Proof of income for alien spouse

[spatnatz 0]

Hello all,

I'm getting ready to start filing for the 2016 tax year. We got married in June this year, so this is the first year filing as married.

My Chinese wife did have income during 2016, but it wasn't documented in any way. I'm not sure how common it is in China for employees to get their pay in the form of cash without taxation, but that's how it was for her. It was all either cash, or Wechat payment.

So what I'm wondering is:

1) What kind of proof (if any) do we need for this income? Or do we just need to come up with an estimate?

2) I have a feeling that my wife's declared foreign income might be taxed. Would filing jointly have a better chance of having lesser taxation?

3) In terms of immigration, we're just before the interview stage. We're waiting to get last year's tax return before we go to the interview. Based on this, will she be eligible for an ITIN if we haven't gotten the immigration visa yet? Or will she be eligible for an SSN instead? We won't enter the US until next summer.

Thanks in advance for your help!

[MariaR323 199]

Hello all,

I'm getting ready to start filing for the 2016 tax year. We got married in June this year, so this is the first year filing as married.

My Chinese wife did have income during 2016, but it wasn't documented in any way. I'm not sure how common it is in China for employees to get their pay in the form of cash without taxation, but that's how it was for her. It was all either cash, or Wechat payment.

So what I'm wondering is:

1) What kind of proof (if any) do we need for this income? Or do we just need to come up with an estimate?

2) I have a feeling that my wife's declared foreign income might be taxed. Would filing jointly have a better chance of having lesser taxation?

3) In terms of immigration, we're just before the interview stage. We're waiting to get last year's tax return before we go to the interview. Based on this, will she be eligible for an ITIN if we haven't gotten the immigration visa yet? Or will she be eligible for an SSN instead? We won't enter the US until next summer.

Thanks in advance for your help!

Hi there, see below in reference to your questions:

1) You do not send any proof with the actual tax return, however, you should keep records for your backup in case you're asked to send something in afterwards. A reasonable estimate of the income would suffice and make sure to convert it to USD. See here: https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates

2) Yes, all earned income should generally be taxed. If you file MFJ (married filing jointly) you indeed have a chance of lower taxation OR better yet, the foreign earned income exclusion.

3) She *could* apply for an ITIN when you send in your completed 2016 tax return but my suggestion, based on the details you provided, would be to wait until you enter the U.S. with the green card so she can get a SSN instead and you then file the 2016 tax return.

Maria

[RandyW 149]

Hello all,

I'm getting ready to start filing for the 2016 tax year. We got married in June this year, so this is the first year filing as married.

My Chinese wife did have income during 2016, but it wasn't documented in any way. I'm not sure how common it is in China for employees to get their pay in the form of cash without taxation, but that's how it was for her. It was all either cash, or Wechat payment.

So what I'm wondering is:

1) What kind of proof (if any) do we need for this income? Or do we just need to come up with an estimate?

2) I have a feeling that my wife's declared foreign income might be taxed. Would filing jointly have a better chance of having lesser taxation?

3) In terms of immigration, we're just before the interview stage. We're waiting to get last year's tax return before we go to the interview. Based on this, will she be eligible for an ITIN if we haven't gotten the immigration visa yet? Or will she be eligible for an SSN instead? We won't enter the US until next summer.

Thanks in advance for your help!

You REPORT your/her income from world-wide sources - include documentation (NOT "proof") as appropriate. In the case of a Chinese employer, they are unlikely to be willing to fill out a W-2. If you wish to document the source, you may wish to use Form 4852, Substitute for Form W-2.

You most likely already KNOW how much she earned. Chinese people are almost always paid in after-tax cash, or bank deposit, so her Chinese taxes, if any, are already paid.

REPORT her income using Form 2555 Foreign Earned Income Exclusion, and be sure to use the Foreign Earned Income Worksheet in the Form 1040 instructions to calculate your taxes. You're not really "excluding" anything this way - you REPORT the income AND pay taxes on it, but at a reduced rate. There are other options you can look into (like a foreign tax credit, but you've already indicated this would not be worthwhile).

She WILL need an ITIN or SSN, unless you file YOUR income as "Married, filing separately". She IS eligible for an ITIN, although you can always wait and file an amended return AFTER she gets her SSN.

