Filing taxes during AOS

[doggieandsam 765]

hi guys, i came over on a k1 in sep 2017 and have filed for AOS in oct. however my local office (Washington DC) is probably one of the slowest ones in the country so it will probably be later this year (at best) if and when i get called for an interview. this means, when my husband and i do file our taxes this year, i would still be in a sort of "residency limbo". we are planning to not DIY our tax filing and will use an accountant so we get it right this first time filing jointly, but i was wondering if the experienced members here can advise me on some items below in the meantime.

 

my questions are as follows:

1) while i am in "residency limbo", is it correct to say that i can mark myself as "resident for tax purposes"? this is not misrepresentation right? since i am still technically not yet an LPR at this point.

2) i was working in the UAE from Jan-Sep 2017. my income there was not taxed because the UAE does not impose income taxes. i am a philippine citizen, and by philippine law, my UAE income is also not taxed in my home country. i understand i will have to declare my UAE income when i file taxes here, but does this mean that i will have pay taxes on it to the US government since it has not been taxed yet by either the UAE or the Philippines? If yes, ouch!

3) i have savings and stocks accounts in the philippines. any gains and interests on these accounts have already been taxed by the philippine government. will they need to be declared and taxed here too?

 

your answers will help me in making sure i ask all the right questions when time comes to meet with an accountant. thank you all.

Edited January 16, 2018 by iamdegie

[milimelo 4,477]

1) yes

2) and 3) ask your tax accountant versed in foreign taxation

 

There’s also the question of filing FBAR for bank accounts overseas - google it. 

[Russ&Caro 1,549]

I agree with the above commenter. You're going to want to ask a tax professional about your tax liability on foreign income. I suspect that you might have to pay US taxes on the foreign income. There is a Foreign Income Exclusion available for some filers but only if your foreign income was subjected to taxes in the country where you were claiming bona fide residence, which as you stated, you were not.

[doggieandsam 765]

thank you both.

[Italian_in_NYC 259]

Why would you file jointly and have your UAE-source income (with no foreign tax credit available, since there are no foreign taxes paid) taxed in the US?

File dual status and only declare your post-entry income.

If you do not have income after your entry (or the income is below the threshold), you do not even have to file.

If you file, be careful with the stocks and make sure you do not have any PFIC (and if you do, file accordingly). Don't forget the FBAR.

[doggieandsam 765]

21 hours ago, Italian_in_NYC said:

Why would you file jointly and have your UAE-source income (with no foreign tax credit available, since there are no foreign taxes paid) taxed in the US?

File dual status and only declare your post-entry income.

If you do not have income after your entry (or the income is below the threshold), you do not even have to file.

If you file, be careful with the stocks and make sure you do not have any PFIC (and if you do, file accordingly). Don't forget the FBAR.

i am not totally sure of this yet, but i read there is something called foreign income exclusion (form 2555 i think) up to $102,000 as long as you pass the tax home or the bona fide residence tests and as far as i can see i qualify. therefore filing jointly will get me and my husband a bigger tax discount than if he were to file on his own. we have not yet decided what route we will pick, just exploring our options for now. somebody else wrote about FBAR so i am aware of it now. thanks for your input.

[Italian_in_NYC 259]

17 hours ago, iamdegie said:

i am not totally sure of this yet, but i read there is something called foreign income exclusion (form 2555 i think) up to $102,000 as long as you pass the tax home or the bona fide residence tests and as far as i can see i qualify. therefore filing jointly will get me and my husband a bigger tax discount than if he were to file on his own. we have not yet decided what route we will pick, just exploring our options for now. somebody else wrote about FBAR so i am aware of it now. thanks for your input.

Assuming you pass all tests, and make the right election, the $102,000 will be prorated.

It really depends on what the pre-entry foreign-source income is. And the exclusion won't cover income from interest, dividends, cap gains, PFICs, etc.

Edited January 19, 2018 by Italian_in_NYC

[doggieandsam 765]

2 hours ago, Italian_in_NYC said:

Assuming you pass all tests, and make the right election, the $102,000 will be prorated.

It really depends on what the pre-entry foreign-source income is. And the exclusion won't cover income from interest, dividends, cap gains, PFICs, etc.

understood. i have a lot to think about and discuss with the accountant when the time comes!