Taxes 2555/2555EZ?

[bluebird74 34]

Hey there fellow members. I am in a process of filing my U.S. taxes and I'm not sure about what form I should use. My problem is with the fact that during one of the years, I was simply unemployed. I noticed that in form 2555EZ, Part II, there is 9c (Other- specify). Is this where I should put "unemployed?" If I can, should I use it along with form 1040EZ and just put my income as "0" or how does that work? If I have to do the regular form (2555) - which also has that "other" option, then it doesn't matter. Although, the problem comes when I will have come to section Part II - Taxpayers Qualifying Under Bona Fide Residence Test, question #10, where it asks you to choose Kind of living quarters in foreign country. Choices are:

a - Purchased house

b - Rented house or apt

c - Rented room

d - Quarters furnished by employer

My answer would me neither, since I was staying with family members. I'm confused. If anyone has encountered the same problem or just knows the answer to my dilemma, please let me know. I appreciate it. Nich-Nick, maybe you have some suggestions as well?

[Nich-Nick 3,353]

Need more info. Who is filing? What year? Is this the USC who has foreign earned income to exclude? Are you using tax software?

Form 2555 is the long version if you want to excluded some of your housing and expenses. Such would be the case for somebody who had a home and family in the US but worked abroad and maintained secondary living quarters in a foreign country. That doesn't generally apply to somebody who chose to live and work with a foreign spouse in a foreign country. Nor does it apply for example when you K1s come over and want to file jointly with your US spouse the year you marry. Your foreign income is reported but the UK person can exclude foreign income.

So while the Form 2555 can be used with a lot of blank areas for the housing info, the Form 2555EZ is the short version to take a foreign income exclusion when you aren't eligible for the housing etc stuff. The instructions for the forms usually have a "Who can use this form?" to help clarify.

A note: TurboTax doesn't do a 2555EZ. The year I married (2008) and filed jointly with my husband (not yet a greencard holder in 2008) I let TurboTax do the 2555 to exclude his 2008 UK income. Then I used a downloaded form 2555EZ and copied the calculations created by TurboTax onto the shorter form. The first year we had to file by mail anyway so switching out forms didn't matter. No e-filing that year.

The form 1040EZ is limited to certain users. If you want to take a foreign income exclusion, then you must use the longer version Form 1040. (This bit is from memory and I don't feel like looking up the appropriate instructions right now, but you can find it all at IRS.GOV and verify it must be a 1040.)

I can't answer the bonafide residence test info unless I know whose income is being excluded. US or UK person?

And I'm supposing what you put for living quarters doesn't matter if you are not qualified to exclude your housing anyway.

[bluebird74 34]

Need more info. Who is filing? What year? Is this the USC who has foreign earned income to exclude? Are you using tax software?

Form 2555 is the long version if you want to excluded some of your housing and expenses. Such would be the case for somebody who had a home and family in the US but worked abroad and maintained secondary living quarters in a foreign country. That doesn't generally apply to somebody who chose to live and work with a foreign spouse in a foreign country. Nor does it apply for example when you K1s come over and want to file jointly with your US spouse the year you marry. Your foreign income is reported but the UK person can exclude foreign income.

So while the Form 2555 can be used with a lot of blank areas for the housing info, the Form 2555EZ is the short version to take a foreign income exclusion when you aren't eligible for the housing etc stuff. The instructions for the forms usually have a "Who can use this form?" to help clarify.

The form 1040EZ is limited to certain users. If you want to take a foreign income exclusion, then you must use the longer version Form 1040. (This bit is from memory and I don't feel like looking up the appropriate instructions right now, but you can find it all at IRS.GOV and verify it must be a 1040.)

I can't answer the bonafide residence test info unless I know whose income is being excluded. US or UK person?

And I'm supposing what you put for living quarters doesn't matter if you are not qualified to exclude your housing anyway.

I am not going to be using any tax software. I deem it unnecessary - in my case. I will not be using any exclusions (housing cost and other expenses), for I have lived at home that was provided by family member (not wife). Since I left U.S., I have lived in 2 EU countries. Except for two months out of the year 2013, I have lived in the UK and could put down the cost of renting a house here, but since I have not had any income, then what's the point, right?