If you file as "Married, Filing Separately" for 2016, and she doesn't arrive until AFTER Jan. 1, then I don't think you will need to report her income for 2016 (check with a tax professional there) - but you won/t be able to take advantage of the lower rate for "Married, filing Jointly")

[aaron2020 11,651]

1. Non-citizen, non-resident wife can volunteer to be treated as a US taxpayer by filing a joint return with her US husband. She must declare all her income.

2. Non-citizen, non-resident US taxpayer does not qualify for the FEIE. She is neither a USC or an LPR, so she can not claim the FEIE.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-requirements

[aaron2020 11,651]

Hello all,

I'm getting ready to start filing for the 2016 tax year. We got married in June this year, so this is the first year filing as married.

My Chinese wife did have income during 2016, but it wasn't documented in any way. I'm not sure how common it is in China for employees to get their pay in the form of cash without taxation, but that's how it was for her. It was all either cash, or Wechat payment.

So what I'm wondering is:

1) What kind of proof (if any) do we need for this income? Or do we just need to come up with an estimate?

2) I have a feeling that my wife's declared foreign income might be taxed. Would filing jointly have a better chance of having lesser taxation?

3) In terms of immigration, we're just before the interview stage. We're waiting to get last year's tax return before we go to the interview. Based on this, will she be eligible for an ITIN if we haven't gotten the immigration visa yet? Or will she be eligible for an SSN instead? We won't enter the US until next summer.

Thanks in advance for your help!

Your wife is not required to file a US tax return for 2016. You can choose to file as "married filing separately" and report only your income. If your wife wants to volunteer to be treated as a US taxpayer so you can file a joint return, then you will need to get her an ITIN (since she does not qualify for a SSN) and report her income.

1. US tax system is self-reporting, so you do not need proof to file. A good estimate will do.

2. Depends on her income. Filing jointly may reduce taxes if her income is low. Filing joint would increase taxes if her income was high. (There's no way to know until you do your taxes with and without her to determine if her income pushes your taxes higher.)

3. She qualifies for an ITIN. SSN only after she immigrates to the US.

[RandyW 149]

1. Non-citizen, non-resident wife can volunteer to be treated as a US taxpayer by filing a joint return with her US husband. She must declare all her income.

2. Non-citizen, non-resident US taxpayer does not qualify for the FEIE. She is neither a USC or an LPR, so she can not claim the FEIE.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-requirements

The Foreign Earned Income Exclusion allows a U.S. taxpayer (in this case an AMERICAN CITIZEN filing "Married, Filing Jointly") to avoid double taxation from income earned in a foreign country.

She is TREATED as an American resident (see https://www.irs.gov/individuals/international-taxpayers/nonresident-spouse-treated-as-a-resident) fortax purposes. Yes, THEY can file Form 2555 - check with a tax professional - please don't argue here.

[RandyW 149]

That link should be - https://www.irs.gov/individuals/international-taxpayers/nonresident-spouse-treated-as-a-resident

[Suss&Camm 2,213]

The Foreign Earned Income Exclusion allows a U.S. taxpayer (in this case an AMERICAN CITIZEN filing "Married, Filing Jointly") to avoid double taxation from income earned in a foreign country.

She is TREATED as an American resident (see https://www.irs.gov/individuals/international-taxpayers/nonresident-spouse-treated-as-a-resident) fortax purposes. Yes, THEY can file Form 2555 - check with a tax professional - please don't argue here.

This is true she can choose to be treated as a US person for tax purposes and I believe the reason she qualifies for the FEIE is because she is a spouse still living in the other country so she would pass the bonafied resident test.

For me as a K1 who is already in the country I would fail this test. Just wanted to add this so that other ppl reading don't just extrapolate to their specific circumstance if that's a bit different.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-bona-fide-residence-test

[Suss&Camm 2,213]

I wanna add that the whole bonafied resident thing is a bit confusing to me. So if my statement above is wrong please correct me. This is what I got out of trying to analyze my own situation.

[RandyW 149]

This is true she can choose to be treated as a US person for tax purposes and I believe the reason she qualifies for the FEIE is because she is a spouse still living in the other country so she would pass the bonafied resident test.

