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2010 Tax Return for LPR from K1 ?'s

2010 Tax Return for LPR from K1 ?'s

Old Dec 9th 2010, 2:41 pm
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Default 2010 Tax Return for LPR from K1 ?'s

Hi,

I have a question regarding the US tax season coming up.

My husband moved over May 2010 on K1, married in July 2010.. He worked in the UK from January 2010 - May 2010 when he moved over. We filed AOS in August and he got his EAD here in the US in October and also started working October 2010, so he will have US income October - December that is taxed on. He received his Green Card end of November 2010 so is now a LPR.

Wondering if filing taxes is going to be just as easy as filling out a 1040 and checking Married filling jointly and just putting his US income on the tax return or if we need to worry about his UK income from January - May?

If we need to worry about UK income and if so where does go on our taxes and what documentation might be required as proof of income?

Hoping other people have had this type of situation!

Thank you!
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Old Dec 9th 2010, 2:50 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Originally Posted by mystasia View Post
Wondering if filing taxes is going to be just as easy as filling out a 1040 and checking Married filling jointly and just putting his US income on the tax return or if we need to worry about his UK income from January - May?
That is exactly what we did when my husband came over in 2004. I'm not entirely sure if that was the correct approach to take though. My OH had only worked in the UK from January to March, and only earned the equivalent of approx $10k, so we decided not to complicate the 1040 with filling out the Foreign Earned Income Tax exclusion form (or whatever the exact name of the form was).

It's especially difficult to figure out what the foreign income earned was since there is the added complication that the UK tax year, IIRC, is April to April. So even though my hubs got a P45 denoting how much he made for the UK tax year, we just deemed it too difficult to figure out what he had made for the Jan - Mar timeframe and left it off the 1040.

If that wasn't the right thing to do, then I'm sure others will pop up and let you know.
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Old Dec 9th 2010, 3:13 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Good to hear thats what you guys did, I assume had no audit problems or anything. My husbands UK income was only about 4500 pounds from January to May, so it seems such a small amount to worry about claiming here in the US.

I ideally want him to be taxed the same I am taxed. I even had him for his W-2 be taxed not as married but withhold at higher single rate so we can get more of a refund at the end of the year.

He is in school and his education expenses will qualify for added credits to our return which I'd like to take advantage of.
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Old Dec 9th 2010, 3:30 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Originally Posted by mystasia View Post
I ideally want him to be taxed the same I am taxed. I even had him for his W-2 be taxed not as married but withhold at higher single rate so we can get more of a refund at the end of the year.
You mean W-4. W-2 is the end of year statement of earnings. The W-4 is the form he fills out saying how much tax to withhold.

If he is married, he MUST check the "married" box on the W-4. If he checked single, he MUST correct it. He can still have higher witholdings, he can choose how many dependents to claim and I believe he can even choose X amount of dollars extra to withhold.

But checking the single box, when actually married, is incorrect. You want his pay stub to say "married" on it, esp since USCIS might be reviewing these things.

Rene
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Old Dec 9th 2010, 3:46 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Originally Posted by Noorah101 View Post
You mean W-4. W-2 is the end of year statement of earnings. The W-4 is the form he fills out saying how much tax to withhold.

If he is married, he MUST check the "married" box on the W-4. If he checked single, he MUST correct it. He can still have higher witholdings, he can choose how many dependents to claim and I believe he can even choose X amount of dollars extra to withhold.

But checking the single box, when actually married, is incorrect. You want his pay stub to say "married" on it, esp since USCIS might be reviewing these things.

Rene


This form, yes W4

http://www.irs.gov/pub/irs-pdf/fw4.pdf

There are 3 options for witholding.

Single, Maried, or Married, but withhold at higher single rate.

That is what he checked, that is what is on file at my work also.
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Old Dec 9th 2010, 4:04 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

No, no audit probs so far 6years on.
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Old Dec 9th 2010, 4:06 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Aliens - Residency Beginning and Ending Dates

Residency Starting Date

If you are a U.S. resident for the calendar year, but you were not a U.S. resident at any time during the preceding calendar year, you are a U.S. resident only for the part of the calendar year that begins on the residency starting date. You are a nonresident alien for the part of the year before that date.

If you meet the substantial presence test for a calendar year, your residency starting date is generally the first day you are present in the United States during that calendar year.

If you meet the green card test at any time during a calendar year
, but do not meet the substantial presence test for that year, your residency starting date is the first day in the calendar year on which you are present in the United States as a Lawful Permanent Resident. However, section 7701(b)(1)(A)(i) of the Internal Revenue Code provides that an alien who is a Lawful Permanent Resident of the United States at any time during a taxable year shall be considered to be a resident alien for the entire tax year.

If you meet both the substantial presence test and the green card test , your residency starting date is the earlier of:

* the first day you are present in the United States during the year you pass the substantial presence test or
* the first day you are present in the U.S. as a Lawful Permanent Resident.