As far as bonafide residence test goes, I have lived outside of the U.S. since 2009 and I have only made short visits since I left. Therefore my domicile was not in the U.S. since that time. I will have a co-sponsor since my I-864 will surely be marked as "does not meet requirements." I'm not going to include my wife's income either, because the co-sponsor meets the 125% poverty level. To recap, since I have not earned any income while abroad, should I include my savings in wages and other income or just put "0" in there on basically all 3 years? Hope this helps.

Edited July 22, 2014 by bluebird74

[bluebird74 34]

Nich-Nick, please forgive my fragment (if any) sentences and overall mess in my message. It's been a very long and tedious day for me.

[Nich-Nick 3,353]

So is this topic about filing taxes or your I-864?

--If you earned no income, there is no reason to file a tax return.

--There is no reason to file a form 2555(EZ) which is to exclude foreign income because you earned no foreign income. How did you come up with that form?

--There is no deducting foreign housing when you didn't maintain a home in the US at the same time and a work transfer put you abroad with paying your own housing costs. It not about "what's the point?" as you stated, but not allowed.

What years are you filing for. What years had income? Any of them?

Edited July 23, 2014 by Nich-Nick

[bluebird74 34]

So is this topic about filing taxes or your I-864?

--If you earned no income, there is no reason to file a tax return.

--There is no reason to file a form 2555(EZ) which is to exclude foreign income because you earned no foreign income. How did you come up with that form?

--There is no deducting foreign housing when you didn't maintain a home in the US at the same time and a work transfer put you abroad with paying your own housing costs. It not about "what's the point?" as you stated, but not allowed.

What years are you filing for. What years had income? Any of them?

Topic is about taxes, but the main reason for filing, is I-864. I know I'm not alone in this, but I haven't filed my recent tax returns, because I did not have any income that I could report. Yes I have earned some (way below the allowed non-taxable threshold), but it was paid in cash, so I guess it wouldn't be smart to include that, if I cannot prove I received it (e.g., pay slips) in case I ever get audited. Am I right? I'm wanting to file for all the years I've missed, but from what I heard, for the purpose of form I-864, I only need to show my tax returns for the last 3 years. I know I can just submit a tax exemption letter, but I don't know much about it and I would rather just do my returns. As far as the 2555EZ goes, I read someone's post who also filed for their spouse and the petitioner filed 2555EZ (income in UK, but filed "zero" since it was foreign income).

Thanks for being a sport I appreciate all the help. Instructions can be confusing at times - especially when there are form variations.

[BBCC 16]

You can file a zero-income tax return if that is what you need for the purpose of the I-864. As posted already, you don't need to file any of the Form 2555 because you have no income to exclude. So, no need to declare the type of housing you were in for that tax year.

[Nich-Nick 3,353]

Yes I have earned some (way below the allowed non-taxable threshold),

If below, then you don't have to file.

but it was paid in cash, so I guess it wouldn't be smart to include that, if I cannot prove I received it (e.g., pay slips) in case I ever get audited. Am I right?

Foreign income is self reported. No pay slips are included. IRS does not have the resources to go after a piddly return. Anyway, Is it better to report something or nothing in the eyes of the IRS if audited. And did you keep a record of how much cash you took? Where will you get the numbers?

I know I can just submit a tax exemption letter, but I don't know much about it and I would rather just do my returns.

It is not an "exemption". It is not earning enough to file if what you have said it true. And it is easier than doing tax returns you don't know much about either.

Thanks for being a sport .

Cheeky

Examples I have written before in other posts. Use to craft your own.

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Your name

Affidavit of Support for [spouse], LNDxxxxxxxxx

STATEMENT OF WHY I DID NOT FILE A TAX RETURN

According to IRS publication 501-Exemptions, Standard Deduction, and Filing Information, I was not required to file an individual tax return. for the years 2010. 2011, and 2012 for the following reasons:

1. I was a full time student, unmarried, and under the age of 22

2. I was a dependent on my father's tax return

3. I was unemployed and had zero earned income in 2010, 2011, and 2012.

4. My unearned income was less than $950 each of those years.

Unearned income 2010 was $______

Unearned income 2011 was $______

Unearned income 2012 was $______

(signature)

Type out full name

----------

To whom it may concern:

I did not file a tax return in 2012, 2011, or 2010 because I was unemployed and earned $0.00 income and thus was not required by the IRS to file.

