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(Another) Tax Return Question

(Another) Tax Return Question

Old Mar 3rd 2011, 8:14 pm
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Default (Another) Tax Return Question

Hello everyone

I've had a look through the wiki and had a search of threads can't find anything which answers my question. As many of you know, I immigrated on a K1 in 2010 and I'm currently awaiting my EAD and green card; expecting the former any day now.

My father-in-law has always dealt with my wife's taxes before with his accountant as she has always lived at home. We still live with her parents but his accountant has said that she won't/can't do our taxes as we have to file separately as a married couple - makes sense to me. My question is, what exactly is the score for me? I believe technically I'm not yet a resident, and I certainly paid taxes last year in the UK before leaving (although next to nothing as I spent most of the year visiting my then fiancee or having emigrated). I've had a look at the free online tax things and I'm really not sure how to fill out questions about residency etc.

I'm leaning towards getting an accountant do deal with, although we can't really afford that. Does anyone have any great suggestions or guides, or do you think I should just invest the money in getting an accountant to deal with it?

ETA: Apart from the immigration issue our taxes are actually incredibly simple. We both made small amounts of money from part time work and have no investments etc. We're supported by my in-laws pending me and my wife (who just graduated college) getting jobs and moving out.
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Old Mar 3rd 2011, 8:18 pm
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Default Re: (Another) Tax Return Question

I don't understand why the accountant can't do her taxes? Unless he just doesn't feel knowledgeable about foreign income and all that.

If you were married during any part of 2010, she MUST file as "married". She can either file "married jointly" or "married separately". uou don't HAVE to file a separate tax return, you can file a joint tax return (you and your wife), most married people do that because there's a tax break when filing jointly.

If you were in the USA in 2010, you can be considered resident for tax purposes. As for how to report your income from overseas, you probably WILL need to consult with a knowledgeable tax accountant (CPA), just this first year, to get over that initial hurdle. Might be expensive, but in my opinion would be worth it your very first time.

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Old Mar 3rd 2011, 8:30 pm
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Default Re: (Another) Tax Return Question

That's what I've been thinking Noorah, thanks for the confirmation. I've been estimated $200 for an accountant to do it, which I'm loath to pay, but I think it's probably the only option. My situation this year is too confusing for me with no experience of US taxes and none of my wife's family does their own taxes so they haven't a clue either.

I think my FiL's accountant would do the taxes, but in the past she's done it as part of his filing and not charged extra. That's how I understood it from the vague explanation I got from my FiL.

Thanks for the move, I couldn't decide whether it was general or marriage visa related when I was posting; changed my mind 3 times for starting the thread
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Old Mar 3rd 2011, 8:51 pm
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Default Re: (Another) Tax Return Question

Actually your situation appears to be pretty simple. Since you were in the US for only about 2 months, did not earn any money in the US, and you do not yet have a green card, you are classified as a non resident and don't need to file US taxes for tax year 2010.
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Old Mar 3rd 2011, 8:59 pm
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Default Re: (Another) Tax Return Question

That was my initial thought, but then my wife has to file as married, and that means providing information about me. We'll have a go at filling out the stuff and see what happens I guess.
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Old Mar 3rd 2011, 9:03 pm
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Default Re: (Another) Tax Return Question

Originally Posted by Malashaan View Post
That was my initial thought, but then my wife has to file as married, and that means providing information about me. We'll have a go at filling out the stuff and see what happens I guess.
Yes but her status will be "married filing separately" so other than your name and social security number on her form, that is all the information that will be needed. I don't believe you can file "married filing jointly" since she is a resident and you are classified as a non resident.
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Old Mar 3rd 2011, 9:13 pm
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Default Re: (Another) Tax Return Question

I just read up on this, your comments helped me figure out what phrases to google search to get the answers I wanted.

We CAN choose married jointly; I can choose to opt in to being considered a US resident in 2010 for tax purposes based on our marriage. However, it makes no sense as I would then be taxed on my worldwide income for the entire year and would have to provide the relevant evidence. If she files as married separately then I don;t have to deal with the IRS for another year
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Old Mar 3rd 2011, 9:21 pm
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Default Re: (Another) Tax Return Question

Originally Posted by Malashaan View Post
I just read up on this, your comments helped me figure out what phrases to google search to get the answers I wanted.

We CAN choose married jointly; I can choose to opt in to being considered a US resident in 2010 for tax purposes based on our marriage. However, it makes no sense as I would then be taxed on my worldwide income for the entire year and would have to provide the relevant evidence. If she files as married separately then I don;t have to deal with the IRS for another year
That I didn't know. If you choose "married filing jointly", that could help her get a refund if she owes taxes since you are an exemption on her tax form, there is an additional $5,700 standard deduction and the marginal tax brackets are better for married couples. Also foreign tax credits can sometimes reduce taxes below what you would have paid if you didn't have foreign income and tax credits (eg. last year I had foreign dividends taxed at $60 but those dividends were tax free in the US so the $60 foreign tax credit was applied against taxes owed on other income).

Normally income from a high tax country (UK) will not be taxed in the US since form 1116 allows foreign tax credits for that income. Therefore you could use Turbo Tax to fill out the form but you will have to manually fill out forms 2555 and 1116 (Turbo Tax doesn't have a menu for those forms except for dividends) from within Turbo Tax and Turbo Tax will calculate your taxes.

