Filing taxes after K1, during AOS

[EmptySeats 49]

Hey all.

 

My wife came here with a K1 visa in April and we married in July. She filed AOS in late September and we are waiting EAD and AP (still haven't heard about biometrics).

 

Anyway, I filed our taxes today with TurboTax. Married filing jointly. My wife has a SS number from back when she lived here in 2007-08, when she worked during her study abroad in college. I used her SS# and filed just as if she was a US citizen because I didn't know any better. I didn't see any questions about citizenship, residency, or foreign income - though it's possible I overlooked something about foreign income. It seems like TurboTax doesn't enter that line of questioning.

 

I e-filed my return just to come on VJ and learn that you both should sign a statement saying you wish for your spouse to be treated as a resident for tax purposes - and that you report foreign income. I have no problem doing either of those things - but I've already e-filed. Turns out the IRS isn't accepting returns until February 12 so it's waiting in the queue until then.

 

If my return is accepted by the IRS, what is my next step? I suppose I can amend the return to include the foreign income (it's not much) but it's hard to e-file an explanation letter. I have seen others on VJ say they e-filed no problem in this situation, so I wonder what I should do if it's accepted.

 

If it's rejected, I know to file by mail with the letter - pretty straightforward.

 

I just want to be ready

Edited February 6, 2021 by EmptySeats

[EmptySeats 49]

Actually, I just checked the IRS and she passes the substantial presence test, having been in the US for over 250 days last year. Here's the substantial presence test according to the IRS: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

 

And this link explains how you either 1) need a green card or to 2) pass the aforementioned substantial presence test to be considered a resident alien: https://www.irs.gov/individuals/international-taxpayers/determining-alien-tax-status

 

So, to my understanding, she counts as a resident alien and no letter explaining that she is a non-resident alien wishing to be treated as a resident alien would be needed.

 

Seems like it's just a matter of amending the income to include her foreign income before moving here early in 2020.

 

But then this IRS page (https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-aliens) seems to suggest that you don't even need to report foreign income, since you only are taxable on foreign income earned during the part of the year where you are a resident alien - not that part of the year where you are a non-resident alien. Meaning foreign income before moving to the US, wouldn't even be taxable. It seems pretty clear.

 

Anyway, I'd love to hear your thoughts.

Edited February 6, 2021 by EmptySeats

[Ayrton 965]

9 hours ago, EmptySeats said:

Actually, I just checked the IRS and she passes the substantial presence test, having been in the US for over 250 days last year. Here's the substantial presence test according to the IRS: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

 

And this link explains how you either 1) need a green card or to 2) pass the aforementioned substantial presence test to be considered a resident alien: https://www.irs.gov/individuals/international-taxpayers/determining-alien-tax-status

 

So, to my understanding, she counts as a resident alien and no letter explaining that she is a non-resident alien wishing to be treated as a resident alien would be needed.

 

Seems like it's just a matter of amending the income to include her foreign income before moving here early in 2020.

 

But then this IRS page (https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-aliens) seems to suggest that you don't even need to report foreign income, since you only are taxable on foreign income earned during the part of the year where you are a resident alien - not that part of the year where you are a non-resident alien. Meaning foreign income before moving to the US, wouldn't even be taxable. It seems pretty clear.

 

Anyway, I'd love to hear your thoughts.

These are two different ways of treating her as a resident.

 

In order to file jointly, she must be considered a resident for tax purposes for the entire year. If she passes the presence test, a letter is not needed, but her foreign income must be reported and can be exempted with for 2555.

[Wuozopo 4,291]

11 hours ago, EmptySeats said:

I used her SS# and filed just as if she was a US citizen because I didn't know any better. I didn't see any questions about citizenship

Many have a SSN without having actual citizenship. Using her SSN is fine. 
 

11 hours ago, EmptySeats said:

though it's possible I overlooked something about foreign income. It seems like TurboTax doesn't enter that line of questioning.

TurboTax deals with foreign income in the “Less Common Income” section which is at the end of all other income questioning. You probably skipped it.

 

11 hours ago, EmptySeats said:

If my return is accepted by the IRS, what is my next step? I suppose I can amend the return to include the foreign income (it's not much) but it's hard to e-file an explanation letter. I have seen others on VJ say they e-filed no problem in this situation, so I wonder what I should do if it's accepted.

 

If it's rejected, I know to file by mail with the letter - pretty straightforward.

Your return will be accepted. TurboTax makes sure that all the required things are in place. Turbo and the IRS have no idea if you failed to report income so that couldn’t cause rejection.

 

Others on VJ may have been accepted for e-file without a letter or foreign income because the IRS has no clue when the spouse arrived of if the spouse had foreign income unless you tell them. Much of tax filing is on the “honor system”. If you do nothing, the IRS will never question you. A computer processes your return and a human never views it. They don’t have the manpower to view or audit small time tax payers.  The only thing that would alert the IRS computers is if you failed to report something they got a report on. Employers, banks, etc report to the IRS how much you got in wages (W2) or investment income (1099-INT) . It is easy for the computer to match up what you got paid and and if you put the same on your tax return. They will send a letter saying that you left something out and and how much you owe them. 
BUT foreign employers aren’t reporting to the IRS so yes some people never get questioned even if they did it all  wrong according  the rules. 
 

If you want to be honest and play by the rules, then file an amended return. Your total tax may be slightly higher by a few dollars. You should wait until your first return is processed and your refund is received before amending. Then you amend and pay back a small amount of that refund. I know from experience that’s how it works.  A few years ago we had to amend. My wife had a couple of TurboTax files going like “what if” scenarios. As soon as she hit submit, she realized she had submitted the wrong file name. 🤦‍♂️SMH.  Calling the IRS, they said wait until what you filed processes and the refund is in hand before amending. 
 

And you have already figured out you don’t need a letter choosing for her to be a resident alien. Anybody arriving before July meets physical presence.

 

11 hours ago, EmptySeats said:

But then this IRS page (https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-aliens) seems to suggest that you don't even need to report foreign income, since you only are taxable on foreign income earned during the part of the year where you are a resident alien - not that part of the year where you are a non-resident alien. Meaning foreign income before moving to the US, wouldn't even be taxable. It seems pretty clear.

That would be if filing as a dual status alien. She would not be able to file a joint return with you. It would be a return with part of the year as a non-resident. Non residents have to file separately. Choosing to count her as a resident all year (based on physical presence) and filing jointly is your best choice. Your redo will report her income and then exclude it using Form 2555. If you did free online Turbo, they may charge for a more complicated return. Go buy or download the desktop software for federal and state available for $39.99 if your charge online will be more. I think desktop is way more flexible to use. 

Edited February 6, 2021 by Wuozopo