Tax.

[photomile 101]

To say I'm confused is an understatement however I have a couple of questions.

Currently I'm still waiting for an interview for my I-485 having only just filed for AOS.

Question 1: The W4 (Part 1)

As far as the W4 is concerned, I think we now have established that we should in fact be on three allowances which has been corrected today. However, the question that appears to be raising issues is part 3 on the Employee's Witholding Allowance Certificate where my wife marks if she is single, married or married but witholding at higher single rate. The instructions below this form say "Note: If married, but legally separated, or spouse is a nonresident alien, check the "Single" box.

The question here, is whether we really should in fact, check single. This in part relies on the next bit.

Q2 is the tax return itself when it comes:

In Document P519 the following is stated regarding residency

You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year 2011. This is known as the “green card” test. You are a lawful permanent resident of the United States at any time if you have been given the privilege according to the immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. citizenship and immigration services (USCIS) (or its predecessor organization) has issued you an alien registration card, also known as a "green card"

However, this page http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad---Nonresident-Alien-Spouse

States the following

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident. This includes situations in which one of you is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other is a nonresident alien at the end of the year.

If you make this choice, the following rules apply:

You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect,

You must file a joint income tax return for the year you make the choice, and

Each spouse must report his or her entire worldwide income on the joint income tax return

To me, this indicates that we can in fact file as joint. I would like to know if anyone has any helpful advice if they have done this! Hints, tips, or even how to guides would be appreciated because I do not know where to start.

Since it also mentions declaring my 'entire worldwide income' on the tax return, does this mean that the IRS may choose to tax me on my income while I was living in the UK despite not being present, or allowed to work in the United States?

This leads on to Question 1 part 2

If myself and my spouse choose to file as joint and to treat me for tax purposes as 'resident', does this mean that our W4 should show as 'married' even though I am legally a non-resident? My gut says yes because for the purposes of our tax return we are choosing to treat me as resident, however there's the 'what' if cloud looming over my head'

Additional question is : How do I 'declare' my world wide income on the joint tax return? Do I declare gross or net income? How are Taxes from the UK taken into account? Will I be required to pay tax in the USA on that income despite not being present or legally allowed to work in the USA?

Thanks in advance. It feels like every time I find an answer with the tax system, I get a different piece of information that directly contradicts the first answer I had. Google has thrown up a few odd balls as well!

Edited January 4, 2013 by photomile

[photomile 101]

(comment referring to removed post removed)

Here is the IRS definition of what they consider a resident and non resident.

http://www.irs.gov/t...pics/tc851.html

That is not being disputed. What I am asking is clearly outlined in the question above.

Edited January 4, 2013 by Kathryn41
to remove reference to removed post

[LeftCoastLady 441]

Caveat Emptor: I'm not a tax professional. I've just filed for eons. You may want to ring up a local tax preparer or your local IRS office to further clarify your questions.

If the W-4 was corrected today (i.e. in 2013), then it won't have any impact on the 2012 income tax return. (You can change the W-4 at anytime.) For the tax return for Tax Year 2012, your wife may want to file as married/joint.

[photomile 101]

Caveat Emptor: I'm not a tax professional. I've just filed for eons. You may want to ring up a local tax preparer or your local IRS office to further clarify your questions.

If the W-4 was corrected today (i.e. in 2013), then it won't have any impact on the 2012 income tax return. (You can change the W-4 at anytime.) For the tax return for Tax Year 2012, your wife may want to file as married/joint.

Ok thanks. You wouldn't happen to know if going forward the 'married / joint' return would mean the W4 should be listed as married despite being nonresident would you?

[Kathryn41 3,205]

