US taxes: Married to a NRA?

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US taxes: Married to a NRA?


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Old 15th January 2012, 09:48 AM
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Default US taxes: Married to a NRA?

For those American expats married to a foreigner (referred to by the US government as “non-resident aliens” or NRAs), there are a few points to be aware of when it comes to filing your US taxes. (Note that non-resident means that you and your spouse are living outside the US. If you're both living in the US, you're both subject to US taxation and can file like any American couple.)

While there is an election to file jointly with your NRA spouse (usually in the year your spouse arrives in the US or departs from the US), you want to consider carefully whether or not to use this option. If you elect to treat your NRA spouse as a US resident for tax purposes, you both lose the ability to take the FEIE (to exclude earned income made while living abroad).

Most US citizens married to NRAs file as “married, filing separately” although there are certain disadvantages to this category, too (mainly, the very low filing threshold - $3700 for 2011 returns - which doesn’t increase when you hit age 65). Filing separately will also subject more of your Social Security benefits (if you’re retired and drawing SS benefits) to taxation.

Your NRA spouse does not need to have a social security number, nor an ITIN (International Taxpayer Identification Number) if they are not subject to US taxation as long as you are not claiming them as a dependent. (See the rules for claiming a spouse as a dependent, too. It s not easy to do.) If you qualify to claim your children as dependents on your tax returns, they will need to have either SS numbers or ITINs, which should be obtained before you file your returns. It may be possible (and slightly advantageous) to file as Head of Household if you have minor children you can claim as your dependents.

If your NRA spouse does not have an ITIN and is not subject to filing US taxes, just fill in “NRA” on your Form 1040 where it asks for the Social Security number of your spouse. (This may keep you from being able to use some tax preparation software and online tax preparation services.)

Read the instructions in Publication 54 carefully. You normally do NOT have to declare any of your NRA spouse’s earnings (salary, etc.) on your US tax returns. When filing as the US spouse of an NRA please also take a look at the thread here on “Declaring Foreign Financial Assets” which discusses some new regs that may affect the reporting of financial accounts you hold jointly with your NRA spouse.
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Old 15th January 2012, 11:06 AM
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great info, thanks

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Old 15th January 2012, 07:26 PM
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Does FEIE apply to self-employed earnings if you are a professional working on a contract basis for something like a school?

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Old 15th January 2012, 07:43 PM
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How does one file U.S. tax returns with self-employed earnings, if it is derived from a business in one's home repairing vehicles? The business is incorporated with only the owner/operator running it. Can he just file, reporting self-employed earnings? Or does he also have to file for his business located in Canada with no ties to the U.S.?

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Old 15th January 2012, 08:40 PM
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Quote:
Originally Posted by greyowl View Post
Does FEIE apply to self-employed earnings if you are a professional working on a contract basis for something like a school?
Normally, yes, "self-employed" earnings are treated as "salary" for FEIE purposes. If you're on a contract basis and being compensated for expenses, you may want to consider filing a Schedule C to deduct your expenses.
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Old 15th January 2012, 08:49 PM
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Quote:
Originally Posted by Madonna View Post
How does one file U.S. tax returns with self-employed earnings, if it is derived from a business in one's home repairing vehicles? The business is incorporated with only the owner/operator running it. Can he just file, reporting self-employed earnings? Or does he also have to file for his business located in Canada with no ties to the U.S.?
If the business is incorporated in Canada, then whatever the taxpayer is paid as "salary" is considered earned income as far as the FEIE is concerned - as long as it can be justified as compensation for his services. If he's paying into the Canadian "social security" system, then he shouldn't be liable for US social security.

If the business is incorporated, does that mean that the business pays income taxes on its earnings, with the "salary" of the owner/operator as one of the business expenses? In that case, he isn't really "self-employed" - he's actually an employee of the corporation.
Cheers,
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Old 15th January 2012, 09:23 PM
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Quote:
Originally Posted by Bevdeforges View Post
If the business is incorporated in Canada, then whatever the taxpayer is paid as "salary" is considered earned income as far as the FEIE is concerned - as long as it can be justified as compensation for his services. If he's paying into the Canadian "social security" system, then he shouldn't be liable for US social security.

If the business is incorporated, does that mean that the business pays income taxes on its earnings, with the "salary" of the owner/operator as one of the business expenses? In that case, he isn't really "self-employed" - he's actually an employee of the corporation.
Cheers,
Bev
Thanks, Bev. That helps a lot. You've been a beacon of common sense and information for me during this whole struggle to comply with our newly discovered U.S. filing obligations.

