cullyvan

Hello - I'm a US Citizen and my husband is British. I've been living in Europe for the past ten years but in November my husband and I moved to the US. He is a permanent resident.

As a US Citizen I am required to report my foreign income I earned abroad using the 2555EZ form which I had to do for the years I was aboard and I assume I have to do this for the 10 months in 2009 that I worked aboard as well when I file my 2009 taxes in the US.

My question is do we also have to file a 2555EZ form for my husband's foreign income? I know as a permanent resident he is required to file income taxes each year but does that only start from the point he actually entered the country and officially became a permanent resident?

Both our incomes fall below the line where you have to pay US taxes on it so it's not a big deal but I'm honestly not sure how to do it correctly.

Anyone with experience or knowledge on this?

Many thanks and best regards,
Aimee & Terry

Zonie

For the year in which your husband emigrated to the US, 2009, he will file a Dual Status tax return to the IRS http://www.irs.gov/businesses/small/...=96433,00.html

The IRS are only concerned with his income from when he became a resident.

cullyvan

Thank you!

chartreuse

Depending on how much you each earned, while in Europe, it might be much simpler for your husband to elect to be taxed as a "non-resident resident alien" for the preceding 10 months.

That would allow you to file Married Filing Jointly and take the standard deductions, instead of itemising everything. You'd both fill out a 2555 (or 2555EZ) and would qualify to exclude income under the threshold ($85,000 ish) on the basis of the physical presence test - as you'd both been present in a foreign country for a contiguous 12 month period (Nov-08 to Oct-09).

Might not be such a good idea if you've been earning 6 figure incomes, however.

Peter Newton

Yep- it's always a good idea to run the numbers both ways to see which is the best filing method.

Also watch out on the start date for tax residence- it starts on the 11th day of physical presence in the US in the year in which the individual becomes a permanent resident.

Suppose one becomes a permanent resident on October 1 2010, but was in the US on vacation from July 1 to July 15 2010. The start date for residence is July 11.

cullyvan

Thanks for your replies. I will look into both options.
Does anyone happen to know if there is an official policy on what exchange rate to use (EUR to USD). In the past I've just used the current rate. Is it possible to get an average rate for an entire year?

Thanks,
Aimee

chartreuse

For 2009 it was 1.4

http://london.usembassy.gov/irs/irsxchng.htm