First time filing taxes while married [Help needed]

[Becker 17]

So we got married in December last year and we are looking at filing taxes. We have read the different ways to file taxes but are confused about how it all works. I assume the best option is for us to file separately but i will explain the situation below to get better answers.

 

We filed for our i130 this month. The UK citizen has never earned or worked in the USA but i understand we now need a ITIN for the UK Citizen. In terms of actually filing his taxes, how does this work? Do we have to put all of his UK income in a separate tax form when filing separately? I read something about a UK citizen needing to earn a certain high amount before paying tax in the US, how true is this? Will the UK citizen be taxed in the UK and in the US for income only earned in the UK?

 

Sorry this is like a foreign language to us and we want to get started early

[HRQX 4,145]

36 minutes ago, Becker said:

Sorry this is like a foreign language to us and we want to get started early

You can compare the final amounts for Married Filing Separately (MFS) and Married Filing Jointly (MFJ), and then choose the one that makes the most financial sense. You can choose either as its purely a tax matter; USCIS doesn't care if couples file MFS.

Edited January 28, 2021 by HRQX

[Ayrton 965]

1 hour ago, Becker said:

So we got married in December last year and we are looking at filing taxes. We have read the different ways to file taxes but are confused about how it all works. I assume the best option is for us to file separately but i will explain the situation below to get better answers.

 

We filed for our i130 this month. The UK citizen has never earned or worked in the USA but i understand we now need a ITIN for the UK Citizen. In terms of actually filing his taxes, how does this work? Do we have to put all of his UK income in a separate tax form when filing separately? I read something about a UK citizen needing to earn a certain high amount before paying tax in the US, how true is this? Will the UK citizen be taxed in the UK and in the US for income only earned in the UK?

 

Sorry this is like a foreign language to us and we want to get started early

Filing jointly will most likely be better since you me spouse didn't have a taxable income last year. Their income from UK will be exempted up to 105k (or something like that), just file 2555. 

 

Send the ITIN form along with the 1040.

Edited January 28, 2021 by Ayrton

[JeanneAdil 6,292]

file whichever is best for you but you are married by year's end so ,  you must state married

ITIN is the W7 form with the proofs of marriage and foreigner's ID  according to the IRS site below

 

https://www.irs.gov/individuals/international-taxpayers/nonresident-alien-spouse

 

you can file online but IRS will delay your returns asking you to send original documents so in this case paper filing is faster

and yes, form 2555 to take the foreign income exclusion according to a tax agreement we have with many (not all) countries and UK is on the list

[RO_AH 1,626]

My wife is abroad still and she is a housewife with no income to claim. I filed for the ITIN as it was advantageous in our situation. If you do file your taxes and request an ITIN you will need the passport of the foreign spouse to mail in with your taxes. You cannot e-file when requesting an ITIN. Any susequent years you can e-file once you have a valid ITIN.

[Becker 17]

Does anyone know where to find a step by step guide of filing jointly to a NRA who is filing 2555 as they are from the UK?

[HRQX 4,145]

27 minutes ago, Becker said:

Does anyone know where to find a step by step guide of filing jointly to a NRA who is filing 2555 as they are from the UK?

I'll tag @Wuozopo since he knows a lot about US/UK tax matters.

[Wuozopo 4,290]

52 minutes ago, Becker said:

Does anyone know where to find a step by step guide of filing jointly to a NRA who is filing 2555 as they are from the UK?

You can’t file jointly with a NRA (nonresident alien). NRAs have to file a 1040NR by themselves. Your wife, who is in the UK still, will need an ITIN and a written statement signed by both electing for the UK spouse to be treated as a resident alien for tax purposes. 
 

Maybe I can come up with a sample tax return of how a return like yours would look. We use TurboTax desktop which I haven’t installed yet. Not sure how to post something like that on here with limited upload space. Ideas? 

[Becker 17]

On 2/10/2021 at 6:46 PM, Wuozopo said:

You can’t file jointly with a NRA (nonresident alien). NRAs have to file a 1040NR by themselves. Your wife, who is in the UK still, will need an ITIN and a written statement signed by both electing for the UK spouse to be treated as a resident alien for tax purposes. 
 

