IRS and Tax
Nov 19th 2012, 9:07 am
#1
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IRS and Tax
I have recently married my USC wife and was wondering if somebody could explain what happens with tax etc. I am currently back in the UK and awaiting I-130 approval along with an immigrant visa. I run a business in the UK at present and my wife has a job in the US. She is amending her social Security details etc and also will be filing her Tax return in the US very soon but it is a bit confusing as to what will happen with myself.
We have read that she will need to file as married but does she need to do that jointly or individual and will the US want to tax my UK income?
What is the difference beteen claiming married jointly or individually?
The IRS can treat me as a US resident if we apply for an ITIN.
Obviously we want to do things the right way but I don't want to be taxed by the US when I don't even reside there.
Many thanks in advance for any help on this matter
Regards
Rob
We have read that she will need to file as married but does she need to do that jointly or individual and will the US want to tax my UK income?
What is the difference beteen claiming married jointly or individually?
The IRS can treat me as a US resident if we apply for an ITIN.
Obviously we want to do things the right way but I don't want to be taxed by the US when I don't even reside there.
Many thanks in advance for any help on this matter
Regards
Rob
Nov 19th 2012, 11:38 am
#2
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Re: IRS and Tax
There's a guide in the wiki on this site for USCs filing taxes from the UK. It recommends the USC files as "married filing separately" and then in the spouse's name put "NON-RESIDENT ALIEN". I'd suggest your wife should be able to do the same.
Last edited by rpjs; Nov 19th 2012 at 11:40 am.
Nov 19th 2012, 11:49 am
#3
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Re: IRS and Tax
Nov 19th 2012, 11:59 am
#4
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Re: IRS and Tax
I'm not a USC and she is. She still lives and works in the US but I'm in the UK until I have clearance to be with her permanantely.
Does what you suggested still stand? Sorry to be a pain and I am searching the wiki for what you have mentioned.
Regards
Rob
Does what you suggested still stand? Sorry to be a pain and I am searching the wiki for what you have mentioned.
Regards
Rob
Nov 19th 2012, 12:15 pm
#5
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Re: IRS and Tax
I don't know - we were in the situation the wiki is specifically about (both USC and UKC in the UK, USC filing through the IRS unit at the London embassy), and my wife had no problems doing it the way described. I am not a tax expert but your situation seems analogous to me: your wife is obliged to file married but as you are not US-resident you can't file jointly (and she can't claim you as a dependent). The IRS knows nothing about you, and if they are happy to accept "NON-RESIDENT ALIEN" for spouse in the case of USCs filing from abroad, I don't see how your situation is much different. You are an alien (to the US), and you are non-resident (in the US) so that's all they need to know.
Nov 19th 2012, 1:03 pm
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Re: IRS and Tax
I don't know - we were in the situation the wiki is specifically about (both USC and UKC in the UK, USC filing through the IRS unit at the London embassy), and my wife had no problems doing it the way described. I am not a tax expert but your situation seems analogous to me: your wife is obliged to file married but as you are not US-resident you can't file jointly (and she can't claim you as a dependent). The IRS knows nothing about you, and if they are happy to accept "NON-RESIDENT ALIEN" for spouse in the case of USCs filing from abroad, I don't see how your situation is much different. You are an alien (to the US), and you are non-resident (in the US) so that's all they need to know.
Thanks again Roy
Nov 19th 2012, 5:04 pm
#8
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Re: IRS and Tax
Your wife can file either married-joint or married-individual, her choice. Your wife should work out her tax return both ways and then file the way by which she owes the least tax.
If she files married-joint you must declare yourself to be a non-resident US tax payer and she will include your income on her return. This will enable her to claim your tax deduction and use the lower-rate tax table that applies to couples filing jointly. She will then exclude as much of your income as is covered by the foreign-earned income exclusion or the amount allowed by the US-UK tax treaty (I'm not familiar with the tax treaty.) As long as your income is not much higher than the excludable amount this could reduce your wife's tax burden considerably. It saved me more than $1,000 the first year that I was married and my wife was still in her country waiting for a visa.
Regards, JEff
If she files married-joint you must declare yourself to be a non-resident US tax payer and she will include your income on her return. This will enable her to claim your tax deduction and use the lower-rate tax table that applies to couples filing jointly. She will then exclude as much of your income as is covered by the foreign-earned income exclusion or the amount allowed by the US-UK tax treaty (I'm not familiar with the tax treaty.) As long as your income is not much higher than the excludable amount this could reduce your wife's tax burden considerably. It saved me more than $1,000 the first year that I was married and my wife was still in her country waiting for a visa.
Regards, JEff
I have recently married my USC wife and was wondering if somebody could explain what happens with tax etc. I am currently back in the UK and awaiting I-130 approval along with an immigrant visa. I run a business in the UK at present and my wife has a job in the US. She is amending her social Security details etc and also will be filing her Tax return in the US very soon but it is a bit confusing as to what will happen with myself.
We have read that she will need to file as married but does she need to do that jointly or individual and will the US want to tax my UK income?
What is the difference beteen claiming married jointly or individually?
The IRS can treat me as a US resident if we apply for an ITIN.
We have read that she will need to file as married but does she need to do that jointly or individual and will the US want to tax my UK income?
What is the difference beteen claiming married jointly or individually?
