Filing amended return - need help!

[Christopher F 3]

5 minutes ago, Dee elle said:

Yes NRA is correct for 2016... but her SSN wasnt issued until she became an LPR.. I dont know about refiling MFJ as she wasnt a resident of the US for the 2016 ....  either  by substantial presence or green card test for 2016, IRS has no interest in her income for that year.. I may be wrong, but it seems to me that you couldnt file MFJ for that 2016. 

 

Im interested in your 2017 filing as .. did you choose for her to be a tax resident for the whole year in order to use MFJ?

Our accountant uses 1116 foreign tax credit.. but i know the other one is also there.. not sure the difference.. I pay him a lot to know things like that. 

Dont forger the FBAR requirements if she holds any foreign bank accounts where the sum total of them, at anytime during the year, exceeds USD 10000. If she did for 2017, she should have filed FBAR by April 2018

I found that , compared to IRS paperwork, USCIS was simple.. 

Correct- she wasn't a resident in 2016.  However, I had the option to file MFJ anyway for the 2016 tax year if she would have had an ITIN (I tried to get her one, but there were too many hoops to jump through).  I believe they let you treat your non-resident spouse as a resident for tax purposes, if you so choose.

When I filed this year, for 2017 tax year, I filed as a "normal" married couple would.  Punched in her SSN and she had 0 income, so it was easy.  She does have an account overseas, but with very little money in it (bad exchange rate).  Isn't the FBAR separate from a tax return?  You are just supposed "claim it" so the IRS is aware of it, right?

Oh boy-- this is getting more complicated that I thought!

[Christopher F 3]

14 minutes ago, RoseEinar said:

I just filed my 2017 taxes as Married Filing Jointly and filled out the 2555EZ and thought I was receiving a huge refund. Come to find out that if you fill out a 2555EZ your tax is calculated differently, using a worksheet. I ended up owing the IRS money, almost as much as had I filed Married Filing Separately. Just a heads up, you might want to run the numbers both ways and see what works better for you. I still came out about $240 ahead filing jointly but it wasn't nearly what I was expecting.

 

Thanks for the heads up...That's crazy--- I am expecting a big refund too.  Was your situation similar to mine?  Where is the worksheet and how can I calculate it?  If you would have owed the IRS money anyway, it sounds like you aren't claiming the correct amount on your W4 or equivalent document, or you are purposely cutting it very close ( which some people do).

[Christopher F 3]

16 minutes ago, Dee elle said:

Yes.. I think that's why he used the 1116

Ours at least came out even..

Another accountant, who totally messed up everything , used the 2555 and the results were not pretty.. we had to refile everything.. a substantial fee to another accountant who actually did know what he was doing.. our initial IRS bill was 4000$... which we paid to get it clear, then were refunded the full amount 6 months later when our 1040x finally went through. 

What a nightmare... now I'm getting nervous.  If I may ask, how much does a good tax accountant charge to do something like this?  I tried to find one in my area, but with no luck.  I wonder if it is even worth it for me to do it now-- no idea how much I could get back and I'm not sure how to calculate it!

[geowrian 22,338]

The amount of tax liability will change in MFS vs MFJ. Obviously this depends on your specific tax circumstances, but generally MFJ will result in a lower tax liability for most individuals. Personally, it resulted in a few thousand dollars extra refund in my case, in which I was able to use the FEIE to exclude all of my wife's foreign-earned income while also getting the higher deduction for being married.

[RoseEinar 27]

28 minutes ago, Christopher F said:

Thanks for the heads up...That's crazy--- I am expecting a big refund too.  Was your situation similar to mine?  Where is the worksheet and how can I calculate it?  If you would have owed the IRS money anyway, it sounds like you aren't claiming the correct amount on your W4 or equivalent document, or you are purposely cutting it very close ( which some people do).

