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IF-Mclean

Arrived December 2018 (CR1), filling taxes

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Hello,

I need some advices while I'm trying to understand US tax system. 

I arrived ealy December 2018 as a green card holder through a CR1 visa. I don't work yet in the USA but I have income from a company based in my previous home country.

 I understood I have to fill taxes for this year.

I have two questions:

1 . Should I report what I earned during my time in the USA (only December) or during all 2018 ?

2. Should I report my gross salary or only what I received on my bank account after the taxes were removed ?

 

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  1. You must report all income. As a bona fide resident in the 2018 tax year, worldwide income must be reported. You likely can remove exclude all your income from being taxed, but your specific circumstances will determine your tax liability.
  2. Gross salary.
Edited by geowrian

Timelines:

Spoiler

AOS (I-485 + I-131 + I-765):

9/25/17: sent forms to Chicago

9/27/17: received by USCIS

10/4/17: NOA1 electronic notification received

10/10/17: NOA1 hard copy received. Social Security card being issued in married name (3rd attempt!)

10/14/17: Biometrics appointment notice received

10/25/17: Biometrics

1/2/18: EAD + AP approved (no website update)

1/5/18: EAD + AP mailed

1/8/18: EAD + AP approval notice hardcopies received

1/10/18: EAD + AP received

9/5/18: Interview scheduled notice

10/17/18: Interview

10/24/18: Green card produced notice

10/25/18: Formal approval

10/31/18: Green card received

 

K-1:

Spoiler

I-129F

12/1/17: sent

12/14/17: NOA1 hard copy received

3/10/17: RFE (IMB verification)

3/22/17: RFE response received

3/24/17: Approved!

3/30/17: NOA2 hard copy received

 

NVC

4/6/2017: Received

4/12/2017: Sent to Riyadh embassy

4/16/2017: Case received at Riyadh embassy

4/21/2017: Request case transfer to Manila, approved 4/24/2017

 

K-1

5/1/2017: Case received by Manila (1 week embassy transfer??? Lucky~)

7/13/2017: Interview: APPROVED!!!

7/19/2017: Visa in hand

8/15/2017: POE

 

 

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I would go to a tax professional as if I recall correctly, there’s a form to put Foreign Tax Credit.  There is a 31 day test for new residents.  You may get a free pass if you came in December and were here less than 31 days in a year.  I would talk to a qualified tax pro for this year’s taxes as you don’t want to overpay.

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9 hours ago, geowrian said:
  1. You must report all income. As a bona fide resident in the 2018 tax year, worldwide income must be reported. You likely can remove exclude all your income from being taxed, but your specific circumstances will determine your tax liability.
  2. Gross salary.

Thank you for this precious information. 

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9 hours ago, bakphx1 said:

I would go to a tax professional as if I recall correctly, there’s a form to put Foreign Tax Credit.  There is a 31 day test for new residents.  You may get a free pass if you came in December and were here less than 31 days in a year.  I would talk to a qualified tax pro for this year’s taxes as you don’t want to overpay.

Thanks a lot for your response.

Yes I will spend less than 31 days at the end of the year. But I don't think I will overpay as my annual income is less than $20000.

I wanted to make sure I understood the process. If I fill jointly with my spouse we think that could raise our taxes return. 

Edited by IF-Mclean

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1 hour ago, IF-Mclean said:

 

I wanted to make sure I understood the process. If I fill jointly with my spouse we think that could raise our taxes return. 

Actually you will lower the tax bill/increase the refund.  Every person who files gets a $12,000 credit to their taxable  income.  For most people that a tax savings of about $1,300.  So, if you report zero income but file jointly, your spouse gets a nice tax break.  Even if you file your income, you get a credit for taxes paid abroad.  That’s why I recommend a tax preparer.  Your tax credit will more than pay for the fee.  You guys just need to figure out the best way to get the credits you’re entitled to and make the most of them.  And go to a person with true education in taxes, not a seasonal tax preparer.  In the US, they spring up in February.  

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3 hours ago, bakphx1 said:

Actually you will lower the tax bill/increase the refund.  Every person who files gets a $12,000 credit to their taxable  income.  For most people that a tax savings of about $1,300.  So, if you report zero income but file jointly, your spouse gets a nice tax break.  Even if you file your income, you get a credit for taxes paid abroad.  That’s why I recommend a tax preparer.  Your tax credit will more than pay for the fee.  You guys just need to figure out the best way to get the credits you’re entitled to and make the most of them.  And go to a person with true education in taxes, not a seasonal tax preparer.  In the US, they spring up in February.  

Thanks a lot! What seemed to be an issue seems to be an opportunity now.

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In most cases, filing jointly results in the smallest tax liability. There are some off cases where filing married but separately (or HOH) has applicable benefits.


Timelines:

Spoiler

AOS (I-485 + I-131 + I-765):

9/25/17: sent forms to Chicago

9/27/17: received by USCIS

10/4/17: NOA1 electronic notification received

10/10/17: NOA1 hard copy received. Social Security card being issued in married name (3rd attempt!)

10/14/17: Biometrics appointment notice received

10/25/17: Biometrics

1/2/18: EAD + AP approved (no website update)

1/5/18: EAD + AP mailed

1/8/18: EAD + AP approval notice hardcopies received

1/10/18: EAD + AP received

9/5/18: Interview scheduled notice

10/17/18: Interview

10/24/18: Green card produced notice

10/25/18: Formal approval

10/31/18: Green card received

 

K-1:

Spoiler

I-129F

12/1/17: sent

12/14/17: NOA1 hard copy received

3/10/17: RFE (IMB verification)

3/22/17: RFE response received

3/24/17: Approved!

