Filing taxes

[midwinterrose 275]

Just gonna note that even if you are treated as a full-year resident and you elect to use the foreign income exemption, if that foreign income came from self-employment you will still have to pay Self-Employment tax on that income, even if it is exempted.  Seems like an easy tax to overlook, so I just thought I'd point it out.

 

1. Taxes for the self-employed abroad

Generally, self-employed individuals pay income tax and self-employment tax (SE tax). If they qualify for the FEIE, they can exclude foreign earned income up to $104,100 (2018) from income tax. (Although the FEIE will be pro-rated depending on the business expenses.) But they still have to pay self-employment tax. Being self-employed, you must pay SE tax on your entire net profit, even the amount you can exclude from income tax.

[geowrian 22,337]

21 hours ago, Loren Y said:

Usually the case, but depending on how long you were here for the year 2019 will determine if you are a resident for tax purposes. Basic guideline below, but still file no matter what, you want transcripts in both your names for the AOS interview.

 

Typical factors states use to determine residency. Often, a major determinant of an individual's status as a resident for income tax purposes is whether he or she is domiciled or maintains an abode in the state and are “present" in the state for 183 days or more (one-half of the tax year).

 

See this link about the Green card/ Substantial presence test.   https://www.irs.gov/individuals/international-taxpayers/introduction-to-residency-under-us-tax-law

 

This will let you know if your worldwide income would come into play while filing.

 

For example: my now wife arrived in late November 2018, and we didn't marry until 2019. she had income for the 2018 year from her previous country of residence, but since she wasn't here anywhere near the 183 days to be considered a resident, she didn't need to be included on my taxes, or file taxes on her foreign income for the 2018 tax year.

 

20 hours ago, Loren Y said:

Only if OP passes the residency test. See my post above. while most foreign income doesn't come into play unless it was over a certain amount ( Above 100,000 dollars or around that), if you are not considered a resident, foreign income need not be filed on.

I’ll just point out a few items...

 

1) In order to file MFJ, you must both be considered a US resident for the entire tax year. See the 1040 instructions.

 

2) The NRA spouse of a US citizen or LPR can elect to be treated as a resident alien for the entire tax year.

 

Putting the basic 2 items together means the OP can either file MFJ and report worldwide income, or they can file MFS (and if not meeting the substantial presence test, may not have to file at all). 

Edited February 17, 2020 by geowrian

[Hoviland 1]

22 hours ago, Loren Y said:

You have to file based on your marital status on December 31st, 2019 as others have mentioned. If you were married before the end of the year, and have a Social security number already it is a file as normal situation. You have no income so far, and that is a good thing as if you file MFJ you will have a 24,000 dollar standard deduction that should net you a nice tax refund assuming your spouse has a normal job with standard withholding s ( Not 1099). But even then it will be beneficial. Usually MFJ will serve most people the best, but as he was supporting you since you couldn't work without EAD approval HOH ( Head of household) could be more beneficial( depending on how long you were here last year), but usually not, you can try both ways to see what gives you the best tax liability, but more than likely MFJ is your best option. But just file using any software with you listed on it with your social security number, and when it asks for your income, or if you have any W-2's you have none, so nothing to enter, so your part of the return is really easy as you are just " Along for the ride" per say. Make sure if you went to school, maybe took any type of educational training to pass the time, they are tax deductible, and you can write off any tuition and books, etc. They have some decent deductions for pending immigrants if you look.

Thnk you!

[Hoviland 1]

4 hours ago, radharose said:

Just gonna note that even if you are treated as a full-year resident and you elect to use the foreign income exemption, if that foreign income came from self-employment you will still have to pay Self-Employment tax on that income, even if it is exempted.  Seems like an easy tax to overlook, so I just thought I'd point it out.

 

1. Taxes for the self-employed abroad

Generally, self-employed individuals pay income tax and self-employment tax (SE tax). If they qualify for the FEIE, they can exclude foreign earned income up to $104,100 (2018) from income tax. (Although the FEIE will be pro-rated depending on the business expenses.) But they still have to pay self-employment tax. Being self-employed, you must pay SE tax on your entire net profit, even the amount you can exclude from income tax.

i have been here for less than half a year and have no form of income since i left my job in my original country to live here. I hope it isn't all as confusing as it seems lol!

[Ayrton 965]

42 minutes ago, Hoviland said:

i have been here for less than half a year and have no form of income since i left my job in my original country to live here. I hope it isn't all as confusing as it seems lol!

If you file jointly with your spouse. You must report your income from abroad. It doesn't matter how many months you were in the US in 2019. To file jointly, you will be treated as a resident alien for the entire year.

[cfp 0]

Rather than start a new topic I thought I’d add to this as my situation seems to fit in.

 

I moved to USA on 20th November 2020. I received my green card and SSN shortly after arriving.

I worked in Japan the whole year up until the end of October 2020 and my earnings stopped then.

The wife and I are filing jointly but here’s the confusion: she is convinced that I will have to pay tax on what I earned before coming here as I am treated as someone who has spent the tax year here. I see zero logic in this. Why would I have to pay tax to the US for money earned in Japan prior to becoming a resident in the USA.

 

Is anyone able to explain or clarify? My earnings were in the mid 5 figures (USD), nothing extravagant if that helps.

 

Thanks.

[Ayrton 965]

12 hours ago, cfp said:

Rather than start a new topic I thought I’d add to this as my situation seems to fit in.

 

I moved to USA on 20th November 2020. I received my green card and SSN shortly after arriving.

I worked in Japan the whole year up until the end of October 2020 and my earnings stopped then.

The wife and I are filing jointly but here’s the confusion: she is convinced that I will have to pay tax on what I earned before coming here as I am treated as someone who has spent the tax year here. I see zero logic in this. Why would I have to pay tax to the US for money earned in Japan prior to becoming a resident in the USA.

 

Is anyone able to explain or clarify? My earnings were in the mid 5 figures (USD), nothing extravagant if that helps.

 

Thanks.

when you file jointly, you're considering yourself a resident for tax purposes for the whole year, so you must report your worldwide income, but you can use the form 2555 to exempt up to 105k of the foreign income.

 

If you don't file jointly, then I believe you have the option to file as dual status.