Honestly, I'm not sure. I was looking at the IRS online forms (just googled for IRS form 2555), but I missed the part about the different tax worksheet...now I'm going to pay someone to figure this out for me   My W4 never seems to be right, but I don't really care as it all comes out the same in the end. If I can get more money back by refiling, however, I sure will.

[Christopher F 3]

14 minutes ago, geowrian said:

The amount of tax liability will change in MFS vs MFJ. Obviously this depends on your specific tax circumstances, but generally MFJ will result in a lower tax liability for most individuals. Personally, it resulted in a few thousand dollars extra refund in my case, in which I was able to use the FEIE to exclude all of my wife's foreign-earned income while also getting the higher deduction for being married.

That is exactly what I was anticipating... but dang the IRS is a tough nut to crack!  It's tough to be precise on a forum because you cant really post exact income figures etc.  In addition to what you said, we should have a lower tax liability because we want to file MFJ, and even though her foreign earned income is taxable, it is almost nothing (a few thousand $).  So that's what lead me to believe that I should be getting a decent refund.

With that being said, I'm nervous that I'd receive a tax bill from uncle Sam for 10k!  haha

Geowrian--- is that all you did?  File the 1040X and FEIE 2555-EZ?  Did you do the same as me and file MFS and then amend to MFJ?

[Christopher F 3]

56 minutes ago, Dee elle said:

Yes NRA is correct for 2016... but her SSN wasnt issued until she became an LPR.. I dont know about refiling MFJ as she wasnt a resident of the US for the 2016 ....  either  by substantial presence or green card test for 2016, IRS has no interest in her income for that year.. I may be wrong, but it seems to me that you couldnt file MFJ for that 2016. 

 

Im interested in your 2017 filing as .. did you choose for her to be a tax resident for the whole year in order to use MFJ?

Our accountant uses 1116 foreign tax credit.. but i know the other one is also there.. not sure the difference.. I pay him a lot to know things like that. 

Dont forger the FBAR requirements if she holds any foreign bank accounts where the sum total of them, at anytime during the year, exceeds USD 10000. If she did for 2017, she should have filed FBAR by April 2018

I found that , compared to IRS paperwork, USCIS was simple.. 

Let me know if I am not analyzing correctly.  Isn't the 1116 foreign tax credit for people who paid taxes to a foreign county?  Neither myself or wife did (she didn't make enough money for it to be a requirement).

[Dee elle 1,368]

29 minutes ago, Christopher F said:

What a nightmare... now I'm getting nervous.  If I may ask, how much does a good tax accountant charge to do something like this?  I tried to find one in my area, but with no luck.  I wonder if it is even worth it for me to do it now-- no idea how much I could get back and I'm not sure how to calculate it!

I used an accountant who is an Enrolled Agent. EA with the IRS. Specialised in taxes 

Italian _in_ NYC ... on this vj site is a specialist in this ... maybe send him a PM 

[geowrian 22,338]

8 minutes ago, Christopher F said:

That is exactly what I was anticipating... but dang the IRS is a tough nut to crack!  It's tough to be precise on a forum because you cant really post exact income figures etc.  In addition to what you said, we should have a lower tax liability because we want to file MFJ, and even though her foreign earned income is taxable, it is almost nothing (a few thousand $).  So that's what lead me to believe that I should be getting a decent refund.

With that being said, I'm nervous that I'd receive a tax bill from uncle Sam for 10k!  haha

Geowrian--- is that all you did?  File the 1040X and FEIE 2555-EZ?  Did you do the same as me and file MFS and then amend to MFJ?

Yes it is! haha Agreed...it's tough to speak in general terms and be useful when a lot of the times specifics matter.

Agreed...assuming you can write off her income entirely via the FEIE, the married status should be a decently substantial reduction in tax liability (again, barring some unusual cases).

