K1 Visa from Canada - Taxes 2016

[mlsjmu 2]

First off thanks to VJ for always great advice, you've helped us immensely through our K1 process. Secondly, please forgive if this is covered somewhere else, I've read a number of threads here and on Turbotax's message boards, but seem to find conflicting answers. Here is our scenario, I'm about to file our 2016 tax returns. My wife is originally from Canada, and came here on her K1 Visa. We were married in November 2016, and have recently sent the paperwork in for her Adjustment of Status (though have yet to hear any news of it). She does already have her social security number. My now wife was a nurse in Canada working part-time in 2016 up until her move down in November. Of course since she does not yet have her EAD, she earned no income in the US in 2016. At this point I'm unclear how to proceed. Has anyone ever attempted a similar scenario in Turbotax? Any additional comments or suggestions are welcome and appreciated.Or if there is a more specific guide relevant to our situation, any links are appreciated. Please excuse the ignorance on tax topics, I've always preferred to plug everything into Turbotax online and let it do all the work. Thanks for your time.

 

Just as an aside, I've read the sticky, but some of the messages on Turbotax seem to contradict or conflate a bit of this, so seeking clarification.

 

Edited January 21, 2017 by mlsjmu

[Glenn&Molly 1]

I hope someone answers because I am in a very very similar boat. My wife is from Canada, we married on December 30, and she has a SSN from her time as a student working in the States. I normally just let TurboTax do the work as well, so hopefully someone answers and can help OP (and myself!)

[MariaR323 199]

It's fairly simple. Since the U.S. entry is late in the year (Nov 2016 and Dec 2016 for the other poster), both foreign spouses are considered nonresidents for 2016.

 

Now, your choice if you'd like to file MFJ for 2016 - you are completely eligible to and in my opinion should because you take advantage of the MFJ tax brackets. If you choose to file jointly, you need an election statement choosing to treat the NR spouse as a resident for tax purposes. You can most def use TurboTax to complete your returns and go through the foreign income reporting and exclusion to exclude the tax on the foreign income. You cannot e-File and must print it hardcopy so that you can attach the election statement and send via U.S. mail.

 

I believe TurboTax will walk you through the return along with foreign income. Give it a shot. If you don't feel too confident about it, go with an independent tax preparer who is versed with foreign income.

[smile:) 0]

I entered with K-1 Visa in July 31th, 2016 and married in august 2016. We filed AOS Oct 2016 and get EAD only in December 2016

I'm just a little confused about tax status should it be nonresident alien or resident alien
And what is the substantial presence test

[LionessDeon 2,060]

My father is a CPA. He has done my taxes my whole life.  My husband entered on a K1 in July 2016. We married in September and filed AOS in November.  We have nothing but NOA1.  I'm going to his office either today or Monday to get our taxes done.  I can let you know his advice. 

[Suss&Camm 2,213]

10 hours ago, smile:) said:

I entered with K-1 Visa in July 31th, 2016 and married in august 2016. We filed AOS Oct 2016 and get EAD only in December 2016

I'm just a little confused about tax status should it be nonresident alien or resident alien
And what is the substantial presence test

You can read publication 519 at the irs website for more information, including the physical presence test. 

[smile:) 0]

11 hours ago, LionessDeon said:

My father is a CPA. He has done my taxes my whole life.  My husband entered on a K1 in July 2016. We married in September and filed AOS in November.  We have nothing but NOA1.  I'm going to his office either today or Monday to get our taxes done.  I can let you know his advice. 

Thank you so much

[smile:) 0]

On 1/28/2017 at 8:54 AM, LionessDeon said:

My father is a CPA. He has done my taxes my whole life.  My husband entered on a K1 in July 2016. We married in September and filed AOS in November.  We have nothing but NOA1.  I'm going to his office either today or Monday to get our taxes done.  I can let you know his advice. 

thank you LionessDeon

, I will wait to hear back from you regarding his advice. 

