Need help filing 2010 tax return - foreign tax credit or a deduction?
 

I've been posting on another forum and it has led to me posting this question.

I'm a USC and we applied for my husband's immigrant visa in London in 2010. He had his interview early December and when we landed in the USA mid-Dec 2010, he officially got his visa (soon after he received his green card).

To become totally compliant with the IRS, we need to file his 2010 tax return. I filed mine as married filing separately and so we are doing the same for him. I'm so confused as to how to fill it in. He earned about $2500 in those two weeks. It was all earned in the UK and went into his UK bank account (it was for work he did in the UK before he even received his visa). But I believe he needs to report it. He has already paid tax on it in the UK (it was due in Jan of this year).

I started off by filling in the foreign tax credit but then I read that I could deduct the taxes on a Schedule A. How do we even know how much tax he paid on that amount? It's such a rough guess because that $2500 was added to the rest of his income that year and the Inland Revenue have their own tax calculator. I could take a rough guess that it was something like 25%.

If he can list our children as dependents, then that wipes out any tax owed, but can he take the whole exemption if he only got his visa in mid-Dec 2010? And, if so, is there any point in filling in a Schedule A?

Thanks so much for all your wise words!

Re: Need help filing 2010 tax return - foreign tax credit or a deduction?
 

A tax credit is almost always going to be worth more to you than a schedule A deduction. The former results in a $1 for $1 reduction in taxes; the latter results in a reduction of taxable income, which will be worth whatever percent of $1 your maginal tax rate is per $1 of foreign tax paid. Decent tax software should take the legwork out of claiming a foreign tax credit even for a part-year resident.

Re: Need help filing 2010 tax return - foreign tax credit or a deduction?
 

thank you so much for that. just spoke to the irs and because he got his green card in jan, 2011 and wasn't in the usa enough days (from 2008-2011 - they use a certain calculation), he wasn't considered a resident and doesn't have to file! thank you for your info though