Foreign earned income exclusion for foreign spouse under MFJ

[akazenishi 18]

Hi all,

 

If I am to file a MFJ return to include my foreign spouse's income in my tax return, is she eligible for claiming foreign earned income exclusion (FEIE)? The IRS website said FEIE is only available for those meeting the below criteria. Does she qualify the below when I file MFJ and treat her as if she is a resident alien?

 

• A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
• A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
• A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

 

Unsure if any of you has filed Form 2555 for FEIE for your spouse before. Grateful if you could share your experience, thanks!

[geowrian 22,337]

She's still abroad, right? I would assume she is a least meet condition 2 and possibly condition 3.

[akazenishi 18]

39 minutes ago, geowrian said:

She's still abroad, right? I would assume she is a least meet condition 2 and possibly condition 3.

Thanks for your reply.

 

Yes she is abroad. She meets condition 3 that she is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, but can I assume that she is a resident alien because she has elected to be treated as such by filing MFJ with me?

• A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months

[geowrian 22,337]

38 minutes ago, akazenishi said:

Thanks for your reply.

 

Yes she is abroad. She meets condition 3 that she is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, but can I assume that she is a resident alien because she has elected to be treated as such by filing MFJ with me?

• A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months

Yes, she can be treated as an RA (as the spouse of a USC: https://www.irs.gov/individuals/international-taxpayers/nonresident-alien-spouse) and meet either of those conditions still.

[akazenishi 18]

1 minute ago, geowrian said:

Yes, she can be treated as an RA (as the spouse of a USC: https://www.irs.gov/individuals/international-taxpayers/nonresident-alien-spouse) and meet either of those conditions still.

Noted with thanks! I think she can apply for FEIE then.

[angeljolie 188]

Which would be more advantageous -- MFJ or head of household? 

 

And if my USC husband chooses to file as head of household, would I need to have an ITIN?

[angeljolie 188]

Another question. In the Form W7 instructions, it states "A spouse can be claimed as a personal exemption only for tax years prior to 2018." We got married in Oct 2019. Should I still apply for an ITIN? 

          

[geowrian 22,337]

9 hours ago, angeljolie said:

Which would be more advantageous -- MFJ or head of household? 

 

And if my USC husband chooses to file as head of household, would I need to have an ITIN?

Only way to know for sure is to run the taxes both ways and see what comes out better.

MFJ usually tends to be better, assuming you can eliminate all taxes on the foreign income.

 

Note that for HOH, you must meet all the conditions noted here: https://turbotax.intuit.com/tax-tips/family/guide-to-filing-taxes-as-head-of-household/L4Nx6DYu9

The "considered unmarried" for HOH purposes should apply for you, but check that the other requirements are met too.

 

3 hours ago, angeljolie said:

Another question. In the Form W7 instructions, it states "A spouse can be claimed as a personal exemption only for tax years prior to 2018." We got married in Oct 2019. Should I still apply for an ITIN?          

Personal exemptions were eliminated, but the standard deductions were increased to compensate. The MFJ standard deductions is twice that of the MFS standard deduction.

[Wuozopo 4,293]

10 hours ago, angeljolie said:

Another question. In the Form W7 instructions, it states "A spouse can be claimed as a personal exemption only for tax years prior to 2018." We got married in Oct 2019. Should I still apply for an ITIN? 

          

That means if you were filing a 2016 or 2017 return, you would find a category called personal exemption for each family member plus a standard deduction . You’re not doing an older return so that is not addressed to you.

Yes apply for the ITIN if you need one. Filing with a wife still has benefits by doubling your standard deduction.

[angeljolie 188]

Thank you both so much @geowrian and @Wuozopo! Very helpful.

[angeljolie 188]

I'm back with questions.

 

Background

- My USC husband came to the Philippines in 2018 to work. We got married in Oct 2019.

- He now has 2 stepchildren (my kids)

- He is filing Form 2555 for himself

- I would be filing Form W7

 

Questions

1. Should I also file for Form 2555? 

2. Do we need other forms to claim our kids as dependents?

3. Where do we send the forms? (I called the local accepting agency today but my husband said he is not comfortable sending anyone his tax return other than the IRS)

4. Can we do a single filing with all forms (Forms 2555 for each of us, and form W7 for me, and 1040 for us [and probably another form for the kids?])?

 

Thanks! 

 

 

 

Edited July 27, 2020 by angeljolie

[Wuozopo 4,293]

10 hours ago, angeljolie said:

. Should I also file for Form 2555? 

Yes, If you had a job and want to exclude the income you earned on a joint tax return.
 

But with your husband working abroad and excluding his foreign earned income, he may not have any tax . Many exclude Their foreign income and are left with zero tax. So adding you on as a joint filer to get the extra standard deduction is no benefit because he can’t do better than zero tax which he could get as Married filing separately. Then you need no ITIN if you aren’t on the return as a joint filer. He has to give your name and in the box for SSN, her writes in NRA (nonresident alien). 

Did he earn more than $105,900 in 2019? If not, then all of his salary is excluded from US taxation. 

 

[Wuozopo 4,293]

10 hours ago, angeljolie said:

Do we need other forms to claim our kids as dependents?

10 hours ago, angeljolie said:

Can we do a single filing with all forms (Forms 2555 for each of us, and form W7 for me, and 1040 for us [and probably another form for the kids?])?

A tax return is as many forms as it takes to report all your info. It’s not my form, your form, kid form. They all inter-mesh. Like form 2555 calculations are carried to a Schedule 1 form, which is carried to the 1040.  And it depends on your source of income and all sorts of things as to how many forms it takes. Tax filing is ver personal to the person(s) filing.
 

So yes a single filing can cover everything...that’s how it works. 
 

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf Here’s the 108 pages of instruction to get started. That will have what you need to know and send you to any needed other forms and more instruction. For example all you need to know about children—Dependents, Qualifying Child for Child Tax Credit, and Credit for Other Dependents starts on page 16.

 

Edited July 27, 2020 by Wuozopo