Thought needed 2555, but software says no

[JoJoJoJo 170]

Hello, in September 2017 I moved to the US on K-1 together with my US fiance, got married, and have filed AOS. Before I came here, I was employed.

 

Now when filing 2017 tax return, we are choosing "married and filing jointly" (required for getting ACA credit).

 

Because MFJ, I was considered as resident alien, in which case I thought I had to declare world wide income.

 

But according to hrblock, I am not bona fide (in which case I have to intend to live in my home country for the whole year) or physically (I have to be outside the US for more than 330 days (I am in the US for about 100 days in 2107)) in my home country. As a result, I was asked to remove Form 4222.

 

Then how am I supposed to declare my income while I was in my home country? Any ideas why? Thanks!

 

Edited February 2, 2018 by JoJoJoJo

[EFGH2017 75]

Did you work for the U.S. government while in your home country? 

[JoJoJoJo 170]

14 minutes ago, EFGH2017 said:

Did you work for the U.S. government while in your home country? 

No, it was a small local company that is not US or government related.

[MariaR323 199]

Are you using their online DIY software? I would recommend going to an independent tax professional.

 

You can definitely file using MFJ, even if you don't pass the substantial presence test here in the U.S. This is where an election statement comes in to play whereby you are electing to be treated as a resident for tax purposes to file MFJ with your spouse. By doing so, yes, you report worldwide income. Form 2555 is used for that and if it's little to none some people even bypass the whole foreign income exclusion just to save the hassle of filling out the additional forms for it. However, if it's substantial enough to make a difference, by all means do the exclusion (or foreign tax credit).

 

If you have to attach the statement, most DIY software won't allow you to attach the statement for e-Filing. You'll have to finish your return, print it and mail it in. If not, go with an independent tax preparer who uses professional software and they can do the e-File with the attachment.

 

Maria

[Italian_in_NYC 259]

Most of the time, it's more convenient to just claim foreign tax credit.

[JoJoJoJo 170]

8 hours ago, MariaR323 said:

Are you using their online DIY software? I would recommend going to an independent tax professional.

 

You can definitely file using MFJ, even if you don't pass the substantial presence test here in the U.S. This is where an election statement comes in to play whereby you are electing to be treated as a resident for tax purposes to file MFJ with your spouse. By doing so, yes, you report worldwide income. Form 2555 is used for that and if it's little to none some people even bypass the whole foreign income exclusion just to save the hassle of filling out the additional forms for it. However, if it's substantial enough to make a difference, by all means do the exclusion (or foreign tax credit).

 

If you have to attach the statement, most DIY software won't allow you to attach the statement for e-Filing. You'll have to finish your return, print it and mail it in. If not, go with an independent tax preparer who uses professional software and they can do the e-File with the attachment.

 

Maria

Thank you @MariaR323 . I am using the free version of H&R. In our case, it was not small enough to ignore. The two below are options to declare foreign earned income. It is quite convenient so far, until I was confused here...

 

 

2 minutes ago, Italian_in_NYC said:

Most of the time, it's more convenient to just claim foreign tax credit.

 

I am just confused about the requirement of 2555 as it requires the taxpayer's home be outside the US. (I am still a tax resident as of now according to my home country.)

 

Quote

Only individuals are eligible for the exclusion. To qualify for the exclusion, the taxpayer's tax home must be outside the U.S. In addition, the taxpayer must meet either of two tests:

• Bona fide resident test: the taxpayer was a bona fide resident of a foreign country for a period that includes a full U.S. tax year, or
• Physical presence test: the taxpayer must be physically present in a foreign country (or countries) for at least 330 full days in any 12-month period that begins or ends in the tax year in question.

 

I cannot pass physical presence test. As for bona fide resident test: I intended to stay at home country before I got K-1 visa in September as I was not 100% sure whether I would come to the US. No plans made or anything. After I got my visa, I intend to come to the US. So I suppose I cannot claim to be a bona fide resident at home country for the FULL YEAR.

 

 

[JoJoJoJo 170]

Guys, after reading 2555-EZ, I noted

 

Quote

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

{ 2017 or

any other period of 12 months in a row starting or ending in 2017? }

.. . . . . . . . . . . . . Yes No • If you answered “Yes,” you meet this test.

 

So I met physical presence test!

 

I thought 12 months had to be within 2017! But it can also be 

"any other period of 12 months in a row starting or ending in 2017".

 

[Italian_in_NYC 259]

What country are you from?

I'm telling you, you can save yourself a headache by just claiming FTC (unless you are from a no-tax or low-tax country).

[Wuozopo 4,293]

On 2/2/2018 at 10:39 AM, JoJoJoJo said:

Thank you @MariaR323 . I am using the free version of H&R. In our case, it was not small enough to ignore. The two below are options to declare foreign earned income. It is quite convenient so far, until I was confused here...

 

 

 

I am just confused about the requirement of 2555 as it requires the taxpayer's home be outside the US. (I am still a tax resident as of now according to my home country.)

 

 

I cannot pass physical presence test. As for bona fide resident test: I intended to stay at home country before I got K-1 visa in September as I was not 100% sure whether I would come to the US. No plans made or anything. After I got my visa, I intend to come to the US. So I suppose I cannot claim to be a bona fide resident at home country for the FULL YEAR.

 

 

 

You qualify for both of those tests. You were a bonafide resident of your country (foreign country) since your birth. You were certainly allowed to work there and it was well over a year.  The way they write this up is geared toward Americans who may be in a foreign country. They can't simply be visiting and trying to get some of their income exempted. They need credentials to show they were residents of that foreign country with authorized work privileges.  You are bonafide because you were born there and have a passport too showing you are a citizen of that foreign country. It doesn't get more bonafide than that. 

 

As as long as you were residing in your home country for the 12 months prior to entering the US on your visa, then you have physical presence in your home country as well. You were most like residing/present for decades. Again, this is mostly trying to eliminate Americans who may or may not have had the credentials to claim they lived legally or long enough in a foreign country. You easily did both, but it is confusing because the writing is aimed more at Americans.

 

 

[JoJoJoJo 170]

2 hours ago, Wuozopo said:

 

You qualify for both of those tests. You were a bonafide resident of your country (foreign country) since your birth. You were certainly allowed to work there and it was well over a year.  The way they write this up is geared toward Americans who may be in a foreign country. They can't simply be visiting and trying to get some of their income exempted. They need credentials to show they were residents of that foreign country with authorized work privileges.  You are bonafide because you were born there and have a passport too showing you are a citizen of that foreign country. It doesn't get more bonafide than that. 

 

As as long as you were residing in your home country for the 12 months prior to entering the US on your visa, then you have physical presence in your home country as well. You were most like residing/present for decades. Again, this is mostly trying to eliminate Americans who may or may not have had the credentials to claim they lived legally or long enough in a foreign country. You easily did both, but it is confusing because the writing is aimed more at Americans.

 

 

Thank you very much  @WuozopoThat makes l lot of sense!!