Maybe I can come up with a sample tax return of how a return like yours would look. We use TurboTax desktop which I haven’t installed yet. Not sure how to post something like that on here with limited upload space. Ideas? 

I’m not sure on how you’d upload it. You could use a Google drive link maybe? 
 

if the USC files Married Filing Separately, does the U.K. citizen need to file any US tax return if all of their income is made in the U.K. and they live in the U.K.? 

[Wuozopo 4,290]

8 hours ago, Becker said:

f the USC files Married Filing Separately, does the U.K. citizen need to file any US tax return if all of their income is made in the U.K. and they live in the U.K.? 

The U.K. citizen does not have to file. If you can get the UK spouse an ITIN and file jointly, I think you will be surprised at the difference in  taxes/refund. 
Separate are taxed at a higher rate

You lose some tax benefits 

You don’t get that extra $12,400 off your taxable income for the spouses standard deduction.

If qualified for the second stimulus $600 per person, your spouse could get $600 when you file jointly.

 

[HRQX 4,145]

4 minutes ago, Wuozopo said:

If qualified for the second stimulus $600 per person, your spouse could get $600 when you file jointly.

The UK spouse would need SSN for immigrating spouse to qualify for stimulus tax credit per CARES Act and Consolidated Appropriations Act, 2021:

https://www.congress.gov/bill/116th-congress/senate-bill/3548/text

https://www.congress.gov/bill/116th-congress/house-bill/133/text

[Becker 17]

9 minutes ago, Wuozopo said:

The U.K. citizen does not have to file. If you can get the UK spouse an ITIN and file jointly, I think you will be surprised at the difference in  taxes/refund. 
Separate are taxed at a higher rate

You lose some tax benefits 

You don’t get that extra $12,400 off your taxable income for the spouses standard deduction.

If qualified for the second stimulus $600 per person, your spouse could get $600 when you file jointly.

 

There is so many things I have and haven’t heated about in regards to tax. Maybe if I lay out situation down you’ll advise what is best? Maybe that’s easier. 
 

So the USC earns more than the U.K. citizen. Not by a significant amount at all but we both currently earn maybe 23-27k a year. 

 

UK citizen earns all theirs in the U.K. and likewise with the USC. 

 

I’m not sure if it helps but neither of us own a house (I saw something about certain assets playing a factor so thought I’d mention this) we are both only renting where we live. 
 

Also in regards to the stimulus check the USC ticked dependent last year and did not get a stimulus anyway.  And this will be the first year actually declaring single (well, married filing separately or married/joint) 

 

From what I’ve gathered, I can’t see either one having a significant impact on tax for the USC? I’m not sure though. Tax/Accounts is not something I have deeply looking into over the past few years 

[Wuozopo 4,290]

8 minutes ago, HRQX said:

The UK spouse would need SSN for immigrating spouse to qualify for stimulus tax credit per CARES Act and Consolidated Appropriations Act, 2021:

https://www.congress.gov/bill/116th-congress/senate-bill/3548/text

https://www.congress.gov/bill/116th-congress/house-bill/133/text

Yes, I just realized I said that wrong. The first package excluded everybody on a return with an ITIN, but the second only excluded the ITIN person and not the rest of the family on that return, correct?

[Wuozopo 4,290]

7 minutes ago, Becker said:

Also in regards to the stimulus check the USC ticked dependent last year and did not get a stimulus anyway.  And this will be the first year actually declaring single (well, married filing separately or married/joint) 

For 2020 tax filing, do your parents still plan to claim you as their dependent on their  2020 tax return?

[HRQX 4,145]

8 minutes ago, Wuozopo said:

but the second only excluded the ITIN person and not the rest of the family on that return, correct?

Yes. The second package fixed the situation for both stimulus amounts for mixed-status* non-military families that were completely screwed by how the first package was written.

 

*"Mixed-status" as in the return includes both SSN and ITIN

Edited February 13, 2021 by HRQX