 

I filed an 1040 (no amendment needed in our situation), 2555 (I declined to use the EZ form since the examples I found didn't use it....but it does look like it would be simpler), and 1099s for things like income from interest. We filed as MFJ the first time as my wife became my wife in the same tax year she entered the US. So the situation is a bit different, but I wouldn't expect that difference to be material to the tax liability issue. I did run the numbers as both MFS and MFJ, and MFJ was clearly optimal in our case.

 

As noted, run the numbers...if somehow MFJ results in more taxes, then don't file the amendment. No need for any tax bill if done correctly, let alone $10k!

[Christopher F 3]

8 minutes ago, geowrian said:

Yes it is! haha Agreed...it's tough to speak in general terms and be useful when a lot of the times specifics matter.

Agreed...assuming you can write off her income entirely via the FEIE, the married status should be a decently substantial reduction in tax liability (again, barring some unusual cases).

 

I filed an 1040 (no amendment needed in our situation), 2555 (I declined to use the EZ form since the examples I found didn't use it....but it does look like it would be simpler), and 1099s for things like income from interest. We filed as MFJ the first time as my wife became my wife in the same tax year she entered the US. So the situation is a bit different, but I wouldn't expect that difference to be material to the tax liability issue. I did run the numbers as both MFS and MFJ, and MFJ was clearly optimal in our case.

 

As noted, run the numbers...if somehow MFJ results in more taxes, then don't file the amendment. No need for any tax bill if done correctly, let alone $10k!

Seems quite similar--  How did you run the #'s exactly?  Any tips?    The only way I have ever done it is playing around with TurboTax.

[geowrian 22,338]

1 minute ago, Christopher F said:

Seems quite similar--  How did you run the #'s exactly?  Any tips?    The only way I have ever done it is playing around with TurboTax.

I used TurboTax as well (but had to print and file by mail due to her being a non-resident part of the year, requiring her to make a choice to be a RA vs NRA). I played with the numbers with and without the form to compare the differences.

 

Essentially, our total combined income was on line 6 of the 1040, then line 21 removed her income (sourced via the 2555). This made line 22 ("total income") the same as if I filed MFS.

 

The 2555 just listed her income and the % of days in her tax year within the US (since she moved mid-year), which resulted in a maximum FEIE of $102,100.00 * 0.504 = $51,458. This number was greater than her foreign income, so her actual exclusion was her entire income.

[usmsbow 802]

Just a FYI: the IRS has help centers throughout the country. You can always consult them. 

[Niaz 2]

3 hours ago, Dee elle said:

Yes NRA is correct for 2016... but her SSN wasnt issued until she became an LPR.. I dont know about refiling MFJ as she wasnt a resident of the US for the 2016 ....  either  by substantial presence or green card test for 2016, IRS has no interest in her income for that year.. I may be wrong, but it seems to me that you couldnt file MFJ for that 2016. 

 

Im interested in your 2017 filing as .. did you choose for her to be a tax resident for the whole year in order to use MFJ?

Our accountant uses 1116 foreign tax credit.. but i know the other one is also there.. not sure the difference.. I pay him a lot to know things like that. 

Dont forger the FBAR requirements if she holds any foreign bank accounts where the sum total of them, at anytime during the year, exceeds USD 10000. If she did for 2017, she should have filed FBAR by April 2018

I found that , compared to IRS paperwork, USCIS was simple.. 

Well 2016 also MFJ can be done since the marriage is already done that year. If the spouse in foreign country is not earning much and if that country is not a high tax country choosing foreign tax credit will not be a good idea . It is better to go for income exemption.

[Christopher F 3]

2 minutes ago, Niaz said:

Well 2016 also MFJ can be done since the marriage is already done that year. If the spouse in foreign country is not earning much and if that country is not a high tax country choosing foreign tax credit will not be a good idea . It is better to go for income exemption.

That's what I was thinking!

[Niaz 2]

And FBAR requirement will not come into picture here as she does not meet the SPT( substantial presence test ) . she was not in US for the required number of days