Will my foreign fiance have to pay federal income tax for 2016?

[kumakun 12]

Hi everyone,

Apologies if this has been addressed somewhere in this forum. I can't imagine it hasn't but I've not been able to find solid answers here.

My fiance will be arriving from Japan on a K-1 visa either at the end of August or end of September 2016 (we'll determine exact date once he has his visa in hand in the next couple of weeks). Based on the IRS' "183-day test" (and formula), he will have been present in the U.S. for ~168 days or less in 2014, 2015, and 2016. He will be resigning from his job in Tokyo in a couple of weeks and will terminate employment a few weeks before he moves here, so all income earned in 2016 will have been earned in Japan while he was living in Japan.

Since we won't be getting married until October/November, we don't anticipate he will have his green card or work authorization by the end of 2016, so we don't anticipate he will earn any income in the U.S. this year.

So...will he need to file a U.S. federal tax return for 2016? And will any of his earnings in Japan prior to his move here be taxable in the U.S.?

And on the off-chance he does receive his green card before December 31 (highly unlikely), would that change these circumstances at all?

We appreciate any guidance or online resources anyone can point us to!

[Nich-Nick 3,354]

So...will he need to file a U.S. federal tax return for 2016? And will any of his earnings in Japan prior to his move here be taxable in the U.S.?

And on the off-chance he does receive his green card before December 31 (highly unlikely), would that change these circumstances at all?

We appreciate any guidance or online resources anyone can point us to!

If he earns zero money in the US, he has no income to report or be taxed. So no, he does not have to file anything.

You on the other hand will be married in 2016 so would have to file Married Filing Separately which is probably the most expensive way to file as far as taxation.

BUT you can CHOOSE to file Married Filing Jointly with him instead, even though you are the only one earning in the U.S. In that case, all money earned anywhere in the world (Japan) by either of the joint filers is reported. He would qualify for the Foreign Earned Income Exclusion which would eliminate any taxes his foreign income would have created. So basically he reports it but is not taxed on it. Believe it or not, your taxes will be less that way than if you file Married Filing Separately.

Edited June 27, 2016 by Nich-Nick

[templeton 120]

Nich-Nick got in just ahead of me. While a tax preparer can speak to your specific circumstances when the time comes, it will likely be best to file jointly. Your husband will declare the income he made in Japan before arriving, but in most cases there is an offsetting deduction for it.

Edited June 27, 2016 by templeton

[kumakun 12]

Great guidance, thanks! We'd probably rather file separately for 2016 and then jointly for 2017 and beyond, but we'll try it both ways for 2016 and see how significant the difference is before filing. Our biggest concern is ensuring he's not double-taxed, considering how, uh, greedy the IRS can be...

Edited June 27, 2016 by kumakun

[MariaR323 199]

One other option, which is not so common, is for you as the U.S. Citizen to file MFS (married filing separately) AND claim an exemption for your NRA (nonresident alien) spouse. You can claim the spousal exemption ONLY IF the NRA spouse has no U.S. source income. Although MFS is generally the least favorable filing status, at least it would allow you to claim the spousal exemption and reduce tax.

Look up the spousal exemption on IRS.gov for more info.

Other than that, if you want to keep things separate, then you would file MFS and your (soon to be) spouse would not need to file anything.

Edited June 27, 2016 by MariaR323

[Nich-Nick 3,354]

Great guidance, thanks! We'd probably rather file separately for 2016 and then jointly for 2017 and beyond, but we'll try it both ways for 2016 and see how significant the difference is before filing. Our biggest concern is ensuring he's not double-taxed, considering how, uh, greedy the IRS can be...

Yes, try all ways. There are tax treaties in place to avoid double taxation. Your concern should also be that you don't get taxed more by avoiding putting him on the tax return.