jmood

What will that difference be?

Michael

It make a difference because married filing jointly is a tax benefit but it declares both as being liable for US taxation on worldwide income.

jmood

Yes but surely for the year for which it was filed. No? The sale we are talking about hasn't happened yet. So it is in a year for which taxes haven't yet been filed.

Noorah101

Right. So they will have to weigh the benefits both ways to see which way works better for them financially that year. File married jointly and declare the money from the sale, or file separately and don't get the tax credit that married filing joint gets them.

Rene

jmood

OK, so how he filed his taxes in the past is irrelevant to the question at present.

Noorah101

I figured he would continue filing the same way he's done in the past, but of course he doesn't have to.

My advice would be for him to file an I-130 now, then by the time she has to go back home, she can sell the house, transfer the money, attend her immigrant visa interview, and then return to the USA. That kills two birds with one stone. Then they can decide how to file that year's tax return.

Rene

jmood

But if he files an I-130 now, that paves the way for how she can/can not continue to travel, does it not? Meaning she couldn't continue to enter and exit on the terms of the B2 tourist visa is she so wanted to. No?

Noorah101

No, not at all. She can continue to visit the USA while the process is going on. But since she's going to be here in the USA for 6 months, that's the majority of the waiting time anyway, so makes sense to makes the 1 trip back home to sell home and get visa, then come back to USA.

Rene

theOAP

How he filed his taxes in the past IS RELEVANT, if the wife was declared as an NRA and resident in the US for tax purposes. He filed married - joint, therefore she is/and was resident in the US for tax purposes, and will continue to be resident for tax purposes.

Technically, he should have filed a declaration with the IRS to file joint. That declaration continues until another declaration is made saying she no longer wants to be considered resident for tax purposes. Once that is done, they can never file joint again. You can not randomly pick and chose which years you file separately or joint when an NRA spouse is involved, with the NRA spouse not filing a return in the years the USC files separately. You may file joint or separate if you wish, but BOTH must file EVERY year. If one files separate, the other must file separate.

There are two questions.

First, although Pub. 54 makes a great song and dance about filing joint with an NRA spouse, does the IRS really enforce this?

Second, does this not become an issue if the NRA spouse becomes truly resident in the US and subject to US tax laws automatically?

Have a good read of Pub. 54, starting on page 6. If they are filing joint, then the $500,000 exclusion comes into play, as well as deductions for costs incurred.

This is not straightforward, but there may be a way through it.

http://www.irs.gov/pub/irs-pdf/p54.pdf

nun

The OP should also watch the amount of time they spend in the US.

1) you can't stay in the US for 6 months on a tourist visa.
2) If you do stay in the US for 6 months (183 days) in any one year you will meet the substantial presence test band be US tax resident.

Choosing to file jointly means that the OP is liable to US tax on their world wide income and they would have to go back to filing single again for the NRA to avoid US taxation, but as theOAP points out that is a one time choice.

Also the assumption that someone in the US on a tourist visa can apply for a GC is one that just sounds dubious to me. I get the feeling that you'd have to return to the UK and apply for an IR1 and enter the US on that and thus get the GC.

The good news is the $500k tax free capital gains tax allowance that you get on the sale of a primary residence if you file jointly.

jmood

Thank you all very much. I think I got it now.

Noorah101

Nun,

You CAN stay in the USA 6 months on a B2 tourist visa, unless for some reason the POE officer reduces that time. Six months is maximum.

Rene

Michael

That is true but tax issues can arise due to the substantial presence test. Although 180 days in one year alone doesn't meet the substantial presence test, as little as a one week stay in the previous year along with that 180 days could.

Cook_County

And your mum might miss you; which would help an argument that you meet the closer connection exception to the substantial presence test if you want to use that rule.