September 2018 AOS Filers

[geowrian 22,337]

Sorry if I missed some details....following the thread for the tax question along with all the other updates is not a fun experience.

 

If filing MFJ, you must be considered a resident alien (RA) for the entire tax year. This is noted in the instructions for filing statuses.

The spouse of a USC or LPR can elect to be treated as an RA for the entire tax year. A letter confirming this election is required. The letter makes filing via eFile impossible right now, but you can still do the taxes online, print them, attach the letter + W-2s (if any), and mail it in. It's a PITA, but it is what it is.

 

A consequence of being an RA for the entire tax year is that you must report all worldwide income just like a USC or LPR must do. This income can then be excluded via the FEIE (Form 2555/2555EZ) for up to roughly $100k.

 

If you became a resident (not just LPR) at any time in the year then you are a dual-status alien. You can either file based solely on when you became an RA onwards (no need to report worldwide income), or do the election to be an RA for the entire year still. The amount of FEIE eligible for exclusion would be proportional to the time before become a resident (i.e. if you entered on July 1st, you would be roughly able up to claim half the full exclusion). This is calculated on the 2555 based on the number of days abroad / 365.

 

Option 2 is to file MFS, and no worldwide income is necessary to be reported by the NRA (just US income, if any).

 

But keep in mind MFJ has double the standard deduction ($12.2k) than MFS. Unless the NRA's income is more than the FEIE (and/or FTC if applicable) + $12.2k, that's leaving money on the table. Filing MFJ can generally reduce your tax liability by thousands of dollars.

[Naes 12,205]

2 minutes ago, geowrian said:

Sorry if I missed some details....following the thread for the tax question along with all the other updates is not a fun experience.

 

If filing MFJ, you must be considered a resident alien (RA) for the entire tax year. This is noted in the instructions for filing statuses.

The spouse of a USC or LPR can elect to be treated as an RA for the entire tax year. A letter confirming this election is required. The letter makes filing via eFile impossible right now, but you can still do the taxes online, print them, attach the letter + W-2s (if any), and mail it in. It's a PITA, but it is what it is.

 

A consequence of being an RA for the entire tax year is that you must report all worldwide income just like a USC or LPR must do. This income can then be excluded via the FEIE (Form 2555/2555EZ) for up to roughly $100k.

 

If you became a resident (not just LPR) at any time in the year then you are a dual-status alien. You can either file based solely on when you became an RA onwards (no need to report worldwide income), or do the election to be an RA for the entire year still. The amount of FEIE eligible for exclusion would be proportional to the time before become a resident (i.e. if you entered on July 1st, you would be roughly able up to claim half the full exclusion). This is calculated on the 2555 based on the number of days abroad / 365.

 

Option 2 is to file MFS, and no worldwide income is necessary to be reported by the NRA (just US income, if any).

 

But keep in mind MFJ has double the standard deduction ($12.2k) than MFS. Unless the NRA's income is more than the FEIE (and/or FTC if applicable) + $12.2k, that's leaving money on the table. Filing MFJ can generally reduce your tax liability by thousands of dollars.

Thank you as always. This made me feel so much better as it seems that I understood it overall... And made me realize I'll be paying H&R for nothing... The only part that confused me was how to attach the letter. Do you know if there is a sample letter we can find or what kind of a letter it should be for the statement to be treated as RA for the entire tax year? And if we should send anything to prove the foreign income as there will be no W2s?

[Nika211 17]

1 hour ago, C90 said:

If you file jointly you have to request that the IRS treats your spouse as a RA. At that moment you have to report ALL the income over 2018, even if (s)he made it in his/her home country. Apparently you can exclude it later on, but it's a little confusing so we'll use an accountant. Don't use an accountant that doesn't know the rules of immigration and taxes. Tbh I don't think h&r block, turbotax etc are very educated on this.

Ok. So what documentation is needed to report the foreign income. My spouse never had any bank accounts in the foreign country, he received cashed and paystubs. 

