carmen blue

IRS Medic - in those 18 days, he didn't earn interest on the money that was in the account (ie the money from the sale of the house), but he did get one month's payment from his UK job at the end of December. We're reporting this on his 2010 taxes that we are currently filing now. However, he doesn't owe US tax on it because he already paid UK tax on it (his earnings were below the threshold for the double taxation agreement, so he did not owe any US tax on it.).

JAJ

The OVDI program is designed for those who have evaded significant amounts of U.S. tax. What "significant" means is a matter of individual judgement but it would generally not be advisable to enter the OVDI program if, for example, the total amount of U.S. tax underpaid was $50.

The better approach in those situations is simply to file (or amend, if necessary) tax returns and FBARs as applicable.

If any interest was received in the time period, normally the United Kingdom withholds 20%, so this would mitigate any U.S. tax liability.

JAJ

Are you a U.S. citizen? If so, have you already filed a 2010 tax return and did you use "married filing jointly" or "married filing separately"? Depending on the answer, you may need to amend your 2010 return.

Take a look at the rules for a dual-status alien.
http://www.irs.gov/businesses/small/...=96433,00.html

You say your husband got his green card on December 20, 2010 - but did he land in the United States with an Immigrant Visa before that date? If yes, then the date he became U.S. tax resident is earlier than that.

nun

Agreed, I'd just file the 2010 taxes and FBAR in good faith and see what the IRS says. There may be a fine for late filing, but in your situation I don't see the IRS being punitive. If they are, then that's the time to seek professional help.

carmen blue

I think this article is interesting: http://www.irs.gov/newsroom/article/...ml?portlet=108

In the first sentence, it says: The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts...

What's the definition of 'hiding'? They don't say the program is to help people who simply have offshore accounts! 'Hiding' is very descriptive.

Then at the end of the article they specifically talk about dual citizens (ie me and my husband) and Americans living abroad:
The IRS recognizes that its success in offshore enforcement and in the disclosure programs has raised awareness related to tax filing obligations. This includes awareness by dual citizens and others who may be delinquent in filing, but owe no U.S. tax. The IRS is currently developing procedures by which these taxpayers may come into compliance with U.S. tax law. The IRS is also committed to educating all taxpayers so that they understand their U.S. tax responsibilities.


I like to think it's unlikely they will penalize anyone who files an FBAR late if they don't owe any taxes. Here's hoping anyway!

carmen blue

JAJ - no, my husband was not on American soil before that date. We applied for his green card in London and when he landed in Arizona in December, that is when he received his green card. So, correct me if I'm wrong, but I don't think that article about a dual-status alien pertains to him. He was only in America for those 2 weeks as a resident alien, never as a non-resident alien. Do you agree? Yes, I think I have to amend my 2010 return...

JAJ

You must have applied for his Immigrant Visa in London, not his green card.

"Dual-status alien" means that he was non-resident for part of the calendar year and resident for the rest of the year.

You've still not told us if in 2010 you filed married/joint or married/separate.

carmen blue

I'm looking at his passport and the immigrant visa stamp says it started the day he landed on American soil. We applied in London and had to wait for his interview which was early December. He had to leave his passport with them and then they couriered it to where he was staying in London. He left for the USA a few days later. When he landed, they took him aside and put the visa stamp on his passport. So, as far as I can tell, he did not have his visa any earlier.

I filed as married filing separate. I've been doing this for years and I write on the return that I'm married to a UK citizen. However, do you think I should have done differently for 2010 because of those last two weeks that I was actually married to a green card holder? How would I amend that?

carmen blue

JAJ - sorry for all the confusion. I remember now he received his green card in the mail a couple weeks after arriving in the States. So, yes, we applied in the UK and he got his visa when he landed here, and then received his green card in the mail.

I'm now thinking I should amend my 2010 return and we could file jointly. We both earned income in the UK in 2010 (I earned it before we moved to the US and he earned it as a resident alien in those last two weeks of 2010). We don't owe any US tax.

Thanks for ALL your help - love this forum...

JAJ

So he became U.S. resident when he arrived in the United States with his visa.

As far as I understand if you file jointly, you have to include ALL your husband's income for 2010, including the time before he was U.S. resident.

Since you appear to have nothing to gain by doing this, I would simply consider amending your married/separate status return for 2010 and your husband should also file married/separate for that year. Your U.S. taxes should still work out as zero when you take in the effect of foreign tax credits.

When one spouse is U.S. resident/citizen, and the other is not, it often makes sense to file as married/separate. Not always - but often.

carmen blue

So he will have to fill in the foreign tax credit form for the income he earned in those two weeks? I haven't looked at the form too closely but it looks complicated. Are we supposed to figure out how much UK tax he paid on that income for those two weeks?!

carmen blue

Just spoke to the IRS because I needed help filling in his 1040 for those days he was in the USA. Just discovered that because he got his green card on Jan 4, 2011 and wasn't physically present in the USA for a certain number of days from 2008-2010, he wasn't considered a resident at all in 2010. So we don't need to file his 2010 taxes or fill in his FBAR for 2010 (he was not a 'US Person' according to their definition). Thank you for all your replies - really appreciate it.

penguinbar

You first wrote that he got his greencard in December 2010 and now you are saying January 2011.

carmen blue

True - and as JAJ reminded me, we actually applied for his immigrant VISA in London. So when we landed in the States, they stamped his passport with his immigrant visa and then they sent his green card on Jan 4, 2011. Had they issued it on Dec 31, he would have had to file his 2010 taxes and send in his FBAR. Thanks for all your help!

ian-mstm

When they sent (or he received) his GC is irrelvant. What's relevant is that he became a PR the day he entered the US. If that was on or prior to December 31, he should have filed 2010 taxes and FBAR.

Ian