MFJ - How to Report Spouse's Foreign Income

[LIMmigration 4]

(Sorry if this question has been answered before.  I did search past posts but am still a bit confused...)

 

My wife and I have been married since 2019 and our visa was just approved in Feb 2022 and she's now in the US.  As I'm filing my taxes, I'd like to choose married-filing-jointly and treat her as a nonresident alien spouse.  She didn't enter the US and generated no income in the US in 2021.  She did generate income for 2021 in Singapore.  She does have an SSN.  I read through the IRS page (https://www.irs.gov/individuals/international-taxpayers/nonresident-spouse) and this is my understanding:

 

1. I have to mail my physical tax return to the IRS (I cannot e-file)
2. I need to submit a declaration that for the entire tax year, my wife was not a USC or US resident and that I was
3. Provide name/address/SSNs for both of us

 

My confusion comes with where I put my wife's Singapore income.  Do I convert the SGD value to USD using the current FX spot rate?  Do I put the income into the declaration I sent the IRS?  Do I attach her tax forms from Singapore?

 

Correct me if I'm wrong, but I was under the impression that as a nonresident alien, she has to pay US taxes on her Singapore income.  I would like to pay that during this tax filing instead of being hit with a tax bill on her foreign income next year.

 

 

[Crazy Cat 41,979]

The IRS publishes conversion rates every year.  Honestly, I would consult a good CPA who is familiar with reporting foreign income, and who can run the numbers for filing both jointly and separately.   There are also FBAR requirements to consider.  My CPA does a great job. She runs the numbers, provides a 2 year comparison, and she files our FBAR every year.  

[Wuozopo 4,293]

53 minutes ago, LIMmigration said:

I'd like to choose married-filing-jointly and treat her as a nonresident alien spouse

A non-resident can not be on a joint return. She has to be a resident alien.

 

53 minutes ago, LIMmigration said:

• I have to mail my physical tax return to the IRS (I cannot e-file)
• I need to submit a declaration that for the entire tax year, my wife was not a USC or US resident and that I was
• Provide name/address/SSNs for both of us

Let’s get the non-resident thing cleared up first.

 

Also Does she have a greencard? When did she enter the US onher visa? Update your timeline.

What software do you use for taxes. I am most experienced with TurboTax but used H&R software once when they gave us a free disk to try. They go about entering the foreign differently to get to the same thing.

Edited March 15, 2022 by Wuozopo

[LIMmigration 4]

6 minutes ago, Wuozopo said:

A non-resident can not be on a joint return. She has to be a resident alien.

 

Let’s get the non-resident thing cleared up first.

 

Also Does she have a greencard? When did she enter the US onher visa? Update your timeline.

What software do you use for taxes. I am most experienced with TurboTax but used H&R software once when they gave us a free disk to try. They go about entering the foreign differently to get to the same thing.

I meant to say filing MFJ as a resident alien.  She got her stamp (waiting for green card to process) when she entered on Feb 5, 2022.

 

I was using FreeTaxUSA, but if TurboTax makes this easier, I will buy that.

 

 

48 minutes ago, Crazy Cat said:

The IRS publishes conversion rates every year.  Honestly, I would consult a good CPA who is familiar with reporting foreign income, and who can run the numbers for filing both jointly and separately.   There are also FBAR requirements to consider.  My CPA does a great job. She runs the numbers, provides a 2 year comparison, and she files our FBAR every year.  

Thanks for the response.  I may need to talk to a local CPA on this.

[Wuozopo 4,293]

13 hours ago, LIMmigration said:

I meant to say filing MFJ as a resident alien.  She got her stamp (waiting for green card to process) when she entered on Feb 5, 2022.

 

I was using FreeTaxUSA, but if TurboTax makes this easier, I will buy that.

 

I had a look and FreeTax USA doesn’t support Form 2555 Foreign Earned Income Exclusion. This page shows that https://www.freetaxusa.com/supported_forms.jsp?thn=3F1C9AF974FF982B2BC274049BA41852
My wife has used TurboTax more than 20 years so just what she continues to use. We buy the disk and install it, so not real familiar with how online compares in pricing. Deluxe version will do everything so no need to go for their upsell suggestions or audit defense, etc. On sale again right now for $49 with state included or $39 for federal only at most places like Amazon, Target, Sam’s Club. 

 

Yes for tax year 2021, you both must sign a statement electing for her to be a resident alien for tax purposes. That’s not usually something software allows to create and send efile, so you end up printing, signing, and mailing in a return to get the statement including with the return. The statement we wrote/sent is in this post as an example, or write one of your own choosing. https://www.visajourney.com/forums/topic/779952-tax-filing-question-aos-from-k1/?do=findComment&comment=10636200

 

 

15 hours ago, LIMmigration said:

My confusion comes with where I put my wife's Singapore income.  Do I convert the SGD value to USD using the current FX spot rate?  Do I put the income into the declaration I sent the IRS?  Do I attach her tax forms from Singapore?

