Declaring overseas income for 2011 taxes

[EV11 18]

Hi everyone,

My husband is a US citizen and I came over to the US on a K1 visa in August 2011 and got married in September 2011. We will be filing our taxes as "Married filing jointly". Although I am yet to receive permanent residency I will be attaching a statement to the tax return asking to be treated as a "resident alien" for tax purposes. I will therefore be considered a resident for the entirety of 2011.

After looking on VJ, numerous threads say you must declare you worldwide income. In my case up until July 2011. Where do we declare this worldwide income? Also what form do we need to fill out to ensure this income doesn't get taxed?

Thank you!

[Nich-Nick 3,354]

One minute ago I answered on taxes in this thread http://www.visajourney.com/forums/topic/347648-q-usa-tax-forms-2012/

It is reported under Other income. On Turbo tax, that was near the bottom of the list of all the possible incomes. I haven't even looked at my 2011 tax year TurboTax to see where it is. Was well hidden in 2009 and easier to find in 2010.

Form 2555 or 2555EZ is the income exclusion form to fill out.

[EV11 18]

Thank you so much for all you help Nich-Nich!

I called the IRS just now and the lady said that we jointly file the form 1040, attach a residency statement and include the form 2555EZ. In your post you mention putting my worldwide income in the "other" income section, however the lady at the IRS said I should exclude my UK income from the income section of the tax return as we are attaching the form 2555EZ. Now I am really confused :s

[Nich-Nick 3,354]

Thank you so much for all you help Nich-Nich!

I called the IRS just now and the lady said that we jointly file the form 1040, attach a residency statement and include the form 2555EZ. In your post you mention putting my worldwide income in the "other" income section, however the lady at the IRS said I should exclude my UK income from the income section of the tax return as we are attaching the form 2555EZ. Now I am really confused :s

How are you doing your taxes? TurboTax Basic installed, not online, is my favorite ($29.00). I can walk you through that one.

Okay so the reporting. I've read the entire Publication 519 many times so feel like I understand the requirements. It clearly states for the immigrant to be considered a resident alien for tax purposes, worldwide income (UK in your case) has to be reported. That means written on the tax return.

So you start on the Form 1040 which is the basic form have to report salaries, interest, dividends, sscholarships, child support, social security payments...any number of things depending on the taxpayer. There's no US W2 wage report like a USC's salary would have. So the catch-all place to report is "other income". You've got to put it in somewhere, before you're allowed to take it out. So when you get started it (especially in TurboTax), it looks like you've got this huge double income that's going to be taxed. That ticker that shows your refund or what you owe is misleading until every bit of info is entered. Once you have all your income entered, then you do Form 2555 to show you are eligible to exclude the foreign income. You can't just enter the USC's income, then expect to subtract the UKC's income off his/her US income which is what would be happening if you think about it.

Example of wrong way:

$25,000 USC income in 2011

-22.000 UK income excluded on form 2555

$3000 taxable income for the couple in 2011. Not the way it works!

Overly-simplified example of correct way:

$25,000 USC income in 2011

+22,000 Other income (UK income)

$45,000 total income for the couple

-22.000 UK income excluded on form 2555

$25,000 taxable income for the couple in 2011.

Does that help??

[EV11 18]

This info is amazing - I really appreciate your help

As much as I would love to be filing our own taxes using Turbo Tax (as I'm a control freak), it is not the case. At my husband's work we give all the information to the accountant and he does his taxes(I'm not sure whether I will need to fill out my own 2555EZ form, my husband is going to ask at work tomorrow).

Your "Taxes for Dummies" explanation was really helpful so thank you. As much as I would like to only be taxed on $3000 On the form 1040 there is a section called "Exemption" do we tick "spouse"?

I wonder if you could help me another question regarding the form 2555EZ? Sorry if i'm being a burden you just give such informative and understandable responses.

On the form 2555EZ section 1 "Bona Fide Residence Test" it asks whether you were a bona fide resident for an entire tax year. Do I say Yes? I was born in England and have lived there for my entire life apart from coming to the US on a J1 VISA between July-Oct 2010 and obviously coming on the K1 visa in August. If the answer is "yes" do I put my birth date as the start date? With the end date do I put CONTINUES as i am a UK citizen or August 16th 2011 when I arrived in the US as I am electing to be a resident for tax purposes?

With the physical presence test I was present in the UK since my birth up until July 2010 when I came to the US on a J1 visa and then was "physically present" again from October 2010 until August 16th 2011. Can I say I was present for a 12month period?

If your able to answer these questions it will be amazing, thank you so much once again for your previous input!

[paojack 41]

This info is amazing - I really appreciate your help

As much as I would love to be filing our own taxes using Turbo Tax (as I'm a control freak), it is not the case. At my husband's work we give all the information to the accountant and he does his taxes(I'm not sure whether I will need to fill out my own 2555EZ form, my husband is going to ask at work tomorrow).

Your "Taxes for Dummies" explanation was really helpful so thank you. As much as I would like to only be taxed on $3000 On the form 1040 there is a section called "Exemption" do we tick "spouse"?

I wonder if you could help me another question regarding the form 2555EZ? Sorry if i'm being a burden you just give such informative and understandable responses.

On the form 2555EZ section 1 "Bona Fide Residence Test" it asks whether you were a bona fide resident for an entire tax year. Do I say Yes? I was born in England and have lived there for my entire life apart from coming to the US on a J1 VISA between July-Oct 2010 and obviously coming on the K1 visa in August. If the answer is "yes" do I put my birth date as the start date? With the end date do I put CONTINUES as i am a UK citizen or August 16th 2011 when I arrived in the US as I am electing to be a resident for tax purposes?

With the physical presence test I was present in the UK since my birth up until July 2010 when I came to the US on a J1 visa and then was "physically present" again from October 2010 until August 16th 2011. Can I say I was present for a 12month period?

If your able to answer these questions it will be amazing, thank you so much once again for your previous input!

FOr what I have read. being in the US on a J1 visa does not count towards the 'physical presence test'

[HikerMark 5]

Just to add my 2c worth.

Your worldwide income, in your case UK income gets reported in each relevant line on the US tax return. So UK wages get reported on line 7 for wages, interest received on line 8 etc. Then, if you qualify to file form 2555 the entry for that form will be shown as a negative figure on line 21.

Note that the 2555 only reduces your foreign earned income. Foreign investment income will still be taxable on the US return subject to relief for any tax you paid in the foreign country on that income.