Does substantial presence apply?

[Wuozopo 4,293]

1 hour ago, Seemoreglass83 said:

Ah ok, it doesnt matter that we already applied with her ead application? They'll just ignore the application when it arrives from uscis? Just imagining a scenario in which we get a ssn now and the application arrives later asking for a ssn.

In my opinion, they would not issue another one because SSA records would indicate she already has a SSN.

[JeanneAdil 6,510]

38 minutes ago, Ayrton said:

You keep posting here in the forum that immigrants can't use form 2555 to exclude their foreign income because their home country doesn't have a tax treaty with the US. 

 

Your comment is wrong, you don't need to have a tax treaty. For 99% of the immigrants here, in their first year they meet the physical presence test and are eligible to use form 2555.

 

Please, stop spreading misinformation.

the country itself where the income is earned must have a tax treaty with the US

[JeanneAdil 6,510]

1 hour ago, Coin3 said:

I assume you are referring to the requirements for form 2555 to exclude foreign-earned income. In their case, they should still qualify by physical presence as long as his wife was in Columbia for at least 330 days of 12 consecutive months ending in 2021.

 

See Figure 4-A on Publication 54:

https://www.irs.gov/pub/irs-pdf/p54.pdf

If the treaty does not cover a particular kind of income, or if there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for the applicable U.S. tax return.

Columbia is not on the list

 

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Canada
China
Cyprus
Czech Republic

[Ayrton 965]

1 minute ago, JeanneAdil said:

the country itself where the income is earned must have a tax treaty with the US

No it doesn't. Please read the instructions of form 2555. A tax treaty is only needed if bona fide residence test is used. If physical presence is used, there's no requirement for tax treaty.

 

 

 

[Ayrton 965]

12 minutes ago, JeanneAdil said:

If the treaty does not cover a particular kind of income, or if there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for the applicable U.S. tax return.

Columbia is not on the list

 

C

Canada
China
Cyprus
Czech Republic

From the instructions:

 

"You must complete either Part II or Part III of Form 2555, but not both parts.

 

Part II

Bona Fide Residence Test

To meet this test, you must be one of the following.

...

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 (January 1–December 31, if you file a calendar year return). See Table 3 at IRS.gov/pub/irs-utl/ Tax_Treaty_Table%203.pdf  for a list of countries with which the United States has an income tax treaty in effect.

 

Part III

Physical Presence Test

To meet this test, you must be a U.S. citizen or resident alien who is physically present in a foreign country, or countries, for at least 330 full days during any period of 12 months in a row. A full day means the 24-hour period that starts at midnight. To figure 330 full days, add all separate periods you were present in a foreign country during the 12-month period shown on line 16. The 330 full days can be interrupted by periods when you are traveling over international waters or are otherwise not in a foreign country. See Pub. 54  for more information and examples.

 

Note.  A nonresident alien who, with a U.S. citizen or U.S. resident alien spouse, chooses to be taxed as a resident of the United States can qualify under this test if the time requirements are met. See Pub. 54  for details on how to make this choice.

 

Line 16.  The 12-month period on which the physical presence test is based must include 365 days, part of which must be in 2021. The dates may begin or end in a calendar year other than 2021."

 

The requirement for a tax treaty is only on Part 2, not 3.

Edited February 25, 2022 by Ayrton

[Wuozopo 4,293]

1 hour ago, JeanneAdil said:

https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z

 

Columbia does not have tax treaty with the US 

 There does not need to be a treaty for the OP’s wife to exclude her foreign income (earned in 2021 while she was resident in Columbia) from US taxation. 
 

To @Seemoreglass83  When filing a joint return, you will report your wife’s $9k earned while living in Columbia. But the IRS allows the Foreign Earned Income Exclusion in her case so the US taxes that the $9k would  create are deducted from your tax bill. The form for the exclusion is Form 2555. 

[iwannaplay54 985]

12 hours ago, Seemoreglass83 said:

Trying to figure out my tax situation and want to verify what a tax accountant told me. My wife moved her dec 26 and we got married on dec 27. Tha accountant told me she doesnt need to file this year since all of her income was when she was out of the country and i can file married filing separately. Is this because of the substantial presence test?

 

Would we have the option to file jointly if we wanted as it seems like we might get a bigger return since she didnt make much in her home country? 

MFJ, choose to be treated as resident, declare her income on the return, then take the foreign earned income exclusion (her income) based on what appears to be qualifying physical presence test.

 

Run those numbers, if you are owed a refund under that set of circumstances then just wait to file until her SS is processed.  Won’t make a difference if the IRS owed you

8 hours ago, Wuozopo said:

 There does not need to be a treaty for the OP’s wife to exclude her foreign income (earned in 2021 while she was resident in Columbia) from US taxation. 
 

To @Seemoreglass83  When filing a joint return, you will report your wife’s $9k earned while living in Columbia. But the IRS allows the Foreign Earned Income Exclusion in her case so the US taxes that the $9k would  create are deducted from your tax bill. The form for the exclusion is Form 2555. 

Correct

[iwannaplay54 985]

8 hours ago, JeanneAdil said:

If the treaty does not cover a particular kind of income, or if there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for the applicable U.S. tax return.

Columbia is not on the list

 

C

Canada
China
Cyprus
Czech Republic

You are misinterpreting what this means and this has nothing to do with the Foreign Earned Income Exclusion.

Edited February 25, 2022 by iwannaplay54

[Crazy Cat 41,884]

13 hours ago, Coin3 said:

From what I have read here on VJ, there is no issue with applying through the EAD application even if you already have an SSN or have applied for one yourself. They will either ignore the request, or issue a new SS card that no longer states "VALID FOR EMPLOYMENT ONLY WITH DHS AUTHORIZATION." At least that's what I'm hoping they do when my wife's EAD is processed.

An EAD does not entitle a person to an unrestricted SS card. 

[Coin3 66]

2 hours ago, Crazy Cat said:

An EAD does not entitle a person to an unrestricted SS card. 

Sorry, you're right. I was thinking of when my wife receives her greencard.

[xyz_123 6]

On 2/24/2022 at 3:46 PM, Seemoreglass83 said:

Wasnt h and r. It was a cpa I found through Yelp. I'm having a heck of a time finding someone who seems like they understand our situation. A different one quoted me $900 to file but said he wasnt sure if their firm could do it since she doesnt have a ssn or itin.

I've had a very difficult time finding a CPA in my area as well, even using the IRS list for certifying acceptance agents (CAAs) in the two states bordering me. It seems that most CAAs in my area are only comfortable working on cases where the foreign spouse is already in the US. As a last resort, I decided to use H&R Block, but I called a local store first to set up a virtual appointment with a CAA. So far so good, and I could immediately tell this person was more knowledgeable than any of the independent CPAs / tax preparers I have already spoken to. I figured at least if this CAA wasn't able to help me, surely someone in such a large company would be able to. For the record, I am also trying to file MFJ but that seems to be the "harder" route for tax people who aren't knowledgeable with ITINs.

 

The only other "viable" option I have found is to look for CPAs at international / expat tax firms. They charge a ton of money (easily $500-1000) to file but they know more than the average CPA / EA would.

Edited March 10, 2022 by xyz_123