Inappropriate comment and one responding to same have been removed. If you have nothing constructive to add to the discussion, please do not participate.

~~~~~~~~~~~~~~~~~~~~~

Moderator hat off.

You can file as married, filing jointly since you are here in the US even though you don't have your green card yet. Selecting that option usually provides you with a better tax situation. I believe UK has a tax treaty with the US and most tax treaties prevent situations of double taxation. You will need to file your UK taxes and get back any refunds owing to you, then for your US taxes you would declare your 'World Income" which means any money you earned anywhere in the world in 2012. You will need to convert the values into US currency. You would then take a foreign tax credit that would back out any of the tax you paid in the UK (or a great portion of it) leaving you in a situation where you have declared your world income in a joint return, credited the tax you paid to a foreign country, and then determined what is left to pay in the US.

That is basically what I did the first year I arrived. I would suggest you do something that we did and found immensely helpful. Invest in one of the hard copy 2012 Income Tax guides written by Ernst and Young or other accounting companies that are generally available at Barnes & Noble or other places like that. It goes into the whole tax situation in detail - and it helps getting used to a different type of taxation method than with which you may be familiar (that was my case), plus it walks you through step by step what you need to do in all of the possible filing situations. We found it extremely useful.

It won't matter what is shown on the W-4 as long as you file correctly. My husband still pays tax on the 'single' rate as that gives him a higher tax refund at the end of the year and we've been married and filing joint taxes since 2004.

Don't trust Google. The hard copy guides tax guides cost around $25 to $30 but it is money well spent - and it makes a great paperweight or door stop when you're finished .

Edited January 4, 2013 by Kathryn41

[Nich-Nick 3,353]

To say I'm confused is an understatement however I have a couple of questions.

Additional question is : How do I 'declare' my world wide income on the joint tax return? Do I declare gross or net income? How are Taxes from the UK taken into account? Will I be required to pay tax in the USA on that income despite not being present or legally allowed to work in the USA?

Thanks in advance. It feels like every time I find an answer with the tax system, I get a different piece of information that directly contradicts the first answer I had. Google has thrown up a few odd balls as well!

Your W4 is a bit of a nothing other than to get an estimate of how much should be held out of your paycheck. It doesn't count for immigration or your final tax return. If too much is held out you get a refund when you do taxes. If not enough, then you'll write a check to the IRS when you file. I think mine still says single even though I ve been married 4 years. The higher the number on the form, the more in your paycheck. Years ago, ours was a zero for a family of four to have more held out because we always owed. A lot. Married gets a little less held out for taxes than single. It's nothing you have to super worry about...like being afraid you'll get in trouble if it isn't perfect.

Taxes. I know this stuff. I've answered questions on VJ for several years. And I've talked a few of my VJ friends through it on the phone their first year. I have done step by step walk throughs for your exact situation when using TurboTax too. Because TurboTax gets organized differently each year, an old thread wouldn't help, but the concepts about taxes would. I don't even have my tax software yet to do anything specific for 2012. I will search later for some good explanations and post.

You won't be taxed twice on the same money. Your UK income will be reported, then excluded. It has nothing to do with foreign taxes paid. It was reported in different ways in different tax years, so I would have to dive into 2012 taxes to give you the correct answer. The form for excluding your income can be confusing but I can help you navigates that.

For now, yes you can file jointly. It is allowed. Figure out how much you earned in the UK since Jan 1, 2012. You don't need a form proving it. just figure it out best way you can. Buy the cheapest version of TurboTax. You dont need more than Basic. The installed software is better than doing it online. I've tried both and other brands too. And I will look for some posts to help you understand until tax season really cranks up in February. It takes that long to get all your tax info like W2s and interest payment info from banks. They have until Jan 31 to send you paperwork.

[The Mean Lady 604]

Your W4 is a bit of a nothing other than to get an estimate of how much should be held out of your paycheck. It doesn't count for immigration or your final tax return. If too much is held out you get a refund when you do taxes. If not enough, then you'll write a check to the IRS when you file. I think mine still says single even though I ve been married 4 years. The higher the number on the form, the more in your paycheck. Years ago, ours was a zero for a family of four to have more held out because we always owed. A lot. Married gets a little less held out for taxes than single. It's nothing you have to super worry about...like being afraid you'll get in trouble if it isn't perfect.