Signature

Typed full name

Date

----------------

Your name

Affidavit of Support for [spouse], LNDxxxxxxxxx

STATEMENT OF WHY I DID NOT FILE A TAX RETURN

According to IRS publication 501-Exemptions, Standard Deduction, and Filing Information, I was not required to file an individual tax return. for the years 2010, 2011, and 2012 for the following reasons:

in 2012, I earned $355.23 and therefore did not meet the threshold for filing a tax return.

in 2011, I earned $0.00 and therefore did not meet the threshold for filing a tax return.

In 20010, ........etc

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[bluebird74 34]

If below, then you don't have to file.

Foreign income is self reported. No pay slips are included. IRS does not have the resources to go after a piddly return. Anyway, Is it better to report something or nothing in the eyes of the IRS if audited. And did you keep a record of how much cash you took? Where will you get the numbers?

It's starting to make sense, and since I haven't earned enough to qualify as a sole sponsor, then those "0" tax returns wouldn't matter much. Plus in on my G-325, I put that I was either unemployed or worked couple of times during one of the years (2009 I think). It was here in the UK and it was on paper- do have my payslips for that. I don't have for the other job I did, for it was just as I mentioned earlier, cash only. I'm starting to think that going with not filing at all and just giving them that letter of why I didn't file, would be the way to go. Although, I'm not completely sure. Instructions on I-864 clearly say that one should file any late tax returns, or provide that exclusion letter (something of that sort). My returns should be submitted to the IO at the time of my wife's interview. I hear that people file at the local IRS office, even with "0" income, get their copies stamped and that's what they submit along with their I-864. So, I'm still not sure of what I should do.

As to whether or not I can prove how much I made while working for a company that paid me cash, I can't. Some of that money is in my U.S. bank account and I cannot prove that I earned it.

[Nich-Nick 3,353]

Instructions from the I-864 which I broke into two parts:

(A) "If you were required to file a Federal income tax return during any of the previous three tax years but did not do so, you must file any and all late returns with IRS and attach an IRS-generated tax return transcript documenting your late filing before submitting the I-864 Affidavit of Support."

(B) "If you were not required to file a Federal income tax return under U.S. tax law because your income was too low, attach a written explanation. "

Was Bluebird required to file? NO because he was unemployed. The part I called "A" is not written to Bluebird because the words IF you were required to file... exclude him.

Was Redbird required to file? Redbird earned £24,000 in the UK. Yes Redbird was required to file. Part A applies to Redbird. It tells him to get those taxes filed.

Is Part B written to Redbird? NO because his income was not low. He is is required to file.

Is Part B written to Bluebird? YES because we have already established he was not required to file.

Does Part B tell Bluebird what to do? YES

Summary:

Redbird> £24,000 income> required to file and didn't because he thought it was ok since he lived overseas> USCIS says must file and attach to I-864.

Bluebird> unemployed, zero income> not required to file> USCIS says attach a signed statement telling us why you didn't have to file. (It was because you earned no income).

So I gotta ask-- how does a person live all those years with zero income. Who paid your way? You don't have to answer that if too personal. But what I am getting at is if you are some trust fund kid who lived off savings, then you have to look at unearned income as well. That is money generated as interest or dividends paid to you by investments.

[bluebird74 34]

Bluebird> unemployed, zero income> not required to file> USCIS says attach a signed statement telling us why you didn't have to file. (It was because you earned no income).

So I gotta ask-- how does a person live all those years with zero income. Who paid your way? You don't have to answer that if too personal. But what I am getting at is if you are some trust fund kid who lived off savings, then you have to look at unearned income as well. That is money generated as interest or dividends paid to you by investments.

Gotcha. You know, the only type of tax returns I have ever filed, was 1040EZ, so when I now look at this combination of 2555, 1040, being unemployed and I-864 requirements, that's when it starts to get confusing. Sometimes, when you're dealing with stress of not being sure and wanting to do everything right, causes your mind to play tricks on you - missing some things that are written in black and white. Thank you for being patient and informative.

You are free to ask, and I have no problem answering. I never said I haven't earned money (working for a living). I simply got paid consulting fees and it was always cash. For the first part of living abroad, I cared for my family member who later passed away. No income then. Later, I did that consulting thing and having been able to live rent free, I was able to put away some money. Couple of investments paid off and I've been able to live off that. My wife works now and we manage this way until we go to the States, where I have a regular job lined up. IRS or USCIS doesn't care if a USC comes back to his homeland after 10 or 30 years, with $5 to his/her name and no place to live. Things are different when that USC wants to bring his/her immigrant significant other. I'm no spring chicken and I wouldn't even come back to the U.S., myself, if I didn't know I can manage and support my wife.

