non-resident alien tax questions


J

Joe N.

Thanks in advance for any knowledgable replies.

My wife is a non-resident alien who has been never even stepped
foot in the United States and works for a foreign-based bank in the Middle
East. She has been waiting for over a year on US Customs and Immigration to
approve her immigrant visa.
Before I filed my 2005 taxes, I had to get her an ITIN number and
file "married filing separately".

My questions are:

1. Is there anything I need to do for 2006 taxes other than list her ITIN
on my 1040A form?

I'm assuming that since she has not yet even been allowed to enter the US
and works for a foreign company she would not be required to report her
income for any tax purposes?

2. Do I list her as an exemption on my 1040A?

Last year I didn't list her as an exemption and the IRS said that I
underestimated my refund amount and issued me a larger refund than I
figured, but didn't give the reason for their decision.

Thanks again!
 
G

Gene Long

1. Is there anything I need to do for 2006 taxes other than list her ITIN
on my 1040A form?
No, you don't even have to bother with her ITIN. Just file a 1040-EZ
form as if you were single.

2. Do I list her as an exemption on my 1040A?
Do not file a 1040A. Go with the 1040-EZ and file single instead of
married. It will be a lot less complicated.

Even if your wife was living in the USA, she wouldn't have to file a
tax return until she becomes a citizen.
 
P

Phil Marti

Gene Long said:
No, you don't even have to bother with her ITIN. Just file a 1040-EZ
form as if you were single.
To OP: You cannot file Single if you're married.
 
A

aufein

Phil said:
To OP: You cannot file Single if you're married.
If you are legally married to a non-resident alien you can affirmativly
elect to file married filing jointly and as such your wife elects to be
taxes as US citized or resident. If you filed your 2005 tax returns on
the basis married filing jointly you may effectively did so (even
though you probably did not included the statement). With that, you
effectively subjected your wife's income to double taxation: once by
including non-US sourced income into your 2005 Federal income tax
return and by filing (I assume your wife files so) a foreign income tax
return. Did you claim foreign tax credit? I strongly recommend that
you talk to a CPA who specializes in the expatriate taxation. If your
wife works in a Middle East country Tax Treaty benefits may not be
available.
 
B

Bill Martin

<If you are legally married to a non-resident alien <you can affirmativly
elect to file married filing jointly

Wouldn't filing jointly be a tremendous blunder in such a case? If the US
citizen files "married filing separately", the non-resident alien wife
wouldn't even have to file a return for income earned abroad working for a
foreign company.
 
P

parrisbraeside

I have been trained as a Foreign Tax Specialist in Canada.

In general, we do not put the Non-Resident Spouse on the US Tax Return,
instead electing to file Married, Filing Separately, for US purposes.
This will put the NRA liable for US taxes. The exception would be if
the NR Spouse has no income. In that case, it is better to claim the
spouse.

As for someone suggesting 1040EZ over 1040A, that may not be the case.
US Citizens have three choices for filing their return. There are times
when it is your advantage to file with the more complex return, the
1040. Each situation is different. Choose appropriately to your
situation that year.

And for looking up a CPA who specializes in the expatriate taxation,
please watch your terms! Expatriate taxation refers to someone leaving
the US and not coming back. Incorrectly filing that claim would provide
you with seven years of hell with the IRS once they determine you are
trying to defraud the government. Instead, look for a CPA specializing
in foreign taxes and foreign exclusions rather than expatriation. It is
like saying you had a wash sale on your stock sell - Wash Sale is a
technical term under IRC, while selling for a loss is different. A US
Wash Sale is a Canadian Superficial Loss.
 
B

Bill Martin

<This will put the NRA liable for US taxes. The exception would be if the NR
Spouse has no <income.

A non-resident alien spouse who works abroad for a foreign company is not
liable for any US taxes, correct? Why would they be?
 
P

parrisbraeside

A NRA who elects to file a US Tax Return is liable to pay US taxes.
There are some things which can be done, but once you put the NRA on a
US Tax Return, they are liable.

(Note: Foreign Income Exclusion may well prevent this but I was talking
no income for income tax purposes... realized that was not clear. FIE
is not perfect as high income earners find out.)
 
C

C. Evans

<There are some things which can be done, but once you put the NRA on a US
Tax Return, they are <liable.

First of all, it is mandatory to put the non-resident alien spouse ITIN on
the tax form when filing "married filing separately" with the IRS, and they
can be claimed as an exemption. However, (unless I am mistaken) listing the
non-resident alien spouse's ITIN on the tax form and claiming them as an
exemption does not make them liable for reporting their income to the IRS if
all of the income is earned abroad from a foreign business entity.
 
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I have a similar situation here:

I have a U.S citizen wife (in Texas, community property state) and a non-resident alien husband. The NRA has no filing requirement.

NRA husband have earned wages in his foreign country. NRA pay taxes on his wages to his country.
They have a small amount of 1099-INT and foreign earned interest under their joint accounts. (less than $100)

I would think it is best for the US citizen wife to file married filing separately and NRA would best not to file a return since there is no filing requirement. For the US citizen wife, she has to report the 1099-int and foreign interests for her foreign accounts.

Does she has to report half of her NRA husband's foreign wages ?

Any advices would be appreciated.
 

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