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Discussion Starter · #1 ·
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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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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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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Discussion Starter · #5 ·
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.
Cheers,
Bev
 

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Discussion Starter · #6 ·
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,
Bev
 

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Thanks!

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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us citizen married to a canadian

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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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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Discussion Starter · #11 ·
When you file taxes as the spouse of a NRA you file as "married, filing separately" and only YOUR income is subject to reporting and tax. You do NOT have to declare half of your spouse's income and in any event an inheritance wouldn't count as income anyhow.

You probably will have to report your joint interest in the bank account(s) held with your husband - but that's a separate form, filed with the Treasury Department and is, quite literally, just an "information report" without tax implications.

All US tax forms and publications are available online from the IRS website Internal Revenue Service Publication 54 is here: http://www.irs.gov/pub/irs-pdf/p54.pdf
Cheers,
Bev
 

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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
Many people no longer want their US-person spouse to have signing authority over any of their family assets because it will all have to be reported to the IRS and eventually be subject to questioning, etc. It is a huge problem and creating a new class of women housewives around the world, those who are now removed from any involvement in family finances because of their US status. Which is fine and well until something happens to the husband, divorce or death and the women has no rights anymore to the assets, home, life she helped build. American Citizens Abroad talks about this in their radio interviews, very interesting, I'm a newbie so I cannot post a link to their website but I'm sure you can find it.

It will also depend on your marriage contract, if it is a community property contract, it could be that this inheritance is indeed partly yours and taxes might be due. Is there a prenup? Is it separate property? Even if you are filing separately, if your marriage contract is joint, you could be liable.

It is all very complicated and like many, many of us your stomach is in knots and rightly so. Good luck.
 

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Marraige contract? community Property?

Many people no longer want their US-person spouse to have signing authority over any of their family assets because it will all have to be reported to the IRS and eventually be subject to questioning, etc. It is a huge problem and creating a new class of women housewives around the world, those who are now removed from any involvement in family finances because of their US status. Which is fine and well until something happens to the husband, divorce or death and the women has no rights anymore to the assets, home, life she helped build. American Citizens Abroad talks about this in their radio interviews, very interesting, I'm a newbie so I cannot post a link to their website but I'm sure you can find it.

It will also depend on your marriage contract, if it is a community property contract, it could be that this inheritance is indeed partly yours and taxes might be due. Is there a prenup? Is it separate property? Even if you are filing separately, if your marriage contract is joint, you could be liable.

It is all very complicated and like many, many of us your stomach is in knots and rightly so. Good luck.
This is concerning I did not know there was different kinds of marriages and no I didn't sign a pre nup we just got married in a little church and that was it- I don't know what a community property marraige as apposed to a non community property marriage even is. Gosh how could I even find that out? should I get re-married and sign a pre nup? anybody have any more info on this? I see my accountant next week and I really need to know more about this as I need to quell my husbands doubts.
 

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Bev do you think what (what should I do) is right about the community property thing concerning my husbands inheritance from his parents farm?
I also have a problem with getting my social security number as they said I need a document for each decade I have lived that has my name and picture. they said school records would work and I have none I never went to school. they said medical records and I didn't go to the doctor other then when I was born until I came to canada at 14. Then they said my place of residence where I lived when I was in the states and there is no record because my parents lived in parks and in cars. I did not have a standard upbringing as you can see. How does sombody like me get a security number they must have some way? I can't be the only one that had crazy parents.
 

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Discussion Starter · #15 ·
Bev do you think what (what should I do) is right about the community property thing concerning my husbands inheritance from his parents farm?
I also have a problem with getting my social security number as they said I need a document for each decade I have lived that has my name and picture. they said school records would work and I have none I never went to school. they said medical records and I didn't go to the doctor other then when I was born until I came to canada at 14. Then they said my place of residence where I lived when I was in the states and there is no record because my parents lived in parks and in cars. I did not have a standard upbringing as you can see. How does sombody like me get a security number they must have some way? I can't be the only one that had crazy parents.
Personally, I wouldn't worry about the community property thing. If you don't have a prenup (and most people don't) your marital property situation is usually a function of the state or province (or country) where you are currently living.

For the inheritance, that doesn't count as "income" the way US tax law works. How any interest or capital gains are divided between spouses when an inheritance (or any other capital) is part of a jointly held account is pretty much up for grabs and can be handled in a variety of ways. Unless we're talking very large amounts (tens or hundreds of thousands of dollars) in income, the IRS is not going to spend much time checking these things out or trying to collect taxes on the amounts.
Cheers,
Bev
 

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I don't know what a community property marraige as apposed to a non community property marriage even is. Gosh how could I even find that out? should I get re-married and sign a pre nup? anybody have any more info on this?.
Dear Jenne2, so sorry to have thrown you into a whirl.

