotsky and Bruner-style. I'll be filing Form 2555/2555EZ as a Taxpayers Qualifying Under Bona Fide Residence Test.

Moving on slightly, it is possibly true that I will ear a UK salary whilst I am in the US waiting on my EAD. It all depends on if that is what I decide to do. The scenario would be working for a UK company, UK bank account, UK project with no direct benefit to the US, using UK resources aside from a US based electricity and Internet connection, and not displacing a US worker in any way. I'm aware that such a scenario has been debated so many times on FJ with some people suggesting "this is totally illegal on a K1" and some people suggesting "this is not illegal on a K1". I think it is fair to suggest that there is no true consensus with many people thinking it is a gray area. That is why I didn't want to raise it too much here as I didn't think it was a fruitful use of anybody's time!

Nonetheless, I wonder whether such a scenario would cause too much of a problem with the IRS. After all, discrepancies between my Form 1050 and Form 1040 would indicate to the IRS that there was some foreign income that I was taxed upon by the relevant foreign tax authority (the HMRC in the UK), and that the UK income was earned after arrival on a K1 but before EAD.

I'm unsure whether the IRS has access to an EAD but I wonder if such a scenario would be raised by the IRS or perhaps by an interviewer at the AOS interview or elsewhere. If so, it might be problematic as it'd presumably subject our K1 AOS application to further scrutiny which might delay everything. Any thoughts from anybody would be helpful.

Simon.

Edited February 27, 2016 by simonschus

[simonschus 58]

* Form 1040, not 1050.

[Nich-Nick 3,354]

You do what you decide to do. My own personal opinion is the IRS and the USCIS are separate pieces of the government and government agencies rarely talk to each other. The IRS won't be checking into your immigration status and the USCIS won't be checking your tax return for accuracy of filing. It's "not their job", so to speak. Meaning if you e-filed jointly with your wife as a resident next year, the IRS wouldn't check you out to make sure you were resident. And the USCIS won't be looking at your 2016 tax return except if you use it to show commingling of finances when you remove conditions two years after your greencard. They won't look past the two names at the top. It just "ain't gonna happen". But we do our best to be honest and accurate because we are good people. This is a personal opinion only and not to be considered advice the mods think is shady.

[simonschus 58]

Thank you again. Yes, I'm trying to work out what needs to be done in order to ensure that everything is filed honestly and accurately with the IRS. As for the working remotely, that is something I'm going to grapple with as to the legality, morality and social acceptability.

Edited February 27, 2016 by simonschus

[simonschus 58]

[if anybody wants to comment on the legality, morality and social acceptability then please do now that I've has some opinion on the original question. As a reminder, the scenario would be working for a UK company whilst waiting for my EAD to be approved, being paid into UK bank account, working on UK project with no direct benefit to the US and no US customer, using UK resources aside from a US based electricity and Internet connection, and not displacing a US worker in any way. I can do everything from a single laptop. The only reason I'd want to do this is because I hate the idea of my partner supporting me despite her having the means to do so; it just doesn't sit well with me].