If you were a U.S. resident during any part of the preceding calendar year and you are a U.S. resident for any part of the current year, you will be considered a U.S. resident at the beginning of the current year. This applies whether you are a resident under the substantial presence test or green card test.
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Old Dec 9th 2010, 4:31 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Originally Posted by mystasia View Post
Married, but withhold at higher single rate.

That is what he checked, that is what is on file at my work also.
OK, that's fine then. Just making sure.

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Old Dec 9th 2010, 6:28 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Originally Posted by meauxna View Post
Aliens - Residency Beginning and Ending Dates

Residency Starting Date

If you are a U.S. resident for the calendar year, but you were not a U.S. resident at any time during the preceding calendar year, you are a U.S. resident only for the part of the calendar year that begins on the residency starting date. You are a nonresident alien for the part of the year before that date.

If you meet the substantial presence test for a calendar year, your residency starting date is generally the first day you are present in the United States during that calendar year.

If you meet the green card test at any time during a calendar year
, but do not meet the substantial presence test for that year, your residency starting date is the first day in the calendar year on which you are present in the United States as a Lawful Permanent Resident. However, section 7701(b)(1)(A)(i) of the Internal Revenue Code provides that an alien who is a Lawful Permanent Resident of the United States at any time during a taxable year shall be considered to be a resident alien for the entire tax year.

If you meet both the substantial presence test and the green card test , your residency starting date is the earlier of:

* the first day you are present in the United States during the year you pass the substantial presence test or
* the first day you are present in the U.S. as a Lawful Permanent Resident.

If you were a U.S. resident during any part of the preceding calendar year and you are a U.S. resident for any part of the current year, you will be considered a U.S. resident at the beginning of the current year. This applies whether you are a resident under the substantial presence test or green card test.
Thanks for that IRS code.

I've read the IRS website on this stuff but still I find the wording confusing and wasn't sure what we should do!

But based on the red sections we should be ok to file the normal 1040 form as he is a LPR in 2010 and thus can qualify for everything I qualify for.
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Old Dec 9th 2010, 6:59 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Originally Posted by mystasia View Post
Thanks for that IRS code.

I've read the IRS website on this stuff but still I find the wording confusing and wasn't sure what we should do!

But based on the red sections we should be ok to file the normal 1040 form as he is a LPR in 2010 and thus can qualify for everything I qualify for.
Yeah, but that is only part of it.
We interpreted it as a need to report worldwide income for the entire tax/calendar year.
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Old Dec 9th 2010, 7:15 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Originally Posted by meauxna View Post
Yeah, but that is only part of it.
We interpreted it as a need to report worldwide income for the entire tax/calendar year.
How did you prove your worldwide income? What documentation from England did you use.

I'm torn on what to do and if it even makes a difference as his income in England was so low, and I thought I had read before that income from another country only matters after a certain amount (so you are not double taxed) which I know was way way more than my husbands $4500 earnings in England in 2010
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Old Dec 9th 2010, 7:26 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

You don't have to prove it, you just declare it.
My DH's foreign income was a fixed amount, so it wasn't difficult for us to calculate.
He also gets occasional pay slips and his end of the year one (P65? always forget).

Your understanding about the double taxation is flawed. What you need to know is that USCs and PRs have to *declare* their worldwide income. All of it, not just the part over the foreign-earned income tax exclusion.

You throw it ALL in the pot, deduct the exlusion amount, and figure your US tax on the balance.
I know, it sucks for $4500, but TurboTax and other similar products can help.

There is a fellow who posted here recently. He discovered as an adult that he's actually also a US citizen. So, wanting to do the right thing, he threw himself in front of the IRS (because he'd never filed a return, never knowing he was a citizen & obligated). Unfortunately, he didn't research far enough before contacting the IRS and he ran afoul of another rule, the one about reporting your foreign bank accounts (deposits in excess of $10K).
The penalty they first proposed charging him was 50% of his account holdings. Yes it was.

Study it carefully, and don't be afraid to call the IRS help line. They are actually good and IIRC you don't have to reveal identifying info to them.
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Old Dec 9th 2010, 7:37 pm
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Default Re: 2010 Tax Return for LPR from K1 ?'s

Originally Posted by meauxna View Post
You don't have to prove it, you just declare it.
You throw it ALL in the pot, deduct the exlusion amount, and figure your US tax on the balance.
I know, it sucks for $4500, but TurboTax and other similar products can help.

.
Ok, see I was thinking we'd have to have some sort of English W2 equivalent to send in with the return, proving his income.. Just one more time, it sounds like what you've said is I declare the $4500 on the return, but then it gets taken off anyways and we figure the taxes based on just the USA income anyways? So the refund should be the same as if we didn't declare it as well?

I do use Turbo Tax so hopefully it will know what to do.
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