Taxes. I know this stuff. I've answered questions on VJ for several years. And I've talked a few of my VJ friends through it on the phone their first year. I have done step by step walk throughs for your exact situation when using TurboTax too. Because TurboTax gets organized differently each year, an old thread wouldn't help, but the concepts about taxes would. I don't even have my tax software yet to do anything specific for 2012. I will search later for some good explanations and post.

You won't be taxed twice on the same money. Your UK income will be reported, then excluded. It has nothing to do with foreign taxes paid. It was reported in different ways in different tax years, so I would have to dive into 2012 taxes to give you the correct answer. The form for excluding your income can be confusing but I can help you navigates that.

For now, yes you can file jointly. It is allowed. Figure out how much you earned in the UK since Jan 1, 2012. You don't need a form proving it. just figure it out best way you can. Buy the cheapest version of TurboTax. You dont need more than Basic. The installed software is better than doing it online. I've tried both and other brands too. And I will look for some posts to help you understand until tax season really cranks up in February. It takes that long to get all your tax info like W2s and interest payment info from banks. They have until Jan 31 to send you paperwork.

Since you seem versed in turbotax, now that my husband has an itin, can I file online?

[LeftCoastLady 441]

Since you seem versed in turbotax, now that my husband has an itin, can I file online?

According to the IRS, you can now efile with an ITIN. Info here: http://1.usa.gov/UwtXbm

Also, while TurboTax is great for most people (and I've used in in the past when things weren't as complex), it doesn't hurt to see a tax professional to evaluate any special tax situations to ensure you're getting all the deductions available.

[The Mean Lady 604]

According to the IRS, you can now efile with an ITIN. Info here: http://1.usa.gov/UwtXbm

Also, while TurboTax is great for most people (and I've used in in the past when things weren't as complex), it doesn't hurt to see a tax professional to evaluate any special tax situations to ensure you're getting all the deductions available.

Thanks for that!

I googled about it last month and couldn't find anything.

There MIGHT be deductions I could be getting, but it isn't worth me forking out money I just plain don't have.

Chances are I'd be paying someone an extra $50 just to get myself an extra $50.

I just don't do anything special enough to be worth some kind of extra credit.

However, in Canada, it's much different.

I tried to file my hubbie's taxes. NO THANKS!

Edited January 6, 2013 by KDH

[Nich-Nick 3,353]

Okay, here's the 2011 walk through, but remember it is listing exact screens/questions for 2011 version. They can change (and usually do) their software each year. There is also a sample of the statement both will sign so that the non-resident alien can be treated as a resident alien for tax purposes and thus file jointly. You can also not file electronically, e-file, the year you make this election. You must have a social Security number or ITIN to file jointly. In almost every case, it is worth it to file jointly, over the USC filing "married filing separately." 2011 taxes with TurboTax

Until I buy my 2012 software I can't comment for this year. I usually wait for a sale or special offer.

Here's a copy/paste about the foreign income exclusion:

So basically it works like this. The maximum exclusion for 2012 is $95,100. If a person worked abroad the entire year, they get to exclude their foreign income up to the full amount. If like most here on Visa Journey, they left their country to live in the US say July 1 ( about half the year abroad) then they only get to exclude up to HALF the amount or $47,550 because they only worked half a year abroad. The form 2555 breaks it down by counting days and you could end up with a 210/365 days percentage exclusion for 210 days abroad. It's that specific.

And here's an old post about where to report. I haven't looked at 2012 yet so this may be correct or changed.

Next thing you need to know is where to report your foreign income. There isn't a 1040 out for 2012 yet, but looking at the 2011

http://www.irs.gov/p...s-pdf/f1040.pdf

as an example. This has varied from year to year, but in 2011 your foreign income is reported on Line 7. Your foreign income exclusion is reported on Line 21--Other Income --as a negative number with "form 2555 or 2555EZ" written in on the dotted line. So add it in, then take it back out.

It is what you earned from Jan 1 to Dec 31 2012. You convert it to US dollars at the exchange rate at the time it was earned.

Oanda.com

has historical exchange rates for any given date. Just come up with a good average rate and report in US dollars. It is self-reported, meaning the IRS doesn't need to see any payslips or documented form of proof. Make up the best estimate and exchange rate you can and you're good to go.

[LeftCoastLady 441]

Here's the 1040 for Tax Year 2012: http://www.irs.gov/pub/irs-pdf/f1040.pdf

The Form 1040 instructions document for Tax Year 2012 have not been posted on IRS.gov, alas, but should be in the next few days. The Form 1040EZ instructions are up: http://www.irs.gov/pub/irs-pdf/i1040ez.pdf

Be sure to read page 5 to determine if you can file using the 1040EZ.

Edited January 6, 2013 by LeftCoastLady