Question on joint tax filing

[joenamy]

I am planning to file my tax return jointly this year. Does anyone know if I need to include my wife's income in China? Thanks.

[david_dawei]

Here is a post to start with..

 

http://candleforlove.com/forums/index....d0f8549c79967d6

[BuffaloPaul]

see this publication

 

US Tax Guide for Aliens

 

Heres relevant passage

 

Nonresident Spouse Treated as a Resident

 

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident. This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year.

 

If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire tax year. Generally, neither you nor your spouse can claim tax treaty benefits as a resident of a foreign country for a tax year for which the choice is in effect and you are both taxed on worldwide income. You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years.

 

 

 

If you file a joint return under this provision, the special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you.

 

Example.

 

Bob and Sharon Williams are married and both are nonresident aliens at the beginning of the year. In June, Bob became a resident alien and remained a resident for the rest of the year. Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return. Bob and Sharon must file a joint return for the year they make the choice, but they can file either joint or separate returns for later years.

 

How To Make the Choice

Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. It should contain the following information.

 

A declaration that one spouse was a nonresident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year, and that you choose to be treated as U.S. residents for the entire tax year.

 

The name, address, and identification number of each spouse. (If one spouse died, include the name and address of the person making the choice for the deceased spouse.)

 

 

Amended return. You generally make this choice when you file your joint return. However, you can also make the choice by filing a joint amended return on Form 1040X. Attach Form 1040, Form 1040A, or Form 1040EZ and print “Amended” across the top of the corrected return. If you make the choice with an amended return, you and your spouse must also amend any returns that you may have filed after the year for which you made the choice.

 

You generally must file the amended joint return within 3 years from the date you filed your original U.S. income tax return or 2 years from the date you paid your income tax for that year, whichever is later.

 

Suspending the Choice

The choice to be treated as a resident alien is suspended for any tax year (after the tax year you made the choice) if neither spouse is a U.S. citizen or resident alien at any time during the tax year. This means each spouse must file a separate return as a nonresident alien for that year if either meets the filing requirements for nonresident aliens discussed in chapter 7.

 

Example.

 

Dick Brown was a resident alien on December 31, 2001, and married to Judy, a nonresident alien. They chose to treat Judy as a resident alien and filed joint 2001 and 2002 income tax returns. On January 10, 2003, Dick became a nonresident alien. Judy had remained a nonresident alien throughout the period. Dick and Judy could have filed joint or separate returns for 2003 because Dick was a resident alien for part of that year. However, since neither Dick nor Judy is a resident alien at any time during 2004, their choice is suspended for that year. If either meets the filing requirements for nonresident aliens discussed in chapter 7, they must file separate returns as nonresident aliens for 2004. If Dick becomes a resident alien again in 2005, their choice is no longer suspended.

 

Ending the Choice

Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier under Suspending the Choice) or ended in one of the following ways.

 

If the choice is ended in one of the following ways, neither spouse can make this choice in any later tax year.

 

Revocation. Either spouse can revoke the choice for any tax year, provided he or she makes the revocation by the due date for filing the tax return for that tax year. The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. The statement must include the name, address, and identification number of each spouse. (If one spouse dies, include the name and address of the person who is revoking the choice for the deceased spouse.) The statement also must include a list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. File the statement as follows.

 

If the spouse revoking the choice must file a return, attach the statement to the return for the first year the revocation applies.

 

If the spouse revoking the choice does not have to file a return, but does file a return (for example, to obtain a refund), attach the statement to the return.

 

If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where you filed the last joint return.

 

Death. The death of either spouse ends the choice, beginning with the first tax year following the year the spouse died. However, if the surviving spouse is a U.S. citizen or resident and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died.

 

Legal separation. A legal separation under a decree of divorce or separate maintenance ends the choice as of the beginning of the tax year in which the legal separation occurs.

 

Inadequate records. The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records.

 

 

[joenamy]

David and Paul, thanks for the references. Really appreciate the help.

[BuffaloPaul]

more from Pub 519

 

Resident Aliens

 

A resident alien's income is generally subject to tax in the same manner as a U.S. citizen. If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U.S. tax return. You must report these amounts whether from sources within or outside the United States.

 

Nonresident Aliens

 

A nonresident alien usually is subject to U.S. income tax only on U.S. source income. Under limited circumstances, certain foreign source income is subject to U.S. tax. See Foreign Income in chapter 4.

 

The general rules for determining U.S. source income that apply to most nonresident aliens are shown in Table 2-1. The following discussions cover the general rules as well as the exceptions to these rules.

 

Table 2-1. Summary of Source Rules for Income of Nonresident Aliens

 

Item of Income Factor Determining Source

Salaries, wages, other compensation Where services performed

Business income:

Personal services Where services performed

Sale of inventory—purchased Where sold

Sale of inventory—produced Allocation

Interest Residence of payer

Dividends Whether a U.S. or foreign corporation*

Rents Location of property

Royalties:

Natural resources Location of property

Patents, copyrights, etc. Where property is used

Sale of real property Location of property

Sale of personal property Seller's tax home (but see Personal Property, later, for exceptions)

Pensions Where services were performed that earned the pension

Sale of natural resources Allocation based on fair market value of product at export terminal. For more information , see section 1.863-1 ( B ) of the regulations.

*Exceptions include:

a ) Dividends paid by a U.S. corporation are foreign source if the corporation elects the

Puerto Rico economic activity credit or possessions tax credit.

B ) Part of a dividend paid by a foreign corporation is U.S. source if at least 25% of the

corporation's gross income is effectively connected with a U.S. trade or business for the

3 tax years before the year in which the dividends are declared.

[joenamy]

Paul, great info! Thanks once again.

 

If I interpret this correctly, the bottom line is that I do have to report my wife's income because she will be considered a "resident alien" once she is here in the US.

 

On the thread that David recommended, Don mentioned that there is a $80,000 exception on foreign earned income. If this is true, than it will not

make a difference either way since my wife's income is less than $80,000.

[Carl]

I filed a joint return with Ying this year. Since she is still in China without a SSAN, I filed a W-7 for an Interim Tax ID Number (ITIN). I only used my income. The IRS did not ask for her income nor did I volunteer it.

 

Don't make it any harder than necessary.

 

Follow my personal mantra.......KISS........(Keep It Simple Stupid)

[bubbafred10]

I filed a joint return with Ying this year.  Since she is still in China without a SSAN, I filed a W-7 for an Interim Tax ID Number (ITIN).  I only used my income.  The IRS did not ask for her income nor did I volunteer it.

 

Don't make it any harder than  necessary.

 

Follow my personal mantra.......KISS........(Keep It Simple Stupid)  

 

 

I did the same. I must have read one of your posts on this subject.

[frank1538]

I am planning to file my tax return jointly this year.  Does anyone know if I need to include my wife's income in China?  Thanks.

I'm assuming your wife still resides in China.

 

If you want to file a joint return (married), I believe you have to include both spouses' income, subject to possible foreign income exclusions. If you do not want to include your alien spouse's income, I think your filing status is married, filing separately.

 

As the posts suggest, you have to take some additional steps to file a joint return with a non resident alien spouse (written attachment to the tax return stating that the non resident alien chooses to be taxed as a resident and a taxpayer identification number for the non resident).