hmvsdog

Hello all,

The good lady and I (both British citizens) moved to the US on an L1 (and L2 respectively) in late January/early February this year and have been loving my British Expat life. I'm starting to think about filing our US tax returns early next year and I have a question.

It would significantly benefit my wife and I if we were able to file under a Married-Filing-Jointly status, but I understand that we'd have to elect to be treated as full year resident for tax purposes for us to do that. That's not a problem as we didn't earn significant income in the UK in the early part of 2016 to pay US tax on, but is it even possible for us both to elect to be treated as full year residents, rather than dual-status and use the Married-Filing-Jointly status for the 2016 tax year?

Thanks!

Olly_

Yes, you can choose to file as if you were resident for the whole year. I did this in 2015 for the same reason as you.

hmvsdog

Thanks Olly. Did you use a CPA to do this for you, or is it straightforward enough that even a numpty like me could use TurboTax etc?

Olly_

I guess it depends how complex your taxes are but I did a fair bit of reading to get my head around it and then used TurboTax to actually file.

If you have complex affairs I guess it might be worth using a CPA.

Don't forget FBAR and Form 8938 if you have money held overseas and you meet the filing thresholds

Cook_County

You'd have to remember to include both sets of elections, signed by you and by you both. You'd also have to remember to report all of your foreign financial assets and understand if you own any PFICs.

hmvsdog

Thankfully my UK affairs are very simplistic. No residual income, minimal balances in the bank accounts and my parents are living in my old house back there.

I'm still considering professional advice, though hugely appreciate the wise words here.

hmvsdog

Further question: I have just received my 1095-B for last year and shows the good lady as not having health coverage until April (accurate, unfortunately). She only arrived in the country in February thus giving her the "less than 3 months" requirement for the shared responsibility payment exemption.

However, given that we will be electing to be treated as full year residents for tax purposes so we can use Married-Filing-Jointly, does this then mean that the exemption for the shared responsibility payment becomes invalid and we'll need to pay the penalty, even though she wasn't in the country in January?

Any insights appreciated.

morpeth

Have to say my own advice is have CPA handle. For variety of reasons, not just their software will pick up potential savings, but having a CPA sign off on a tax return I am convinced reduces chances of an audit.

Cook_County

She gets an exception for having a foreign tax home until February (if you want to claim it).

Andrew_365

I paid for a CPA at HR Block because I was unable to file online taxes as I did not qualify as a full year resident in the US the first year I moved here. It was $300 but worth it, since then I just file online.

morpeth

So they had an actually CPA do your return ? Many are enrolled agents (EA) at H & R block, I didn't know for usual tax returns. $300 sounds pretty good.

Andrew_365

Could be...I am not sure...I just turned up and paid!

mrken30

Do you still own the house? Hopefully not, but if so you may need to treat it as a rental property with below market price rents.I have never done this, but remember something about if you rent to family at below market rents.

NB most people on here are not CPA's so you may want to confirm what anyone says. Hopefully information given will point you in the right direction.

morpeth

H and R Block is not a CPA firm, though many of the people doing the returns are called Enrolled Agents (EA) meaning they go through some level of certification by the IRS. By standardizing their services with good software (pretty easy to actually do simple returns online yourself) they offer for many a reasonable priced service. Since I assume you had some international type issues in your return, $300 is pretty good as I know of one case where a very simple return cost $140. Also they keep your returns on file so if your are travelling pretty easy to get access to information.

Aoi

TaxAct attached form 8965, Health Coverage Exemptions to my 2015 form 1040, U.S. Individual Income Tax Return. The step by step guidance was straightforward.