Edited February 9, 2017 by smile:)

[mlsjmu 2]

Hello, OP here again. Unfortunately, I'm still having the same issues as before. Turbo Tax doesn't seem to want to handle the problem, and much of what I read seems to indicate my now wife may have to pay taxes in both Canada and the US, even though she did not work a day in the US in 2016. Can anyone confirm if this is correct? Sorry, I'm very lost on this issue, and everywhere I seek help from seems to give contradictory answers.

[Suss&Camm 2,213]

1 hour ago, mlsjmu said:

Hello, OP here again. Unfortunately, I'm still having the same issues as before. Turbo Tax doesn't seem to want to handle the problem, and much of what I read seems to indicate my now wife may have to pay taxes in both Canada and the US, even though she did not work a day in the US in 2016. Can anyone confirm if this is correct? Sorry, I'm very lost on this issue, and everywhere I seek help from seems to give contradictory answers.

No she does not need to pay taxes in both countries. She needs only to report her Canadian income in the US, if you then choose to treat her as a tax resident for the entire year (by adding an election statement) she can use the form 2555 to exclude the foreign earned income from being taxable - still as said reported though..

 

I can't answer about using TurboTax for the calculations cause I did mine by hand, however, you can't use it to e-file since you'll be sending along an election statement. What you'll need is: (This is only how to do it if you don't also have other forms, schedules etc. it only concerns the additional parts needed for a spouse's first year, if you want to file jointly and have foreign income)

 

1. Fill out the 2555 (2555EZ - if eligible, conditions on top of form) Income must be reported in USD - I used this site http://www.x-rates.com - suggested on the IRS website. It'll let you calculate an average exchange rate during the time the money was earned. Excluded amounts can only be earned money, not unearned such as interest - pm if you run into issues filling it out

2. Fill out your joint 1040 - On the dotted line on line 21 wrote "2555EZ ($xx,xxx)" (or 2555 if that's your form) and in the box on the right, on the same line, subtract the same amount: 

-xx,xxx	xx

Continue filling in your 1040 using the 1040 instructions and tax table - for figuring the taxes you'll need to use the foreign earned income worksheet...

3. Write and send along an election statement, here's my example:

 

First year election statement

 

Date xx/xx/2017

 

 

Filing address

Department of the Treasury
Internal Revenue Service
Austin, TX  73301-0002 – Check where you’re supposed to send

 

 

To Whom It May Concern,

 

In the tax year 2016, I was a non-resident for tax purposes but was married to a U.S. citizen.
My spouse and I therefore choose for me to be treated as U.S. resident for the entire tax year of 2016.

 

 

Signature       _________________________________________
Printed name                        Spouse #1's name
SSN               XXX-XX-XXXX

Address         101 Immigration St

                      Taxville, AA 555 88
 

 

Signature        _________________________________________
Printed name                         Spouse #2's name
SSN               XXX-XX-XXXX

Address         101 Immigration St

                      Taxville, AA 555 88
 

 

4. Fill out the 8965 coverage exemption form (to avoid coverage fee for part of the year where spouse was not in the US - Fill out Part III and put exemption "C" and mark x's in the month's where it applies, including the arrival month. If the arrival month was October or later, then you can also put exemption "B" on a new line for subsequent months, claiming the short coverage gap.

 

Hope this helps, Good luck to you

Edited March 15, 2017 by Suss&Camm

[mlsjmu 2]

54 minutes ago, Suss&Camm said:

No she does not need to pay taxes in both countries. She needs only to report her Canadian income in the US, if you then choose to treat her as a tax resident for the entire year (by adding an election statement) she can use the form 2555 to exclude the foreign earned income from being taxable - still as said reported though..

 

 

Thank you, TurboTax allows me to input her foreign income if we list as filing jointly, and the program initially shows I should be able to exclude it, but it won't allow me to select anything to do so. I appreciate the info very much!