Taxes and the Green Card

[Usui Takumi 1,562]

At what point does the foreign spouses income come into play regarding income tax? Is it when the EAD has been received, the Green Card had been received, or upon entry and a SS No.?

We are about 60 says from starting AOS and it would be nice to time it so that for 2008 nothing needs reporting.

[sweetpiano 0]

At what point does the foreign spouses income come into play regarding income tax? Is it when the EAD has been received, the Green Card had been received, or upon entry and a SS No.?

We are about 60 says from starting AOS and it would be nice to time it so that for 2008 nothing needs reporting.

Income tax comes into play when the foreign spouse starts working, as simple as that. If there is no income, then there is no income tax to report, right?

A foreign spouse may have EAD or green card (which grant the right to work) but if s/he does not work, then there is no income and therefore no income tax. So this has nothing to do with timing the AOS. If you don't want to report anything for 2008, then the foreign spouse should not start working until 2009, provided s/he is authorized to work.

[Usui Takumi 1,562]

She'll be working from the moment she lands actually. She has retained her position and is working remotely. Does that then mean she must report her foreign earned income right away?

[sweetpiano 0]

She'll be working from the moment she lands actually. She has retained her position and is working remotely. Does that then mean she must report her foreign earned income right away?

I see, so she will be continuing to work for her UK company. In this case, I see three time periods:

1. She definitely has no obligation to report foreign income earned before she marries you, up until that point she is an unmarried foreign national working for a foreign company and that's none of the IRS's business.

2. Between the marriage and the moment she becomes a permanent resident, I would say it's your choice, I don't believe there is an obligation to report the foreign income, as her legal status will not be that of a permanent resident. For example, my husband and I filed a joint tax return and I reported my foreign earned income for 2007, without me being a permanent resident yet, because if a foregn spouse chooses to report foreign income, the IRS agrees to consider the foreign spouse as a permanent resident for tax purposes, but I don't think the foreign spouse must file along with the USC spouse. In other words, if she chooses to report the foreign income on a joint tax return, the IRS agrees to view her a permanent resident for tax purposes. But it is not mandatory for her to report her income until she legally become a permanent resident. However she cannot file a single return in her name with the foreign income, it must be on a joint return.

3. After she becomes a permanent resident (i.e. her AOS is approved), she is obligated to report income, regardless of whether foreign earned or US earned.

The EAD approval does not play into any of the above, as the EAD is authorization to work in the US. If she does start earning US based income before her AOS is approved, she will have to report that, though.

[payxibka 10,048]

She'll be working from the moment she lands actually. She has retained her position and is working remotely. Does that then mean she must report her foreign earned income right away?

I see, so she will be continuing to work for her UK company. In this case, I see three time periods:

1. She definitely has no obligation to report foreign income earned before she marries you, up until that point she is an unmarried foreign national working for a foreign company and that's none of the IRS's business.

2. Between the marriage and the moment she becomes a permanent resident, I would say it's your choice, I don't believe there is an obligation to report the foreign income, as her legal status will not be that of a permanent resident. For example, my husband and I filed a joint tax return and I reported my foreign earned income for 2007, without me being a permanent resident yet, because if a foregn spouse chooses to report foreign income, the IRS agrees to consider the foreign spouse as a permanent resident for tax purposes, but I don't think the foreign spouse must file along with the USC spouse. In other words, if she chooses to report the foreign income on a joint tax return, the IRS agrees to view her a permanent resident for tax purposes. But it is not mandatory for her to report her income until she legally become a permanent resident. However she cannot file a single return in her name with the foreign income, it must be on a joint return.

3. After she becomes a permanent resident (i.e. her AOS is approved), she is obligated to report income, regardless of whether foreign earned or US earned.

The EAD approval does not play into any of the above, as the EAD is authorization to work in the US. If she does start earning US based income before her AOS is approved, she will have to report that, though.

Close, the IRS has authority to tax all who have had some presence in the USA.... The first thing that you must do is determine what classification the alien has for tax purposes... it is either non-resident alien or resident alien... Once you have the classification then you can decide how to proceed...

