File Jointly or Separately?

[alejandro60610 3]

Hello.

 

I'm a USC. Got married to my immigrant wife in Sept 2023 (B2 visa) here in USA. She is going through AOS (I-485). 

 

About her:

• EAD has arrived, along with SSN (December 2023)
• I-130 and 485 still pending
• she did have income in 2023 from her previous job in her home country
• she has earned NO income (foreign or in USA) since arriving in USA

 

About Me:

• self-employed, low-income (not worried about lowering my tax rate, as I owe nothing other than my self-employment tax)
  • yes, we have a joint sponsor for I-864, before anybody asks
  • we have no kids or dependents, so I'm not head of household

 

According to this, she is considered a non-resident alien at this point:  https://www.irs.gov/individuals/international-taxpayers/tax-information-and-responsibilities-for-new-immigrants-to-the-united-states. She doesn't yet have a green card, and her time in USA is well below the number of days quoted.

 

According to this, I could claim her as a resident for tax purposes, since I'm a USC:  https://www.irs.gov/individuals/international-taxpayers/nonresident-spouse

 

My questions are, should I file married jointly or separately for 2023, and why?

If jointly, would she be subject to tax on money she earned in 2023 at her job in her home country prior to arriving in USA? 

How would she prove her income, since her country has no such thing as a W-2?

 

Thank you in advance.

[Crazy Cat 41,880]

You can choose to file a joint return.  If you file a joint return, she must report all world-wide income for the entire tax year.   There is no need for a source document for her income unless you are audited.  It is simply listed on the 1040.   I have a great accountant here in Dallas.  

Edited December 20, 2023 by Crazy Cat

[Crazy Cat 41,880]

Don't forget about the FBAR.....

[alejandro60610 3]

37 minutes ago, Crazy Cat said:

You can choose to file a joint return.  If you file a joint return, she must report all world-wide income for the entire tax year.   There is no need for a source document for her income unless you are audited.  It is simply listed on the 1040.   I have a great accountant here in Dallas.  

Thank you. I know I can file it joint, but I'm wondering why I would want to do that? Let's say she made $50k, then she would owe USA tax on that, no?

 

I'm trying to figure out which one (joint or sep) is more beneficial in our situation and why. I realize that from USCIS standpoint (say she gets a green card interview in May of next year, or when she goes to remove conditions from from her 2 year green card), it may be beneficial to file jointly. But that comes at the expense of her paying USA tax on her 2023 income, no?

[Crazy Cat 41,880]

7 minutes ago, alejandro60610 said:

hank you. I know I can file it joint, but I'm wondering why I would want to do that? Let's say she made $50k, then she would owe USA tax on that, no?

Maybe...Maybe not.  There are multiple factors such as the country she is from, tax treaties, foreign income exclusion, how much income she earned, etc.  I always advise new immigrants (especially those with significant income) to seek the help of a competent, experienced tax advisor the first year.  My wife and I filed "Married- Filing Separately" her first year for the very things you are concerned about.  My accountant ran the numbers for JOINT as well as SEPARATE returns.  

and if she files, the FBAR needs to be done, too.

Edited December 20, 2023 by Crazy Cat

[Crazy Cat 41,880]

7 minutes ago, alejandro60610 said:

it may be beneficial to file jointly. But that comes at the expense of her paying USA tax on her 2023 income, no?

Very possibly, yes.  That's why a good tax pro will run the number for multiple scenarios to help determine the better strategy.  

[Chancy 6,241]

18 minutes ago, alejandro60610 said:

Let's say she made $50k, then she would owe USA tax on that, no?

 

For tax year 2023, the maximum amount eligible for Foreign Earned Income Exclusion is $120k -- https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

[alejandro60610 3]

3 hours ago, Chancy said:

 

For tax year 2023, the maximum amount eligible for Foreign Earned Income Exclusion is $120k -- https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

Thanks.

 

3 hours ago, Crazy Cat said:

Very possibly, yes.  That's why a good tax pro will run the number for multiple scenarios to help determine the better strategy.  

Thanks again.

[Redro 4,611]

You file form 2555 so your wife can exclude her foreign income. We arrived in September 2022, filed MFJ. Neither of us worked in the US but we still filed AND we filed MFJ. Also filed FBAR. 

you want to run the numbers of filing MFJ vs MFS. We elected to file MFJ as I plan on filing for citizenship as soon as I am eligible and I want to be tax compliant for every year I’m present in the US. In addition, filing on the three year rule I want to make sure I file MFJ for bonafide relationship/ immigration purposes. 
ETA I know AOS is different to arriving on immigrant visa… but I would have filed taxes even if I arrived in the US and adjusted… 

Edited December 21, 2023 by Redro

[JeanneAdil 6,509]

Exclusion amount. For 2023, the maximum exclusion amount has increased to $120,000

 

https://www.irs.gov/pub/irs-pdf/i2555.pdfeither MFJ or MFS is up to u /run the numbers

 

Do I need my spouses Social Security number to file taxes separately

 

A spouse who is Married Filing Separately is not required to provide the Social Security card for the other spouse, although the return cannot be e-filed without the spouse's Social Security number.

 

From IRS publication

 

https://apps.irs.gov/app/vita/content/globalmedia/4491_filing_basics.pdf

 

[Crazy Cat 41,880]

17 hours ago, alejandro60610 said:

Thanks again.

I'm glad you asked this question.  It reminded me to contact my tax professional to set up her services for 2023 taxes.  I contacted her, and tax document collection has begun..... She takes care of the 1040 package, all foreign asset reporting and FBAR reporting to the Treasury Department.

 

 

 

 

 

 

[alejandro60610 3]

On 12/20/2023 at 8:54 PM, Redro said:

You file form 2555 so your wife can exclude her foreign income. We arrived in September 2022, filed MFJ. Neither of us worked in the US but we still filed AND we filed MFJ. Also filed FBAR. 

you want to run the numbers of filing MFJ vs MFS. We elected to file MFJ as I plan on filing for citizenship as soon as I am eligible and I want to be tax compliant for every year I’m present in the US. In addition, filing on the three year rule I want to make sure I file MFJ for bonafide relationship/ immigration purposes. 
ETA I know AOS is different to arriving on immigrant visa… but I would have filed taxes even if I arrived in the US and adjusted… 

Thank you!

9 hours ago, Crazy Cat said:

I'm glad you asked this question.  It reminded me to contact my tax professional to set up her services for 2023 taxes.  I contacted her, and tax document collection has begun..... She takes care of the 1040 package, all foreign asset reporting and FBAR reporting to the Treasury Department.

 

 

 

 

 

 

Glad I could help!