So I'd recommend that you get Turbo Tax and fill out your taxes both ways and choose the one that is more beneficial.

As far as gathering evidence, all you will need is pay stubs indicating total income taxes withheld for the year and earnings for that year. Even though the UK tax system does not work on the physical year, the US government is only interested in the total income tax paid for the physical year and not whether you will owe additional taxes or get a refund (those are included in the following years tax return). Therefore filling out a UK tax return is not required by the US government but only that taxes were withheld.

Last edited by Michael; Mar 3rd 2011 at 10:07 pm.
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Old Mar 3rd 2011, 10:48 pm
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Default Re: (Another) Tax Return Question

Originally Posted by Malashaan View Post
I just read up on this, your comments helped me figure out what phrases to google search to get the answers I wanted.

We CAN choose married jointly; I can choose to opt in to being considered a US resident in 2010 for tax purposes based on our marriage. However, it makes no sense as I would then be taxed on my worldwide income for the entire year and would have to provide the relevant evidence. If she files as married separately then I don;t have to deal with the IRS for another year
Ah, but then you miss the extra deductions. Yes, the evidence is a pain, but you're not going to get double taxed.. you just have to report the worldwide income. Unless you earned over say $90K, you are under the limit.
Read Michael's post carefully.

this is why it's worth getting a pro's help the first year.
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Old Mar 3rd 2011, 11:25 pm
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Default Re: (Another) Tax Return Question

Originally Posted by meauxna View Post
Ah, but then you miss the extra deductions. Yes, the evidence is a pain, but you're not going to get double taxed.. you just have to report the worldwide income. Unless you earned over say $90K, you are under the limit.
Read Michael's post carefully.

this is why it's worth getting a pro's help the first year.
Ditto.

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Old Mar 3rd 2011, 11:33 pm
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Default Re: (Another) Tax Return Question

Originally Posted by meauxna View Post
Ah, but then you miss the extra deductions. Yes, the evidence is a pain, but you're not going to get double taxed.. you just have to report the worldwide income. Unless you earned over say $90K, you are under the limit.Read Michael's post carefully.

this is why it's worth getting a pro's help the first year.
The $90K is an exclusion amount and doesn't apply but because of the offset of taxes, the foreign income will normally be 100% offset up to incomes of several hundred thousands of dollars unless it is low tax country.

Another advantage of filing jointly is that the maximum amount of the "Make Work Pay" refundable tax credit increases from $400 to $800. Therefore by filing jointly, it is possible to get back all the taxes that were withheld plus an additional $800 due to the additional standard deduction, additional exemption, the additonal $400 "Make Work Pay" tax credit, and possibly some of your foreign tax credits being used to offeset taxes owed on her income.
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Old Mar 4th 2011, 1:40 am
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oh I am sooo glad you reminded me about that 'make work pay'.
If I would just get the damn return done, I'd know about it.

Man I hate doing taxes now. It used to be so easy...
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Old Mar 4th 2011, 1:49 am
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Originally Posted by meauxna View Post
oh I am sooo glad you reminded me about that 'make work pay'.
If I would just get the damn return done, I'd know about it.

Man I hate doing taxes now. It used to be so easy...
Use Turbo Tax and it is very easy and automatically takes care of things like "Make Work Pay".
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Old Mar 4th 2011, 1:55 am
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Default Re: (Another) Tax Return Question

I totally get what you're saying, in our case it doesn't matter. My wife was in college last year and her annual income was less than $8k so she's below the minimum threshold anyway. Might be able to do some jiggery pokery but it would be the difference of $5 or something. It's not worth getting my old pay stubs mailed over for the difference it will make, especially seen as I'm fairly sure it'd be no difference at all. That said, i'm reading your comment about "male work pay" and wondering. I'll figure it out anyway

Thanks for the advice, I was good at this stuff back in England; I think i'm starting to get my head around how the US system works. It'll be useful next year when I'll definitely be doing my own taxes.
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Old Mar 4th 2011, 2:35 am
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Default Re: (Another) Tax Return Question

Originally Posted by Malashaan View Post
I totally get what you're saying, in our case it doesn't matter. My wife was in college last year and her annual income was less than $8k so she's below the minimum threshold anyway. Might be able to do some jiggery pokery but it would be the difference of $5 or something. It's not worth getting my old pay stubs mailed over for the difference it will make, especially seen as I'm fairly sure it'd be no difference at all. That said, i'm reading your comment about "male work pay" and wondering. I'll figure it out anyway

Thanks for the advice, I was good at this stuff back in England; I think i'm starting to get my head around how the US system works. It'll be useful next year when I'll definitely be doing my own taxes.
It sounds like she should will get back all the taxes that were withheld as well as the $400 "Make work Pay" tax credit unless her parents claimed her as a dependant since she was in school and therefore her tax will be more. It probably isn't worth the effort to get another $100 for the "Make Work Pay" tax credit by filing jointly. The difference is in the "The Make Work Pay" tax credit which is calculated at 6.2% of your earned income to a maximum of $400 or $800.

Last edited by Michael; Mar 4th 2011 at 2:42 am.
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