[geowrian 22,337]

3 minutes ago, Naes said:

Thank you as always. This made me feel so much better as it seems that I understood it overall... And made me realize I'll be paying H&R for nothing... The only part that confused me was how to attach the letter. Do you know if there is a sample letter we can find or what kind of a letter it should be for the statement to be treated as RA for the entire tax year? And if we should send anything to prove the foreign income as there will be no W2s?

Be sure to hold on to records of the foreign income in case you are audited (just as you should do for record of any income...not just foreign! ). But nothing needs to be sent as evidence of the foreign income with the 1040. W-2s must be sent for any US income, though.

 

Here's one I used for 2017 taxes, with personal information masked out.

https://drive.google.com/open?id=1oFYM0MbbUxFPLTxOzn6qsk_eZMLhF42O9zRUs-KtVzU

[Naes 12,205]

Just now, geowrian said:

Be sure to hold on to records of the foreign income in case you are audited (just as you should do for record of any income...not just foreign! ). But nothing needs to be sent as evidence of the foreign income with the 1040. W-2s must be sent for any US income, though.

 

Here's one I used for 2017 taxes, with personal information masked out.

https://drive.google.com/open?id=1oFYM0MbbUxFPLTxOzn6qsk_eZMLhF42O9zRUs-KtVzU

Awesome to know! I have my tax transcripts from Japan so I’ll save them for whenever they ask me.

[Jessica829 211]

46 minutes ago, dynesyzygy24 said:

Exactly 160days still nothing ☹️

 

45 minutes ago, Naes said:

sigh... yep... I finally started putting my resume together though... with the anticipation 

Yea, whoever's got the 9/4 box needs to get a move on it! 

[DeepakChani 738]

I feel like I got a Ph.D in Tax Policy by reading all these recent posts :) 

Edited February 11, 2019 by DeepakChani

[Johannab143 14]

Hi everyone,

 

Anyone who has received their Ead card, how long after the I-797 did your card arrive please?

thank you in advance ☺️

[akoko-01 12]

6 hours ago, geowrian said:

Sorry if I missed some details....following the thread for the tax question along with all the other updates is not a fun experience.

 

If filing MFJ, you must be considered a resident alien (RA) for the entire tax year. This is noted in the instructions for filing statuses.

The spouse of a USC or LPR can elect to be treated as an RA for the entire tax year. A letter confirming this election is required. The letter makes filing via eFile impossible right now, but you can still do the taxes online, print them, attach the letter + W-2s (if any), and mail it in. It's a PITA, but it is what it is.

 

A consequence of being an RA for the entire tax year is that you must report all worldwide income just like a USC or LPR must do. This income can then be excluded via the FEIE (Form 2555/2555EZ) for up to roughly $100k.

 

If you became a resident (not just LPR) at any time in the year then you are a dual-status alien. You can either file based solely on when you became an RA onwards (no need to report worldwide income), or do the election to be an RA for the entire year still. The amount of FEIE eligible for exclusion would be proportional to the time before become a resident (i.e. if you entered on July 1st, you would be roughly able up to claim half the full exclusion). This is calculated on the 2555 based on the number of days abroad / 365.

 

Option 2 is to file MFS, and no worldwide income is necessary to be reported by the NRA (just US income, if any).

 

But keep in mind MFJ has double the standard deduction ($12.2k) than MFS. Unless the NRA's income is more than the FEIE (and/or FTC if applicable) + $12.2k, that's leaving money on the table. Filing MFJ can generally reduce your tax liability by thousands of dollars.

thank you so much. plz let us know if we are missing something:

 

we have 2 options:

1- we file MFS and in this case the USC only files because the RA did not have income. so it is the regular taxes but instead of single, we put MFJ.

2- we file MFJ. we have to do it by mail. in the package, we include:

   - letter to consider my spouse as RA

   - tax form but including worldwide income.

   - form 2555 to exclude the worldwide income.

   - W2

 

do you have any idea about the foreign bank accounts? we searched for it and they say that you don't file it with IRS but with FBAR separately.