The IRS can treat me as a US resident if we apply for an ITIN.
Last edited by jeffreyhy; Nov 19th 2012 at 5:08 pm.
Nov 19th 2012, 5:38 pm
#9
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Re: IRS and Tax
Your wife can file either married-joint or married-individual, her choice. Your wife should work out her tax return both ways and then file the way by which she owes the least tax.
If she files married-joint you must declare yourself to be a non-resident US tax payer and she will include your income on her return. This will enable her to claim your tax deduction and use the lower-rate tax table that applies to couples filing jointly. She will then exclude as much of your income as is covered by the foreign-earned income exclusion or the amount allowed by the US-UK tax treaty (I'm not familiar with the tax treaty.) As long as your income is not much higher than the excludable amount this could reduce your wife's tax burden considerably. It saved me more than $1,000 the first year that I was married and my wife was still in her country waiting for a visa.
Regards, JEff
If she files married-joint you must declare yourself to be a non-resident US tax payer and she will include your income on her return. This will enable her to claim your tax deduction and use the lower-rate tax table that applies to couples filing jointly. She will then exclude as much of your income as is covered by the foreign-earned income exclusion or the amount allowed by the US-UK tax treaty (I'm not familiar with the tax treaty.) As long as your income is not much higher than the excludable amount this could reduce your wife's tax burden considerably. It saved me more than $1,000 the first year that I was married and my wife was still in her country waiting for a visa.
Regards, JEff
That is some very helpful info. I shall get my wife to calculate both ways as you say.
Rob
Nov 19th 2012, 5:40 pm
#10
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Re: IRS and Tax
My wife filed as married, filing separately last tax year.
Nov 19th 2012, 8:27 pm
#11
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Re: IRS and Tax
Anyway, if she resides in the UK she may not be paying any tax anyway, even though she still has to file, simplest thing to do is to file as married, filing seperately and she does the FBAR, 8938, 2555 and all that other fun stuff.
Only if she has to actually pay any tax is there a point in messing around with the allowances.
Also, when the OP becomes resident in the US he will have to file a dual-status return as explained in IRS publication 519 so staying separate makes that a teeny bit less complicated.
Nov 19th 2012, 8:36 pm
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Re: IRS and Tax
Not sure that's true, depends on what the treaty says. Article 24 of the UK treaty doesn't seem to say you can do that although I'm admittedly no expert on it.
Anyway, if she resides in the UK she may not be paying any tax anyway, even though she still has to file, simplest thing to do is to file as married, filing seperately and she does the FBAR, 8938, 2555 and all that other fun stuff.
Only if she has to actually pay any tax is there a point in messing around with the allowances.
Also, when the OP becomes resident in the US he will have to file a dual-status return as explained in IRS publication 519 so staying separate makes that a teeny bit less complicated.
Anyway, if she resides in the UK she may not be paying any tax anyway, even though she still has to file, simplest thing to do is to file as married, filing seperately and she does the FBAR, 8938, 2555 and all that other fun stuff.
Only if she has to actually pay any tax is there a point in messing around with the allowances.
Also, when the OP becomes resident in the US he will have to file a dual-status return as explained in IRS publication 519 so staying separate makes that a teeny bit less complicated.
Gives me some more homework to do which proves invaluable in this type of situation. It's good to be ahead of things and at least try to understand it all.
Rob
Nov 19th 2012, 8:49 pm
#13
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Re: IRS and Tax
The OP clearly stated in his opening post that his wife lives and works in the USA.
Regards, JEff
Regards, JEff
Nov 19th 2012, 8:54 pm
#14
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Re: IRS and Tax
IRS publication 519:
http://www.irs.gov/pub/irs-pdf/p519.pdf
A nice lot of info there but yes as Jeff stated, my original post did state the fact that my wife still resides in the US and I shall hopefully joining her once I have clearance
Rob
http://www.irs.gov/pub/irs-pdf/p519.pdf
A nice lot of info there but yes as Jeff stated, my original post did state the fact that my wife still resides in the US and I shall hopefully joining her once I have clearance
Rob
Nov 20th 2012, 2:35 am
#15
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Re: IRS and Tax
While you remain resident in the UK your wife should file "married separately". It will avoid lots of complications. Don't open yourself up to the IRS and US until you have to. Once you are in the US you and your wife will need to decide whether to file jointly of separately.
Before you join your wife in the US make sure you fully understand the US tax implications of your UK business and any UK investments you hold as when you become US resident the IRS will tax you on your worldwide income. In many cases it's a good idea to sell your investments and move them to the US as there are complex and potentially expensive rules about holding foreign investments and accounts. If you decide to keep them make sure you understand FBAR, FATCA and PFIC rules......any UK pensions, stocks and shares ISAs or unit trusts will be particularly troublesome. You business will also be a complication.
Before you join your wife in the US make sure you fully understand the US tax implications of your UK business and any UK investments you hold as when you become US resident the IRS will tax you on your worldwide income. In many cases it's a good idea to sell your investments and move them to the US as there are complex and potentially expensive rules about holding foreign investments and accounts. If you decide to keep them make sure you understand FBAR, FATCA and PFIC rules......any UK pensions, stocks and shares ISAs or unit trusts will be particularly troublesome. You business will also be a complication.