You are allowed to convert at the rate when earned. I think we did a mix of rates because the British pound was all over the place that year. There are websites where you can find historical rates. We used OANDA or XE.  Or you can choose an average rate. The US Treasury publishes averages for each quarter.
 

The irs doesn’t ask for anything to document that income with something akin to our W2. Just come up with a figure and use it. The income is not in your declaration statement. It is reported on the tax return in US dollars and ends up on Line 1 where your wage earnings are reported. How you get it there depends on the software. With TurboTax, they ask about all your income first so you go through wages on W2,, interest, dividends, pensions, etc, etc. At the end if income it has a section they call “Less Common Income”. That’s where you put in the foreign income. It will say something like “Did you have any foreign income” Yes. Then follow the prompts to enter it. It will take you through the Foreign Earned Income exclusion too. It puts everything in the right place on Schedule 1 and in Line 1 of the 1040 added to your income, and Line 8 of 1040 where it subtracts out the foreign. It will create form 2555 Foreign Earned Income Exclusion. 
 

15 hours ago, LIMmigration said:

Correct me if I'm wrong, but I was under the impression that as a nonresident alien, she has to pay US taxes on her Singapore income.  I would like to pay that during this tax filing instead of being hit with a tax bill on her foreign income next year.

 

 You report her foreign earned income  for 2021 on your joint tax return. The foreign earned income exclusion (Form 2555) allows the tax it would create be taken off. In 2022 tax year, her salary (earned income) can only be excluded for the portion of the year she resided in Singapore (Jan 1- Feb 5). 

 

The foreign income exclusion is only used on “earned income”—-salary, job earnings.

Investment income like dividend, interest are “unearned income” and are not included in form 2555.

 

 Chew on that then ask further questions when you have them

Edited March 16, 2022 by Wuozopo

[LIMmigration 4]

1 hour ago, Wuozopo said:

I had a look and FreeTax USA doesn’t support Form 2555 Foreign Earned Income Exclusion. This page shows that https://www.freetaxusa.com/supported_forms.jsp?thn=3F1C9AF974FF982B2BC274049BA41852
My wife has used TurboTax more than 20 years so just what she continues to use. We buy the disk and install it, so not real familiar with how online compares in pricing. Deluxe version will do everything so no need to go for their upsell suggestions or audit defense, etc. On sale again right now for $49 with state included or $39 for federal only at most places like Amazon, Target, Sam’s Club. 

 

Yes for tax year 2021, you both must sign a statement electing for her to be a resident alien for tax purposes. That’s not usually something software allows to create and send efile, so you end up printing, signing, and mailing in a return to get the statement including with the return. The statement we wrote/sent is in this post as an example, or write one of your own choosing. https://www.visajourney.com/forums/topic/779952-tax-filing-question-aos-from-k1/?do=findComment&comment=10636200

 

 

You are allowed to convert at the rate when earned. I think we did a mix of rates because the British pound was all over the place that year. There are websites where you can find historical rates. We used OANDA or XE.  Or you can choose an average rate. The US Treasury publishes averages for each quarter.
 

The irs doesn’t ask for anything to document that income with something akin to our W2. Just come up with a figure and use it. The income is not in your declaration statement. It is reported on the tax return in US dollars and ends up on Line 1 where your wage earnings are reported. How you get it there depends on the software. With TurboTax, they ask about all your income first so you go through wages on W2,, interest, dividends, pensions, etc, etc. At the end if income it has a section they call “Less Common Income”. That’s where you put in the foreign income. It will say something like “Did you have any foreign income” Yes. Then follow the prompts to enter it. It will take you through the Foreign Earned Income exclusion too. It puts everything in the right place on Schedule 1 and in Line 1 of the 1040 added to your income, and Line 8 of 1040 where it subtracts out the foreign. It will create form 2555 Foreign Earned Income Exclusion. 
 

 You report her foreign earned income  for 2021 on your joint tax return. The foreign earned income exclusion (Form 2555) allows the tax it would create be taken off. In 2022 tax year, her salary (earned income) can only be excluded for the portion of the year she resided in Singapore (Jan 1- Feb 5). 

 

The foreign income exclusion is only used on “earned income”—-salary, job earnings.

Investment income like dividend, interest are “unearned income” and are not included in form 2555.

 

 Chew on that then ask further questions when you have them

I greatly appreciate the effort you put into this response--especially the sample statement to include.  I just used Turbo Tax Deluxe and it was very simple and straightforward with how to file her foreign income.  Thank you for your help!