Anyway, it looks like I don't really have to file those tax return, but something tells me I should file as unemployed with "0" income anyway. Final thoughts?

[Nich-Nick 3,353]

I understand the stress and the unfamiliarity with the forms. I understand some people can't read government language. I am lucky because immigration never stressed me, maybe because I can read government language. I follow the form instructions, not what somebody on VJ says. So I am trying to tell you what the I-864 instructions say to me. I used to be a teacher and I can keep breaking it down until I see the light bulb come on over your head. But in the end, it is your decision how to proceed.

Final thoughts?

There is discrepancy in what you say.

A) you earned money from consulting. That is self-employed. Money is taxable.

B) you were unemployed and earned NO income. No income, no tax return.

C) you had "investments that paid off". Gains from investments are taxable.

Which is it money or no money? Self-employed consultant or unemployed? Capital gains from investments reported as unearned income?

There is no value in filing a tax return if indeed you were unemployed and earned no income. If you were self-employed as a consultant and earned (even under the table), the IRS does not excuse you from reporting money you earned if it was over a certain amount depending on your filing status. Have you looked up the actual numbers that do not require filing or just guessing you didn't earn enough? Do people cheat the UK and US tax agencies? Sure they do, but it is still breaking the law. Will you get caught? Probably not.

It's for you to work out because only you know the details. I am not going to write every scenario possible just guessing from the sketchy info. I think you have gained some information that you can apply to the facts as you want to report them.

[bluebird74 34]

There is discrepancy in what you say.

A) you earned money from consulting. That is self-employed. Money is taxable.

B) you were unemployed and earned NO income. No income, no tax return.

C) you had "investments that paid off". Gains from investments are taxable.

Which is it money or no money? Self-employed consultant or unemployed? Capital gains from investments reported as unearned income?

If you were self-employed as a consultant and earned (even under the table), the IRS does not excuse you from reporting money you earned if it was over a certain amount depending on your filing status. Have you looked up the actual numbers that do not require filing or just guessing you didn't earn enough?

It's for you to work out because only you know the details. I am not going to write every scenario possible just guessing from the sketchy info. I think you have gained some information that you can apply to the facts as you want to report them.

I haven't given you any sketchy info, but I don't feel comfortable divulging all personal information to public on this forum. To clear some things:

A) yes I have earned money, but never registered my services as business in a foreign country (I'm a dual citizen through my parent). To me it was like as if I founded money on the street. Would you have reported your finding as income?

B) unemployed, no income, no tax return. Except for work done in the UK, where on two separate occasions, I earned less than 1200GBP

C) Not capital gains. Cash business investment that paid off 10 fold.

I'm unemployed, living on savings and what wife makes- for now. I'm sorry if this looks bad to you, but it's the truth and I'm not ashamed of not working. I don't sell drugs, steal, etc. I simply live off my savings, waiting to go back to U.S. I cannot get a job in the UK I would like and I'm qualified for. I'm looked upon as a foreigner with foreign diploma and work history. UK companies are picky about who they hire for office or sales jobs (I'm not talking about Primark type sales). I have better chances of getting hired in the UK by an American company, but it's easier to do it while in the States then here. Long story short, I refuse to work through agencies, just to make 200GBP/week. If I have to, I will. As of right now, I have the luxury of not needing to. I've done it before and I don't care to do it again.

[bluebird74 34]

Wow, did I just use a word: "founded?" I meant to write "found" of course.

[Nich-Nick 3,353]

Not judging at all. And by sketchy, I meant It takes dates, amounts, etc to explain taxes. Very complicated depending on ...well every detail that you know and I am only guessing. Was only saying I can't help more without details.

"To me it was like as if I found money on the street. Would you have reported your finding as income? "

Wel-l-l-l, she says slowly, you mean like the $200 cash the man gave my husband last week for helping him set up his new MacBook Pro. It was a unrelated side job to the home automation reason he went there as a subcontractor on behalf of a business. Yes, I wrote up an invoice strictly for our books of 2 hrs@$85/hr plus sales tax to remit to the state, and the rest coded as "tip". It will be reported as self-employment income. That's just how we roll, but I don't really care if you report or don't.