I only mentioned the community property thing, because that was what my tax lawyer asked me when I regularized. I know that several people on this forum have posted that if you have a NRA spouse you can file separately; this is perhaps true but in that case my US tax lawyer is mistaken. He asked me many questions about my marriage contract abroad, and luckily it was a separate property contract. Perhaps my lawyer was mistaken or the rules have changed.

Basically, when you marry you can either decide to share everything (community property), to keep everything separate (separate property) or a mix of the two (usually done with a specific clause or annex in the marriage contract, or in the US commonly a prenup agreement),

Apparently in the USA some states are "community property states" which means all marriages in those states are community property unless another agreement like a prenup exists (anyone jump in here if I'm wrong).

I don't know how it is in Canada.

In my country the basic default was separate property contracts which was luckily what I had.

My lawyer said that if I had a community property wedding, the husbands and wifes assets are split down the middle and you have to declare half of everything each year.

For an inheritance indeed you should not have to pay income tax on it... however you must inform yourself about the multiple declarations you may have to make. If you get a gift or inheritance from someone who is not a US citizen, and you don't declare it, it could be subject to penalties. So you just have to make sure you get the paperwork done correctly.

Of course going forward if your inheritance produces an income (for example if you rent the farm and get rental income, or if you sell it and make a capital gain), that income would be half yours and must be declared and taxes paid depending on your marriage contract.

I pretty much agree with the main guidelines given elsewhere on this forum, just do your best to try and fill in the paperwork as completely as possible and make sure you do so every year; do not do anything drastic, just try your very best to comply and probably everything will be ok.
 

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community property

Dear Jenne2, so sorry to have thrown you into a whirl.

I only mentioned the community property thing, because that was what my tax lawyer asked me when I regularized. I know that several people on this forum have posted that if you have a NRA spouse you can file separately; this is perhaps true but in that case my US tax lawyer is mistaken. He asked me many questions about my marriage contract abroad, and luckily it was a separate property contract. Perhaps my lawyer was mistaken or the rules have changed.

Basically, when you marry you can either decide to share everything (community property), to keep everything separate (separate property) or a mix of the two (usually done with a specific clause or annex in the marriage contract, or in the US commonly a prenup agreement),

Apparently in the USA some states are "community property states" which means all marriages in those states are community property unless another agreement like a prenup exists (anyone jump in here if I'm wrong).

I don't know how it is in Canada.

In my country the basic default was separate property contracts which was luckily what I had.

My lawyer said that if I had a community property wedding, the husbands and wifes assets are split down the middle and you have to declare half of everything each year.

For an inheritance indeed you should not have to pay income tax on it... however you must inform yourself about the multiple declarations you may have to make. If you get a gift or inheritance from someone who is not a US citizen, and you don't declare it, it could be subject to penalties. So you just have to make sure you get the paperwork done correctly.

Of course going forward if your inheritance produces an income (for example if you rent the farm and get rental income, or if you sell it and make a capital gain), that income would be half yours and must be declared and taxes paid depending on your marriage contract.

I pretty much agree with the main guidelines given elsewhere on this forum, just do your best to try and fill in the paperwork as completely as possible and make sure you do so every year; do not do anything drastic, just try your very best to comply and probably everything will be ok.
Thanks for you explaination I really appreciate the time you took. I guess I will know more when I see my accountant next week I hope he knows about all this stuff. I am trying to study it all as much as possible so I at least know a bit. I just find it so scary cause we worked so very hard for what we have-
 

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Personally, I wouldn't worry about the community property thing. If you don't have a prenup (and most people don't) your marital property situation is usually a function of the state or province (or country) where you are currently living.

Bev
Indeed, your marital property situation could be dictated by local law, local customs...

And in many places it could be a COMMUNITY PROPERTY by default.

My tax lawyers said the IRS will look to the local contract and law to determine if you are under a community property or separate property contract.

Anyone who is a US citizen with a NRA spouse, and who has a community property contract by default or by agreement, should worry about it.

I have a friend in a dire situation because of this.

It implies that on your tax return, FBARS and other declarations you own half of everything and your income is half of everything. It is a completely different way of filling out your 1040 and could have very serious impacts.

On what basis are you saying "don't worry about it", are you a CPA, tax lawyer, accountant in France, IRS employee?
 

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Discussion Starter · #19 ·
On what basis are you saying "don't worry about it", are you a CPA, tax lawyer, accountant in France, IRS employee?
As it turns out I AM a CPA (though not in practice these days - certified, not licensed) and I work as an accountant here in France for a French company.
Cheers,
Bev
 

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whatshouldIdo I think that Bev seeing the state I was in "" thought that a word of comfort and reasurance would be more benificial to my state of mind at the time. It's a little thing called compassion and I do very much appreciate what she did for me. I have an accountant that knows all the ins and outs up here. I was just scared thats all. So thank you Bev! a word spoken at the right time in due season is a well of Life!
Jeanne<3
 
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