Filing Taxes as it relates to CR-1

[BeefedRamen 0]

Hi!
US Citizen here.
This is my first time filing taxes as married jointly, but my wife is still in the Philippines; she has yet to immigrate over.

Is it true that filing jointly would be a major green flag for CR1 couples when USCIS reviews our case?

Would their be any "down sides" to filing jointly even when my wife is a nonresident alien? For example, would it take longer for the IRS to view our taxes if filing jointly?

Would my monthly monetary gifts to her be counted as her income?

Would I need to wait for my wife to file her taxes in the Philippines before I file mine?

Any tips when filing jointly with a nonresident alien?

Thanks in advance. 😁

[TBoneTX 46,703]

Thread is moved from the CR-1 Process forum to the Tax & Finances forum, to be among similar-themed threads.

Edited Thursday at 05:10 AM by TBoneTX

[S2N 41]

A lot of questions here so I’ll try to answer them all:

 

1) If you have not already, file an extension (if you go down the joint path, will need to be paper extension since she’s an NRA.) Whatever your decision unlikely to be able to file in the next 12 days since this is probably something you’d want to hire a CPA for.

2) Any evidence of financial commingling is a good thing, but USCIS and the State Department realize that MFJ isn’t always practical for people in this situation.

3) Gifts are never taxable to the recipient; there’s forms you have to file if it’s over a certain amount as a giver, but unless it’s over ~$13M in a lifetime it’s not taxable. These forms go away if you’re MFJ, since you’re just moving cash around between spouses on the same 1040.

4) Biggest downside is you have to paper file the first year before getting an ITIN and send in her passport or a certified copy or do it with a certified acceptance agent. Since she won’t be in the U.S. to physically sign it sounds like, you’d need to get her to sign form 2848 and fax it to the IRS/send you a copy as well that you can both fax and include with the form authorizing you to sign on her behalf.

 

We are filing jointly this year, and will do it when he’s in the U.S. at the end of April. The tax benefits of MFJ when there’s a large income disparity usually make it worth the hassle, but you can always file to amend later.

Edited Thursday at 05:16 AM by S2N

[BeefedRamen 0]

6 minutes ago, S2N said:

4) Biggest downside is you have to paper file the first year before getting an ITIN and send in her passport or a certified copy or do it with a certified acceptance agent. Since she won’t be in the U.S. to physically sign it sounds like, you’d need to get her to sign form 2848 and fax it to the IRS/send you a copy as well that you can both fax and include with the form authorizing you to sign on her behalf.

Thank you so much for all your prompt and clear answers! Appreciate it! 🤩

Regarding #4. My wife has an ITIN already. Would that make a difference? By having an ITIN, would I still have to paper file and would she still have to physically sign anything and do everything else you mentioned in #4?

[S2N 41]

42 minutes ago, BeefedRamen said:

Regarding #4. My wife has an ITIN already. Would that make a difference? By having an ITIN, would I still have to paper file and would she still have to physically sign anything and do everything else you mentioned in #4?

That makes it much easier. You all can e-file so no need for paper.

I would still file an extension request now, which you can do for free electronically using your preferred tax software since she has an ITIN (TurboTax, FreeTaxUSA, TaxAct, etc.) If you end up not needing it, it doesn’t hurt, and good to have on record if you do need it. Check state laws to see if you’d need to file an additional one in the state or if it’s automatic with the federal one.

 

My recommendation is still to get a CPA with experience in foreign tax issues to prepare the return rather than DIY it. It’s possible to do on your own but anytime multiple tax jurisdictions are involved it is easy to make mistakes and claim too much or too little. It’ll cost more to prepare the return, but given your fact pattern you’ll probably more than make it up by paying less under the new filing status.

