Tax Return and filing a joint return

[johnny206]

Need some tips on filing tax return please!

 

Some background:

 

My Wife

• Worked in China until early October 2014
• Moved to US at the end of October as K-1 holder
• Married in November 2014
• Has SSN and local ID card
• In the process of obtaining 2 year conditional residency (2 yr green card)

Correct me if I'm wrong...I should:

• File married and joint-filing
• Report her salary earned in China during 2014(?) If yes, should I report her before Chinese tax salary or after tax net salary?
• Any other things I need to look out for? Appreciate any pointers to save on taxes or avoid legal pitfalls.

Thank you so much and Happy Year of the Goat!

[Randy W]

Need some tips on filing tax return please!

 

Some background:

 

My Wife

• Worked in China until early October 2014
• Moved to US at the end of October as K-1 holder
• Married in November 2014
• Has SSN and local ID card
• In the process of obtaining 2 year conditional residency (2 yr green card)

Correct me if I'm wrong...I should:

• File married and joint-filing
• Report her salary earned in China during 2014(?) If yes, should I report her before Chinese tax salary or after tax net salary?
• Any other things I need to look out for? Appreciate any pointers to save on taxes or avoid legal pitfalls.

Thank you so much and Happy Year of the Goat!

 

 

We can't look over your shoulder for you to see what your best options are or what dollar amounts you're talking about, but typically, the answers are yes - file married filing jointly, and report her income for the entire year. The income may be "excluded" by filing form 2555, but be sure to calculate your taxes using the Foreign Earned Income Exclusion worksheet which is in the 1040 instructions. You'll find that you WILL be paying tax on her income, but at a lower rate because of the "exclusion". By filing jointly, you are making a "first year choice" to bring her income for the entire year under the U.S. tax umbrella. This may still work to your advantage because it will apply the lower "Married filing jointly" rate to your own income.

 

Depending on what kind of dollar amounts you're talking about (especially if she earned a substantial salary in China), you may wish to talk to an accountant and/or study up on Publication 519 U.S. Tax Guide for Aliens to determine if using the filing status, "Married, filing separately" might work better for you. You MAY be able to ACTUALLY exclude (not report) her income while in China, but, of course, the higher "Married filing separately" rates would apply to your own income. To quote from Publication 519, "Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U.S. trade or business."

 

But in nearly every case, the "married, filing jointly" will work out best. Just to make up a dollar amount here, if she earned more than $20,000 while in China and paid taxes, the "married, filing separately" option may be worth looking into.

[johnny206]

She wasn't making substantial salary last year in China. About 12,000 RMB per month before tax/deductions etc., she took home net about 8500 RMB each month.

[Doug]

What if you cannot get a straight answer from your wife about how much she makes, much less anything in writing? She does not seem to be able to get anything from her office at work, especially past years.

Edited February 23, 2015 by Doug (see edit history)

[Randy W]

What if you cannot get a straight answer from your wife about how much she makes, much less anything in writing? She does not seem to be able to get anything from her office at work, especially past years.

 

 

Assuming you're wanting to file Jointly, I would just estimate as best you can, and report THAT to the IRS on the Form 2555. It's unlikely that the IRS could track it down any better than you can. You could take a look at the Form 4852, Substitute for Form W-2, Wage and Tax Statement, to see if that might help your reporting.

 

The alternative, of course, is to just file Married, filing separately - you wouldn't have to report her income this way.

[johnny206]

Quick question: My wife is in the process of getting her 2 year conditional green card. So as of now, she's considered a non-resident alien, correct?

[Randy W]

Quick question: My wife is in the process of getting her 2 year conditional green card. So as of now, she's considered a non-resident alien, correct?

 

 

Does she live in the U.S.? Have you file Married, filing jointly for this or previous years?

 

Topic 851 - Resident and Nonresident Aliens

 

You are considered a resident alien if you met one of the following two tests for the calendar year:

1. The green card test - You are considered to have met the green card test if at any time during the calendar year, you were a lawful permanent resident of the United States according to the immigration laws, and this status has not been rescinded or administratively or judicially determined to have been abandoned.
2. The substantial presence test - For the purposes of this test, the term United States does not include U.S. possessions and territories or U.S. airspace. The United States includes the following areas:
   • All 50 states and the District of Columbia,
   • The territorial waters of the United States, and
   • The seabed and subsoil of those submarine areas that are adjacent to U.S. territorial waters and over which the United States has exclusive rights under international law to explore and exploit natural resources.

. . .

 

For more information, refer to Publication 519, U.S. Tax Guide for Aliens, and U.S. Citizens and Resident Aliens Abroad on IRS.gov.

[johnny206]

Here's what I found out for my situation:

 

My wife does not pass the "substantial presence" or green card test thus she is considered a Non-resident Alien (NR).

 

I can choose to file as Married File Jointly (MFJ) or Married File Separately (MFS).