[geowrian 22,337]

7 minutes ago, akoko-01 said:

thank you so much. plz let us know if we are missing something:

 

we have 2 options:

1- we file MFS and in this case the USC only files because the RA did not have income. so it is the regular taxes but instead of single, we put MFJ.

2- we file MFJ. we have to do it by mail. in the package, we include:

   - letter to consider my spouse as RA

   - tax form but including worldwide income.

   - form 2555 to exclude the worldwide income.

   - W2

 

do you have any idea about the foreign bank accounts? we searched for it and they say that you don't file it with IRS but with FBAR separately.

Bingo (except you said RA instead of NRA above [in green]).

 

Correct, if the foreign accounts meet or exceed $10,000 then an FBAR must be filed. This is separate from taxes.

[K1visaHopeful 2,814]

6 hours ago, geowrian said:

Sorry if I missed some details....following the thread for the tax question along with all the other updates is not a fun experience.

 

If filing MFJ, you must be considered a resident alien (RA) for the entire tax year. This is noted in the instructions for filing statuses.

The spouse of a USC or LPR can elect to be treated as an RA for the entire tax year. A letter confirming this election is required. The letter makes filing via eFile impossible right now, but you can still do the taxes online, print them, attach the letter + W-2s (if any), and mail it in. It's a PITA, but it is what it is.

 

A consequence of being an RA for the entire tax year is that you must report all worldwide income just like a USC or LPR must do. This income can then be excluded via the FEIE (Form 2555/2555EZ) for up to roughly $100k.

 

If you became a resident (not just LPR) at any time in the year then you are a dual-status alien. You can either file based solely on when you became an RA onwards (no need to report worldwide income), or do the election to be an RA for the entire year still. The amount of FEIE eligible for exclusion would be proportional to the time before become a resident (i.e. if you entered on July 1st, you would be roughly able up to claim half the full exclusion). This is calculated on the 2555 based on the number of days abroad / 365.

 

Option 2 is to file MFS, and no worldwide income is necessary to be reported by the NRA (just US income, if any).

 

But keep in mind MFJ has double the standard deduction ($12.2k) than MFS. Unless the NRA's income is more than the FEIE (and/or FTC if applicable) + $12.2k, that's leaving money on the table. Filing MFJ can generally reduce your tax liability by thousands of dollars.

I forwarded this to my husband's accountant. I hope you're not offended and moreso, I hope my accountant is not offended. 🤣

Edited February 12, 2019 by K1visaHopeful

[akoko-01 12]

2 minutes ago, geowrian said:

Bingo (except you said RA instead of NRA above [in green]).

 

Correct, if the foreign accounts meet or exceed $10,000 then an FBAR must be filed. This is separate from taxes.

oh sorry! yep NRA 🙂

thank you for the tax filing explanation. 

[geowrian 22,337]

6 minutes ago, K1visaHopeful said:

I forwarded this to my husband's accountant. I hope you're not offended and moreso, I hope my accountant is not offended. 🤣

Let me know what he/she says! haha

To be fair, only a sliver of people go through this, and even then it's usualy only 1 year in your life. It's a pretty edge case compared to the general population unless you specialize.

[K1visaHopeful 2,814]

14 minutes ago, geowrian said:

Bingo (except you said RA instead of NRA above [in green]).

 

Correct, if the foreign accounts meet or exceed $10,000 then an FBAR must be filed. This is separate from taxes.

You have me reading about FBAR and FATCA now. I read something about FBAR being filed separate from the tax return but I also read something about a Schedule B to be filed with the ITR (a bit confusing).

Do you have any info on that as I do have an overseas bank account still?

[geowrian 22,337]

6 minutes ago, K1visaHopeful said:

You have me reading about FBAR and FATCA now. I read something about FBAR being filed separate from the tax return but I also read something about a Schedule B to be filed with the ITR (a bit confusing).

Do you have any info on that as I do have an overseas bank account still?

I do not, sorry. I've never had to actually file an FBAR personally. Everything (bank account wise) is in the US for us.

Edited February 12, 2019 by geowrian