[JeanneAdil 6,796]

why would you want to file for an extension? you still have time to file by the 15th

Most who want an extension, owe taxes and that is costly with the interest and penalties added on from the 15th April till taxes are paid in full

Many think this gives them extra time but it is costly (very costly)

Plus 

If you owe tax and don't file on time (with extensions), there's also a penalty for not filing on time. The failure-to-file penalty is usually five percent of the tax owed for each month, or part of a month that your return is late, up to a maximum of 25%. If your return is over 60 days late, there's also a minimum penalty for late filing; it's the lesser of $510 (for tax returns required to be filed in 2025) or 100 percent of the tax owed. See Topic no. 304 for information about extensions of time to file if you can't file on time

 

https://www.irs.gov/taxtopics/tc653

 

just get online with her info and file 

you are able to file as MFJ or MFS 

her foreign income is reported on form 2555 and you can exclude income up to the 2024 amount

For tax year 2024, the maximum exclusion is $126,500 per person. If two individuals are married, and both work abroad and meet either the bona fide residence test or the physical presence test, each one can choose the foreign earned income exclusion. Together, they can exclude as much as $253,000 for the 2024 tax year.

[TexasRafael 150]

This is my experience.  I got married in July 2021, 9 days after my spouse arrived in the US and unfortunately for reasons he had to go back to Indonesia and then I had to apply for a spousal visa.  When I filed my 2021 taxes I filed married filing jointly and just entered all 9's in the place where his social security needed to go, ( he did not have a social security number.)  I did proceed to apply for an ITIN in the interim but that took almost two years to accomplish.  So when 2022 came around, I once again filed married filing jointly and filled it all 9's in for his social security number.  On both times the IRS processed my return, gave me my refund and uploaded the return so I could get a copy to use when doing the paper work for the spousal visa.  The money you send is NOT income for your spouse, her income is 0 in the US.    He eventually entered in October 2023 with the spousal visa and in one month after arrival he received his social security number.  It would be good to have the ITIN but that process takes a long time and they are very slow in handling it.  What I would NOT do is file single.   

[S2N 41]

1 hour ago, JeanneAdil said:

why would you want to file for an extension? you still have time to file by the 15th

Most who want an extension, owe taxes and that is costly with the interest and penalties added on from the 15th April till taxes are paid in full

Many think this gives them extra time but it is costly (very costly)

Plus 

If you owe tax and don't file on time (with extensions), there's also a penalty for not filing on time. The failure-to-file penalty is usually five percent of the tax owed for each month, or part of a month that your return is late, up to a maximum of 25%. If your return is over 60 days late, there's also a minimum penalty for late filing; it's the lesser of $510 (for tax returns required to be filed in 2025) or 100 percent of the tax owed. See Topic no. 304 for information about extensions of time to file if you can't file on time

 

Filing an extension is free and if you owe nothing or are owed a refund there’s none of the penalties you describe apply. Those only apply if you don’t pay any tax due when you apply for the extension. Also the failure to file penalty would never apply to someone who files an extension. The whole point of the extension is to avoid it.

 

If you anticipate owing and you file an extension and pay the amount you owe, you are also not charged any of the interest.

 

An extension is simply an extension of time to file, not time to pay. It hurts nothing requesting one, is free and easy to do, and if they can file by 4/15 it has no impact on anything. If they don’t file by 4/15, it’s on record they plan to file by 10/15.

 

Also it is not a great idea for someone who is doing first year MFJ with a foreign spouse to DIY it. The reason for an extension is it gives OP time to find a CPA and gives the CPA time to prepare.

[S2N 41]

1 hour ago, TexasRafael said:

her income is 0 in the US.

This is not true. By electing to file MFJ any foreign spousal income worldwide must be reported and taxed. Gifts are not income for the recipient; but anything earned overseas from a job, business, or investments is.

 

You still end up paying less in the overwhelming majority of cases because of how tax brackets work, but the U.S. taxes on worldwide income and making the election to treat a foreign spouse as a tax resident under the IRC, you forfeit the ability to use the foreign earned income exclusion.
 

My husband pays more in U.S. taxes than he does in Chilean taxes on paper, but he actually pays nothing in U.S. taxes and I pay $4k less by our decision to treat him as a tax resident that I would if I filed MFS/single.