 

MFJ: By filing MFJ, I'm electing to treat my wife to be taxed as a resident. I will have to including my wife's worldwide income. Basically filing like a normal US married couple.

 

MFS: I file as married filing separately and she files her own 1040NR. HOWEVER, since 1040NR only applies to US source income, which she has none; so in my wife's case she doesn't have to file tax return this year.

 

MFS makes the most sense in my situation since I don't have to pay taxes on my wife's income, thus I'll get more refund. My wife doesn't have to file so no income tax will be paid to the government.

[Randy W]

Here's what I found out for my situation:

 

My wife does not pass the "substantial presence" or green card test thus she is considered a Non-resident Alien (NR).

 

I can choose to file as Married File Jointly (MFJ) or Married File Separately (MFS).

 

MFJ: By filing MFJ, I'm electing to treat my wife to be taxed as a resident. I will have to including my wife's worldwide income. Basically filing like a normal US married couple.

 

MFS: I file as married filing separately and she files her own 1040NR. HOWEVER, since 1040NR only applies to US source income, which she has none; so in my wife's case she doesn't have to file tax return this year.

 

MFS makes the most sense in my situation since I don't have to pay taxes on my wife's income, thus I'll get more refund. My wife doesn't have to file so no income tax will be paid to the government.

 

 

. . . but be sure to factor into that equation a comparison of the tax YOU would pay as Married, filing jointly vs. Married, filing separately.

 

Also consider using the Form 2555EZ, Foreign Earned Income Exclusion, and the Foreign Earned Income Exclusion worksheet in the 1040 instructions.

 

Most of us come out ahead by filing Married, filing jointly, but, of course, that depends on what dollar amounts you're talking about.

 

AND . . . once you "treat your wife as a resident", she will need to report and pay taxes on her worldwide income every year.

[wawster]

Ok guys, this may be old hat to you, but I;'ve been reading alot, and getting alternately straightened out, and confused.

 

Here's my situation. Yifang did not work in 2015. i supported her and my stepson completely all year.

They are arriving in the US at the end of January, and should both have their SSNs before I file my taxes.

 

Here is what I am expecting. I file married jointly with Yifang.. That part is pretty clear. what isn't clear is how i approach my step-son. I supported him all last year, but he wasn't in the US.

 

Last year's taxes weren't an issue. I filed married, filing jointly. My ex-wife passed away in early January of 2014, so the filing jointly was with her SSN, even though Yifang and i were married in November of 2014.So I will have had contiguous years filing married jointly.

 

But how do I handle my stepson on the taxes? Do I just leave him off of them for 2015 as a dependent?

 

Thanks for the help, guys...

[dnoblett]

I would have stepson on your taxes as a dependent, this is a tax benefit for you.

[Randy W]

I would have stepson on your taxes as a dependent, this is a tax benefit for you.

 

 

My understanding is that you CAN NOT claim a foreign-resident, non-household member, stepchild. I'm pretty sure that's come up before - I'll see if I can't find something there.

 

My question would be about your 2014 return, since you had TWO wives during that year - and possibly a deduction for each. It might be worth your while to look into, if Yifang wasn't mentioned on the return - you have three years to file an amended return

[Randy W]

From Publication 501 - Exemptions, Standard Deduction, and Filing Information

 

Citizen or Resident Test

You generally cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.

 

However, there is an exception for certain adopted children, as explained next

 

[dnoblett]

 

From Publication 501 - Exemptions, Standard Deduction, and Filing Information

 

Citizen or Resident Test

You generally cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.

 

However, there is an exception for certain adopted children, as explained next

 

 

Yep, that makes sense, so in this case they are coming to the states after December 31, so will not be a resident in the 2015 tax year so cannot be claimed as a dependent.

[Randy W]

Ok guys, this may be old hat to you, but I;'ve been reading alot, and getting alternately straightened out, and confused.

 

Here's my situation. Yifang did not work in 2015. i supported her and my stepson completely all year.

They are arriving in the US at the end of January, and should both have their SSNs before I file my taxes.

 

Here is what I am expecting. I file married jointly with Yifang.. That part is pretty clear. what isn't clear is how i approach my step-son. I supported him all last year, but he wasn't in the US.

 

Last year's taxes weren't an issue. I filed married, filing jointly. My ex-wife passed away in early January of 2014, so the filing jointly was with her SSN, even though Yifang and i were married in November of 2014.So I will have had contiguous years filing married jointly.

 

But how do I handle my stepson on the taxes? Do I just leave him off of them for 2015 as a dependent?

 

Thanks for the help, guys...

 

 

Spouse died during the year. If your spouse died during the year, you are considered married for the whole year for filing status purposes.

If you didn't remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child .

If you remarried before the end of the tax year, you can file a joint return with your new spouse. Your deceased spouse's filing status is married filing separately for that year.

 

 

 

From Publication 17 - https://www.irs.gov/publications/p17/ch02.html#en_US_2015_publink1000170739