3/30/17: NOA2 hard copy received

 

NVC

4/6/2017: Received

4/12/2017: Sent to Riyadh embassy

4/16/2017: Case received at Riyadh embassy

4/21/2017: Request case transfer to Manila, approved 4/24/2017

 

K-1

5/1/2017: Case received by Manila (1 week embassy transfer??? Lucky~)

7/13/2017: Interview: APPROVED!!!

7/19/2017: Visa in hand

8/15/2017: POE

 

 

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On 12/22/2018 at 11:54 PM, bakphx1 said:

I would go to a tax professional as if I recall correctly, there’s a form to put Foreign Tax Credit.  There is a 31 day test for new residents.  You may get a free pass if you came in December and were here less than 31 days in a year.  I would talk to a qualified tax pro for this year’s taxes as you don’t want to overpay.

There is no free pass but you definitely qualify for most of the $104,000 bonafide resident (of your previous country) foreign earned income exclusion.  If you just arrived in December and didnt spend any other time in the US in 2018 you probably get the whole exclusion based on physical presence.  At a minimum you can exclude a prorated amount based on when you entered the country as a legal resident.

So:  when the taxes are being filled out enter your income along with your spouses but enter yours as foreign earned.  Any tax package (we used turbotax last year) will guide you through and unless (your) 2018 income was more than $104,000 (you) won’t owe any taxes.  There is a benefit that  but your tax rates on the total income that is taxable will be much lower because you are filing as married / joint so you get a nice break and usually a nice refund.

The bank account? Just a form stating you have an overseas bank account etc  and has nothing to do with taxes.  

 

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

 

Some rules and regs for your enjoyment.  

 

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7 hours ago, Nitas_man said:

There is no free pass but you definitely qualify for most of the $104,000 bonafide resident (of your previous country) foreign earned income exclusion.  If you just arrived in December and didnt spend any other time in the US in 2018 you probably get the whole exclusion based on physical presence.  

 

The whole exclusion based on physical presence is the “free pass” I referred to.   If it es interpreted differently I was just being simple.  But I think OP understands now that there are credits and no liabilities for filing.  

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11 hours ago, Nitas_man said:

There is no free pass but you definitely qualify for most of the $104,000 bonafide resident (of your previous country) foreign earned income exclusion.  If you just arrived in December and didnt spend any other time in the US in 2018 you probably get the whole exclusion based on physical presence.  At a minimum you can exclude a prorated amount based on when you entered the country as a legal resident.

So:  when the taxes are being filled out enter your income along with your spouses but enter yours as foreign earned.  Any tax package (we used turbotax last year) will guide you through and unless (your) 2018 income was more than $104,000 (you) won’t owe any taxes.  There is a benefit that  but your tax rates on the total income that is taxable will be much lower because you are filing as married / joint so you get a nice break and usually a nice refund.

The bank account? Just a form stating you have an overseas bank account etc  and has nothing to do with taxes.  

 

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

 

Some rules and regs for your enjoyment.  

 

Thanks a lot for your response. By the end of the year I will spend exactly 31 days in the US: 27 days as a green card holder and 4 days as a visitor ( from a previous trip for a meeting ). And yes my foreign income is way lower than $104000.

 

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Just now, IF-Mclean said:

Thanks a lot for your response. By the end of the year I will spend exactly 31 days in the US: 27 days as a green card holder and 4 days as a visitor ( from a previous trip for a meeting ). And yes my foreign income is way lower than $104000.

 

You’re set for the whole exclusion.  Choose “physical presence test” under the foreign earned income exclusion and it will subtract everything you made.  It will ask for those dates you mentioned, make sure you have documentation for entry/exit (I used travel itineraries) and save that somewhere.  

You guys should get a nice break on the US income side because you’re filing married/joint and your spouse’s taxes will have gone way down.  Best of luck!

 

 

 

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1 hour ago, Nitas_man said:

You’re set for the whole exclusion.  Choose “physical presence test” under the foreign earned income exclusion and it will subtract everything you made.  It will ask for those dates you mentioned, make sure you have documentation for entry/exit (I used travel itineraries) and save that somewhere.  

You guys should get a nice break on the US income side because you’re filing married/joint and your spouse’s taxes will have gone way down.  Best of luck!

 

 

 

Thank you for the link. I found the form 2555 which seems to perfectly fit with my profile. I have the stamps on my passport. I'm going to keep them carefully.

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On 12/23/2018 at 9:10 AM, IF-Mclean said:

Thanks a lot for your response.

Yes I will spend less than 31 days at the end of the year. But I don't think I will overpay as my annual income is less than $20000.

I wanted to make sure I understood the process. If I fill jointly with my spouse we think that could raise our taxes return. 

I'm in a similar situation. I'm a USC married to Mexican who has been in the US since August 2018. We married in December. He is considered a US Resident Alien for tax purposes due to the substantial presence test (more that 183 days present in US during 2018). Even if he didn't pass the substantial presence test, we would have chosen to treat him as a Resident Alien.

 

Before coming to the US, he had income and paid taxes in Mexico. We are filing MFJ. Because of filing MFJ, we must include his income from Mexico with my income on line 1 of 1040. This is called "worldwide income." In order to prevent double taxation on his income in Mexico, we are filing form 1116 Foreign Tax Credit. It's a little complicated, but read the instructions thoroughly and you'll figure it out. Form 1116 helps you figure out how much of a credit you can take on your foreign taxes. You are not required to provide any proof of what your foreign income was, or how much foreign taxes you paid, but you should keep those records in the event you are audited.

 

If you don't have any foreign income for 2018, then your situation may be even easier.

 

Here are the forms I will file for 2019.

2018 1040

2018 1040 S 3 (Schedule where you input the credit figured on form 1116)

2018 1116 Foreign Tax Credit

 

Best of luck!

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