Edited Thursday at 03:50 PM by S2N

[KMG 178]

14 hours ago, BeefedRamen said:

Hi!
US Citizen here.
This is my first time filing taxes as married jointly, but my wife is still in the Philippines; she has yet to immigrate over.

Is it true that filing jointly would be a major green flag for CR1 couples when USCIS reviews our case?

Would their be any "down sides" to filing jointly even when my wife is a nonresident alien? For example, would it take longer for the IRS to view our taxes if filing jointly?

Would my monthly monetary gifts to her be counted as her income?

Would I need to wait for my wife to file her taxes in the Philippines before I file mine?

Any tips when filing jointly with a nonresident alien?

Thanks in advance. 😁

I have always filed "Married Filing Separately" until my husband has a SSN.

[TexasRafael 150]

20 minutes ago, KMG said:

I have always filed "Married Filing Separately" until my husband has a SSN.

Well, that places you in a much higher tax bracket and I was not willing to pay higher taxes just because he did not have a social security number, I took the gamble of just doing the taxes and entering all 9's for the social security number for 2 years consecutively and never had a problem.  Once the ITIN arrived I amended my returns to include the ITIN number and once the social security arrived I amended the returns once again.  Having worked as an IRS Volunteer for over 20 years did help because I did it all myself.   

[S2N 41]

27 minutes ago, TexasRafael said:

Well, that places you in a much higher tax bracket and I was not willing to pay higher taxes just because he did not have a social security number, I took the gamble of just doing the taxes and entering all 9's for the social security number for 2 years consecutively and never had a problem.  Once the ITIN arrived I amended my returns to include the ITIN number and once the social security arrived I amended the returns once again.  Having worked as an IRS Volunteer for over 20 years did help because I did it all myself.   

Main impact MFS has vs. single is that you get extra taxes on investment income and social security after $125kish. Can’t claim certain credits as well, but that wouldn’t really be applicable in most immigrant situations. Also can have some weird impacts in community property states. You can always go back and amend as needed.

 

But in this case OP’s wife already has an ITIN, so MFJ is the objectively best tax status and none of the annoying bits that come with applying for an ITIN apply to them (processing times are currently around 2 months for an ITIN, fwiw, so 999… isn’t really advisable these days.)

 

@BeefedRamen: something I forgot to mention is that both you and your wife will need to sign a declaration electing to file jointly as an NRA spouse (IRS website with info). You can draft the letter, she can print and wet sign then scan to you and you can do the same. If e-Filing the accountant will upload it with the return so both being wet on the paper that’s sent in shouldn’t be an issue since it’s a scan anyway.

[KMG 178]

28 minutes ago, TexasRafael said:

Well, that places you in a much higher tax bracket and I was not willing to pay higher taxes just because he did not have a social security number, I took the gamble of just doing the taxes and entering all 9's for the social security number for 2 years consecutively and never had a problem.  Once the ITIN arrived I amended my returns to include the ITIN number and once the social security arrived I amended the returns once again.  Having worked as an IRS Volunteer for over 20 years did help because I did it all myself.   

I am currently Foreign Earned Income so I don't have any taxes.

[BeefedRamen 0]

Thanks again for all the info y'all! Very helpful.

Actually. I assumed a TIN in the Philippines is no different than an ITIN. Would any one know if they are the exact equivalent?

Edited Thursday at 10:45 PM by BeefedRamen

[S2N 41]

11 minutes ago, BeefedRamen said:

Thanks again for all the info y'all! Very helpful.

Actually. I assumed a TIN in the Philippines is no different than an ITIN. Would any one know if they are the exact equivalent?

A Filipino TIN is not the same as an ITIN issued by the IRS (IRS link.) You cannot file U.S. government 

 

Its usually worry the money to file MFJ, but not required. If she does not have an IRS mentioned ITIN already you will need to paper file (see my original comment.)

 

I think the best course would be for you to:

1) file an extension now (will need to be paper if your wife doesn’t have an IRS issued ITIN.)

2) find a CPA with experience in these issues who can walk you through what’s needed and give you the best advice for your situation. It’ll likely be after 4/15 at this point, hence the need for an extension.