For me as a K1 who is already in the country I would fail this test. Just wanted to add this so that other ppl reading don't just extrapolate to their specific circumstance if that's a bit different.

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-bona-fide-residence-test

You may want to check out the "physical presence" test.

[Suss&Camm 2,213]

You may want to check out the "physical presence" test.

I've read that part of publication 54 as well... I get stuck on the whole "12 consequtive months" part...

During 2016 I had income from back home from January through November... I arrived in the US in October...

What I don't understand is if the period claimed in the test have to overlap the period for which the income is acquired..

The period of the test can be any 330 days.. and following can the income that was acquired after coming to the US then be included in the exclusion... I've read the parts like 10 times and I still don't understand what's meant...

I AM planning on seeing a tax specialist for these questions..

[spatnatz 0]

Thanks for all the input, everyone!

I'm seeing a variety of different responses here, some suggesting that my wife has to file, others suggesting that she shouldn't.

I did go ahead and call the IRS international tax law hotline to double check, and what they told me was that I don't need to report anything for 2016, but that things would get complex for 2017 once my wife enters the U.S. next year, if she were to earn wages after entering the country.

Basically, my wife's options would to either file as a resident alien for the whole year, or try to split the 2017 year into two parts (nonresident alien and resident alien). If I recall correctly, I was told that if we file jointly, that we'd have to treat her as resident alien for the whole tax year, but if she filed separately, she could divide it up into RA and NRA time periods, since she won't arrive in the US until the summertime. Luckily, we've got over a year to figure that out! Hope this information helps for anyone else seeking similar information.

Thanks again for your help, everyone.

[RandyW 149]

Yes, exactly! But don't forget that by filing "Married, Filing Jointly", you can take advantage of THAT rate and MAYBE pay LOWER taxes for the entire year, even though you would pay taxes on her entire income. HER tax on her income from China is REDUCED by using the Form 2555. But(2) tax on THAT income is AVOIDED IF you file "Married, Filing Separately", since she will NOT be "Treated as a resident". A lot of math to chew on!

Suss&Camm - Your "qualifying days" and the "tax year" are two separate periods. You lived in your country for 330 "qualifying days" from Oct. 2015 to Oct 2016, so you qualify. From Jan.1, 2106 to when you arrived in Oct., 2106 is approximately 320 days, so the maximum you can "exclude" is approximately $88,200 ( = 320/365 * $100,800). The income you REPORT is from the entire tax year.

There is even a paragraph (Income earned in Prior Year) about what to do on your 2017 return if, say, you arrive in the U.S. in Dec., 2106, and then receive a check from the foreign employment in Jan., 2017

[Suss&Camm 2,213]

Yes, exactly! But don't forget that by filing "Married, Filing Jointly", you can take advantage of THAT rate and MAYBE pay LOWER taxes for the entire year, even though you would pay taxes on her entire income. HER tax on her income from China is REDUCED by using the Form 2555. But(2) tax on THAT income is AVOIDED IF you file "Married, Filing Separately", since she will NOT be "Treated as a resident". A lot of math to chew on!

Suss&Camm - Your "qualifying days" and the "tax year" are two separate periods. You lived in your country for 330 "qualifying days" from Oct. 2015 to Oct 2016, so you qualify. From Jan.1, 2106 to when you arrived in Oct., 2106 is approximately 320 days, so the maximum you can "exclude" is approximately $88,200 ( = 320/365 * $100,800). The income you REPORT is from the entire tax year.

There is even a paragraph (Income earned in Prior Year) about what to do on your 2017 return if, say, you arrive in the U.S. in Dec., 2106, and then receive a check from the foreign employment in Jan., 2017

This was really helpful information! Thank you for taking your time and clearing that up! I've been looking around for that answer a lot but only ever got directed to publication 54, which is really full of information and I learned a lot BUT I couldn't make out these couple of sentences.

I was set on MFJ and tax credits since I didn't think FEIE was an option... now I'll have to weigh the options thanks again!

OP, I hope you got smth out of my confused meddling aswell

Edited December 27, 2016 by Suss&Camm