Filing taxes together

[ecce 20]

My husband (came over from Israel and July and we were married) and I planned to file our taxes together for 2011. He made no U.S. income in 2011. However, I am using TurboTax and it is asks explicitly if any money was made outside the U.S. or if either of us had any foreign bank accounts at any point in the year. If you click "yes" it makes you fill out what looks to be a very complicated set of forms about foreign assets and investments. My husband did have a small checking account and he earned a *little* income in the first few months of the year that he paid Israeli taxes on as an Israeli citizen. The amounts are really low. My question is whether these assets really count, since I don't understand how they are the business of the U.S. government at all - he wasn't a U.S. citizen or resident when he earned it. Is there any reason for me to even have his name on my taxes if he didn't make any money in the U.S. (i.e., does he even need to file)? Have have other people dealt with this and what we are really supposed to report anything?

Thanks

[ceadsearc 516]

If you are filing as married filing jointly then for tax purposes he is considered a resident for the year and thus his foreign income is subject to taxes.

[nickbits 43]

Note you also file for the foreign tax credit and you should owe nothing. Filling out the form for bank accounts only applies if the value is more than $10,000 US.

Yes, it is a hassle but shouldn't cost anything.

[pddp 240]

About to start the same process here as well. From what I've understood so far though, it's up to each couple to decide if the foreign spouse is treated as a resident for the entire tax year. Ans since the foreign spouse was already taxed in their home country, they most likely qualify to have their foreign income exempted. Look up Nich-Nick's previous posts.

[ecce 20]

Thanks everyone!

[kcoyclay1 98]

Double check these information. Why would someone pay taxes to the US for periods before they were married? I think this is for residents and citizens working oversees. They need to declare oversees income and accounts. Check with IRS.

[kcoyclay1 98]

Thanks everyone!

Income from Abroad is Taxable

 

Many United States (U.S.) citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with accounts in Liechtenstein. The interest of the IRS, however, extends beyond accounts in Liechtenstein to accounts anywhere in the world. Consequently, the IRS reminds you to report your worldwide income on your U.S. tax return.

If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement,  a Form 1099 (Information Return) or the foreign equivalents.    See Publication 525, Taxable and Nontaxable Income for more information.

Additionally, if you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad.

Hiding Income Offshore

Not reporting income from foreign sources may be a crime.  The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes. Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions.  The goal is to ensure U.S. citizens and residents are accurately reporting their income and paying the correct tax. 

Foreign Financial Accounts

In addition to reporting your worldwide income, you must also report on your U.S. tax return whether you have any foreign bank or investment accounts.  The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:

You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and

The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.