Tax dependent question

[shahnam0716 6]

My husband lives in his country and I live in the United States. We both work (he in his country and me in the United States). I have filed for CR-1 visa.

1) When I file my taxes this year, do I need to claim my husband as my dependent?

2) Do I need to file jointly? or can I file independently here and he can file his taxes in his country?

[payxibka 10,047]

For US tax purposes married is married.  Your husband is not your dependent, he is your husband.  Children are dependents

[Hypnos 6,578]

A spouse is never a dependent.

[Ryan H 3,819]

Moved from IR-1/CR-1 Process & Procedures to Tax & Finances During US Immigration forum.

[Italian_in_NYC 259]

1) Not a dependent, but you may be able to claim a personal exemption for him (assuming he has an ITIN)

2) You can either file MFS or MFJ (not single). If you file MFJ, you need to report all of his income from any source (then claim foreign tax credit, or FEIE, or both). He would be also required to fill all the information returns that apply (FBAR, 8938, 5471, 8865, 8858, 926, 8621, etc). And yes, if he lives in a country with income tax he will have to file a return there, according to the country's tax laws, as he has income sourced there (and he still is a tax resident there).

[shahnam0716 6]

21 hours ago, Italian_in_NYC said:

1) Not a dependent, but you may be able to claim a personal exemption for him (assuming he has an ITIN)

2) You can either file MFS or MFJ (not single). If you file MFJ, you need to report all of his income from any source (then claim foreign tax credit, or FEIE, or both). He would be also required to fill all the information returns that apply (FBAR, 8938, 5471, 8865, 8858, 926, 8621, etc). And yes, if he lives in a country with income tax he will have to file a return there, according to the country's tax laws, as he has income sourced there (and he still is a tax resident there).

Thank you for your response. What is the benefit/disadvantage of filing MFJ vs MFS? 

[payxibka 10,047]

MFJ - Joint income, Lower tax rates

MFS - Separate Income, Higher tax rates

[Italian_in_NYC 259]

On ‎12‎/‎13‎/‎2017 at 5:48 PM, payxibka said:

MFJ - Joint income, Lower tax rates

MFS - Separate Income, Higher tax rates

Not necessarily (although usually that's the case).

It depends on the income level (of both) and on the specific deductions.

If MFJ, the foreign spouse will be required to file all the information forms (some of them quite complex) and report all of his/her worldwide income, which might be taxed at a higher rate in the US (especially investment income).

[payxibka 10,047]

39 minutes ago, Italian_in_NYC said:

Not necessarily (although usually that's the case).

It depends on the income level (of both) and on the specific deductions.

If MFJ, the foreign spouse will be required to file all the information forms (some of them quite complex) and report all of his/her worldwide income, which might be taxed at a higher rate in the US (especially investment income).

I was only referring to the US side of the equation on differences between MFJ and MFS.  

[Italian_in_NYC 259]

Just now, payxibka said:

I was only referring to the US side of the equation on differences between MFJ and MFS.  

Me too, and not necessarily it is always better.

It really depends on their personal situation.

For instance: if foreign spouse has substantial income from a no-tax (or low-tax) country filing jointly might not be the best way.

Not to talk about the information returns that may be required. Preparing a form 5471 could be expensive in terms of prep fees.

[payxibka 10,047]

Just now, Italian_in_NYC said:

Me too, and not necessarily it is always better.

It really depends on their personal situation.

For instance: if foreign spouse has substantial income from a no-tax (or low-tax) country filing jointly might not be the best way.

Not to talk about the information returns that may be required. Preparing a form 5471 could be expensive in terms of prep fees.

I never said which was better as it is dependent on many things.  I did not conclude which method would result in an overall combined smaller tax bill.

 

in the US ,  MFJ tax rates are ALWAYS less than MFS  rates. 

[Italian_in_NYC 259]

22 minutes ago, payxibka said:

I never said which was better as it is dependent on many things.  I did not conclude which method would result in an overall combined smaller tax bill.

 

in the US ,  MFJ tax rates are ALWAYS less than MFS  rates. 

Incorrect.

The rates are the same (with the brackets amounts slashed in half).

It really depends on who makes more money.

If the OP's husband, for instance, works in Dubai and makes $300,000, then it would not make any sense to file jointly.

 

So the answer is: there is no answer. Any taxpayer in this situation should carefully take a look at both scenario and decide.

Edited December 15, 2017 by Italian_in_NYC

[payxibka 10,047]

And therefore the effective tax rates are higher

[Italian_in_NYC 259]

And once you elect to be treated as a US person for tax purposes, there is no US side. It's worldwide income from any source.

So before you file jointly, do a tax simulation.

And if the foreign spouse has substantial assets overseas, then I strongly recommend a pre-immigration consultation with an expert CPA or tax attorney.

[Italian_in_NYC 259]

1 minute ago, payxibka said:

And therefore the effective tax rates are higher

No, it really depends.

As I said, if the spouse makes a lot of money overseas and the FEIE and/or foreign tax credit don't cover, then it would be suicidal to file jointly.