How to file my tax return now that I am married?

kapsz28 · 11-17-2008, 11:16 AM

But there is a catch. My wife does not live in the US, does not have a green card, and does not have a SSN. It seems like I am required to file as "Married" as opposed to "Single." But there are a couple of different options. "Married filing jointly" and "married filing separately." I am not sure what is the easiest, and what is actually required by law. From what I read, if I select married but filing separately, then the taxes are going to be worse. But if I want to file jointly, my wife will most likely need an ITIN since she doesn't have a SSN and can't get one until she has a green card. If I file separately, is my wife required to file taxes too even though she doesn't live in the US?

I found these links, but I still don't know whether or not she is required to file or if I can just file separately.

http://www.irs.gov/businesses/small/...=96734,00.html

http://www.irs.gov/individuals/artic...=96287,00.html

http://www.irs.gov/pub/irs-pdf/fw7.pdf

lt1camaro95 · 11-17-2008, 01:15 PM

Married filing seperately. BTW, dont marry mail order brides. duh

kapsz28 · 11-17-2008, 01:22 PM

Although separately would be easier, I just looked up the difference in federal taxes between jointly and separately, and it is $2,700.

lt1camaro95 · 11-17-2008, 01:23 PM

Get turbo tax. It has all the scenerios you can think of and will show you how much money for each.

brad8266 · 11-17-2008, 02:12 PM

Call a tax professional for this situation as its a fairly unique one.

Jon5212 · 11-17-2008, 02:19 PM

^^^ +1 on that.

FSANE · 11-17-2008, 02:34 PM

file separately

kapsz28 · 11-17-2008, 02:38 PM

Quote:

Originally Posted by lt1camaro95

Get turbo tax. It has all the scenerios you can think of and will show you how much money for each.

Eh, I would need the $100 version because I have a small business. I always use http://www.taxslayer.com/ and they are pretty good.

It looks like I just need to request the ITIN and then I can electronically file as married filing jointly. Considering how much the paperwork costs to get her in the US, the extra $2,700 in my tax return would be very useful.

ponygt65 · 11-17-2008, 03:39 PM

Tax specialist....CPA prefered would be best.

Or just call the IRS and local state tax board.

-1 on turbo tax. I used them once, and will never go back. www.taxact.com is the best I've found so far.

kapsz28 · 11-17-2008, 04:08 PM

Quote:

Originally Posted by ponygt65

Or just call the IRS and local state tax board.

IRS, maybe, but definitely not calling my state. They have to be the rudest workers out there. Anytime I called a NJ state employee, they are always rude. Today I just called my county's clerk office and even they were useless for a simple question. I got married in Costa Rica and wanted to know if it was valid in the US or if I had to register my marriage certificate. Mind you, I called the county clerk because the US Embassy's website sepecifically said to call them as the law varies from state to state. She tells me it is not necessary, but many people also get married in NJ so they don't have any issues down the road. So I was like, "does that mean my marriage is valid in NJ or not?" She tells me that she can't give me anymore information because they cannot provide legal advise. I mean, holy shit. What kind of legal advise is this? Either I have to register my marriage certificate or I don't, to make it valid. It is either valid or not valid.

Sooner Todd · 11-19-2008, 11:27 AM

The key question is whether or not she had any US-source income or if together you had any US-source community income.

If that is not the case, which I would presume is true since she lives in Costa Rica, then the circumstance is much simpler.

Now, to determine filing status:

1. You cannot file single
2. Your spouse is classified as a Nonresident Alien (NRA) since she does not have green card

You may *elect* to file as Married filing Jointly (MFJ), but to do so, you are agreeing to be taxed on all worldwide income and will provide all books and records foreign and domestic that are needed to determine tax liability.

This is a hugely risky election to make. You will benefit slightly due to a higher standard deduction, but you open yourself up to a great deal of scrutiny. Not to disparage your relationship, but if she has a second husband in Costa Rica (or the US) and she has significant income, you are electing to be responsible for US income taxes on that income. Or if she has a wealthy family and they arrange for her to be the recipient of a large chunk of income. They have the cash in hand, it's been subject to US tax on your dime, and now they are free to bring it onshore.

Again, not saying you'll end up fucked or anything, nor do I of course have any reason to suspect anything nefarious. However, it's not unheard of and regardless, you're opening yourself up to more scrutiny, more audit risk and more burdensome recordkeeping requirements.

A few thousand dollars vs potential shitstorm and red tape

your call

kapsz28 · 11-19-2008, 11:46 AM

Yeah, someone was telling me that I had to report her earning too. Only problem is, they don't get anything like a W-2 that lists their earnings. Where she works right now, all she gets is a check once a month. No paystub or anything. Not to mention the exchange rate constantly changes, so how would you even report it in US dollars accurately?

Sooner Todd · 11-19-2008, 12:02 PM

Quote:

Originally Posted by kapsz28

Yeah, someone was telling me that I had to report her earning too. Only problem is, they don't get anything like a W-2 that lists their earnings. Where she works right now, all she gets is a check once a month. No paystub or anything. Not to mention the exchange rate constantly changes, so how would you even report it in US dollars accurately?

*IF* you elect to file jointly, you must report her earnings.

As far as currency translation, it wouldn't be that hard. You'd just use the spot rate as of each payment date. The harder part would be determining what Costa Rican taxes were deducted from her checks (if any) so as to be able to report the gross income as well as calculate the foreign tax credit.

At best, you're saving a couple thousand by filing jointly and you would save less if she had no withholding. Along with the additional exposure you are agreeing to. Not worth it for most taxpayers.

kapsz28 · 11-19-2008, 12:22 PM

But when you have to pay over $5k just in paperwork and lawyer fees, plus she has a 3 year old daughter that will be living with us as well, the couple thousand extra can be very helpful. Not to mention, I am almost certainly getting laid off at the end of January, which is why I am looking into getting as much as possible out of my tax return.

Oh, and figuring out the gross earnings is not even possible. They never see the gross earnings if you work somewhere that is doing the taxes. Plus I believe if you make under a certain amount of money a month, you don't even pay taxes. Their system is very different. The best I could do is add up her paychecks. At least they only get paid once a month, so only 12 paychecks to add.

Sooner Todd · 11-19-2008, 12:30 PM

Just FYI, you could be in the same situation in 2009. If she is an NRA at any time during the year, you'll be in the same filing situation for next year.

If you can't come up with taxes and gross earnings, then you are really cutting into the tax benefit of filing MFJ since you cannot claim any foreign tax credit (FTC) for taxes paid in Costa Rica, but will still have to report that income. Also, since you are uncertain about what the gross income actually was, then you are subjecting yourself to additional exposure due to the possibility of underreporting her income (by only reporting the net amount). You could protect yourself by imputing a 30% tax rate on the income (standard US foreign withholding), but that's only going to cut into your tax benefit even further since you cannot impute taxes for FTC purposes.

MFJ isn't worth it doing it the safe way.