[Urge To Race 2]

Actually, point 1 below is not true. Her tax status is independent of her marital status. There are 2 tests to determine if a person (a "foreign" person) must file US tax returns. One is the green card test. Once you have a green card, you are a US resident for tax purposes. That does not apply here yet as there is no GC. Holding off on the AOS for later in the year so that it is approved after 12/31/08 would help with this. But the second test is the one to worry about. If she is present in the US for more than 31 days this year and 183 over the last 3 years, she is a resident for US tax purposes.

This means that if she is here more than 183 days this year (or over that last 3 years), she is a US resident for tax purposes. Even foreign income must be reported. Even if she was single and here under other circumstances, she would still be required to file an individual return under single status.

Now there is an exclusion for foreign income for all US tax filers. Unless she is making more than the exclusion amount ($87,500 for 2007 but might be different for 2008), you might get an advantage by having her file with you jointly.

She'll be working from the moment she lands actually. She has retained her position and is working remotely. Does that then mean she must report her foreign earned income right away?

I see, so she will be continuing to work for her UK company. In this case, I see three time periods:

1. She definitely has no obligation to report foreign income earned before she marries you, up until that point she is an unmarried foreign national working for a foreign company and that's none of the IRS's business.

2. Between the marriage and the moment she becomes a permanent resident, I would say it's your choice, I don't believe there is an obligation to report the foreign income, as her legal status will not be that of a permanent resident. For example, my husband and I filed a joint tax return and I reported my foreign earned income for 2007, without me being a permanent resident yet, because if a foregn spouse chooses to report foreign income, the IRS agrees to consider the foreign spouse as a permanent resident for tax purposes, but I don't think the foreign spouse must file along with the USC spouse. In other words, if she chooses to report the foreign income on a joint tax return, the IRS agrees to view her a permanent resident for tax purposes. But it is not mandatory for her to report her income until she legally become a permanent resident. However she cannot file a single return in her name with the foreign income, it must be on a joint return.

3. After she becomes a permanent resident (i.e. her AOS is approved), she is obligated to report income, regardless of whether foreign earned or US earned.

The EAD approval does not play into any of the above, as the EAD is authorization to work in the US. If she does start earning US based income before her AOS is approved, she will have to report that, though.

Edited August 13, 2008 by Urge To Race

[sweetpiano 0]

Thanks for shedding light on this, Urge To Race, I didn't think at all about the 31 days rule. And yes, taking the foreign income exclusion on a joint tax return can be an advantage.

Edited August 13, 2008 by sweetpiano

[Usui Takumi 1,562]

Thanks for the info. I think she will be very close to the 183 day total in the past 3 years. Thats such an odd number.

[pushbrk 13,410]

Thanks for the info. I think she will be very close to the 183 day total in the past 3 years. Thats such an odd number.

Tax issues aside, until she has EAD, she's not authorized to "work" in the US, whether remotely for a UK company or not. At least, that's my understanding. Is there something about this case that's different?

Frankly, this has always confused me. I used to work for a Canadian company who paid me as a US employee. There's no confusion there, but technical people would come and attend conferences and sales calls with me, so they were definitely "working" in the US but were treated as if they were simply "here on business" and needed no EAD.

I guess, I'm saying you need to address or determine whether it's going to be legal for her to work here remotely.

[Usui Takumi 1,562]

Well I've never really read anything that said you couldn't. My understanding would be that you can't seek employment in the US. I mean consider a person who owns there own company with other employees. They wouldn't be expected to shut down the company because they can't run it remotely...Also that means that people who are the VWP that check back with their work and sometimes do work on the fly during vacation are breaking the law, which I find hard to believe.

I think in the day of the internet there is alot of grey on this subject. In our case worst case she flys thru JFK gets the stamp and and continues as normal.

Edited August 14, 2008 by lancer1655

[Usui Takumi 1,562]

I should add that until AOS is approved, the person is not a resident correct, their visa was a non immigrant visa after all. Therefore nothing should stop someone from working for a foreign company.

[Usui Takumi 1,562]

I've just read in a few places that it depends on where the product of the company is going ie. if its a foreign company and a foreign product then there isn't an issue. Though I think i'll talk to the embassy to confirm. Again worse case we'll just get the stamp.

Edited August 14, 2008 by lancer1655