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Old 17th October 2012, 10:21 PM
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Quote:
Originally Posted by Bevdeforges View Post
For those American expats married to a foreigner (referred to by the US government as “non-resident aliens” or NRAs), there are a few points to be aware of when it comes to filing your US taxes. (Note that non-resident means that you and your spouse are living outside the US. If you're both living in the US, you're both subject to US taxation and can file like any American couple.)

While there is an election to file jointly with your NRA spouse (usually in the year your spouse arrives in the US or departs from the US), you want to consider carefully whether or not to use this option. If you elect to treat your NRA spouse as a US resident for tax purposes, you both lose the ability to take the FEIE (to exclude earned income made while living abroad).

Most US citizens married to NRAs file as “married, filing separately” although there are certain disadvantages to this category, too (mainly, the very low filing threshold - $3700 for 2011 returns - which doesn’t increase when you hit age 65). Filing separately will also subject more of your Social Security benefits (if you’re retired and drawing SS benefits) to taxation.

Your NRA spouse does not need to have a social security number, nor an ITIN (International Taxpayer Identification Number) if they are not subject to US taxation as long as you are not claiming them as a dependent. (See the rules for claiming a spouse as a dependent, too. It s not easy to do.) If you qualify to claim your children as dependents on your tax returns, they will need to have either SS numbers or ITINs, which should be obtained before you file your returns. It may be possible (and slightly advantageous) to file as Head of Household if you have minor children you can claim as your dependents.

If your NRA spouse does not have an ITIN and is not subject to filing US taxes, just fill in “NRA” on your Form 1040 where it asks for the Social Security number of your spouse. (This may keep you from being able to use some tax preparation software and online tax preparation services.)

Read the instructions in Publication 54 carefully. You normally do NOT have to declare any of your NRA spouse’s earnings (salary, etc.) on your US tax returns. When filing as the US spouse of an NRA please also take a look at the thread here on “Declaring Foreign Financial Assets” which discusses some new regs that may affect the reporting of financial accounts you hold jointly with your NRA spouse.
Hi I have just found out about having to file my us taxes I have lived in canda for 40 years and never knew about it I came up with my parents when I was 14 and I have a landed immigrant card all these years.. my question is my husband inherited some money from his parents and he is afraid if I file my taxes in the us they will try and get his inheritance. could you please tell me if this is true?I was not named a benificary in the will, but it shows going into our bank account that we hold jointly.
thank you
Jeanne

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Old 17th October 2012, 10:23 PM
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ps I am losing sleep over this and my stomach is in knotts all the time. please help!
Jeanne

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Old 17th October 2012, 10:25 PM
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Quote:
Originally Posted by Bevdeforges View Post
For those American expats married to a foreigner (referred to by the US government as “non-resident aliens” or NRAs), there are a few points to be aware of when it comes to filing your US taxes. (Note that non-resident means that you and your spouse are living outside the US. If you're both living in the US, you're both subject to US taxation and can file like any American couple.)

While there is an election to file jointly with your NRA spouse (usually in the year your spouse arrives in the US or departs from the US), you want to consider carefully whether or not to use this option. If you elect to treat your NRA spouse as a US resident for tax purposes, you both lose the ability to take the FEIE (to exclude earned income made while living abroad).

Most US citizens married to NRAs file as “married, filing separately” although there are certain disadvantages to this category, too (mainly, the very low filing threshold - $3700 for 2011 returns - which doesn’t increase when you hit age 65). Filing separately will also subject more of your Social Security benefits (if you’re retired and drawing SS benefits) to taxation.

Your NRA spouse does not need to have a social security number, nor an ITIN (International Taxpayer Identification Number) if they are not subject to US taxation as long as you are not claiming them as a dependent. (See the rules for claiming a spouse as a dependent, too. It s not easy to do.) If you qualify to claim your children as dependents on your tax returns, they will need to have either SS numbers or ITINs, which should be obtained before you file your returns. It may be possible (and slightly advantageous) to file as Head of Household if you have minor children you can claim as your dependents.

If your NRA spouse does not have an ITIN and is not subject to filing US taxes, just fill in “NRA” on your Form 1040 where it asks for the Social Security number of your spouse. (This may keep you from being able to use some tax preparation software and online tax preparation services.)

Read the instructions in Publication 54 carefully. You normally do NOT have to declare any of your NRA spouse’s earnings (salary, etc.) on your US tax returns. When filing as the US spouse of an NRA please also take a look at the thread here on “Declaring Foreign Financial Assets” which discusses some new regs that may affect the reporting of financial accounts you hold jointly with your NRA spouse.
what is publication 54 and how do I find it to read?
Jeanne

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