I am an Italian citizen married to a retired USN retired woman, I work here in Italy, we have been filing joint for God known how many years, all right here we go with my question:

We were just told that I need to report my IT income to Uncle Sam,that will be taking my wife's income bracket to a total different level, I pay almost 2000 USD in taxes every single month to my government, and we have never filed my income...

Please help, when we were back in the US we were of course filing joint and were reporting both incomes (of coure) but we have been here for the past 15 years and thy are just now telling us that I need to report my IT income...

H E L P

You do NOT have to file a joint return; your wife can file Married Filing Separately and report ONLY her income.

However, if you DO file a joint return, then BOTH of your incomes have to be declared. You can then EXCLUDE your income (up to $91,400) using Form 2555. However, as you cited, your wife's income is then taxed at a higher tax rate based on your added income.

You can also declare your income and claim the Foreign Tax Credit (Form 1116) to see if that results in a lower tax.

The returns will have to be modeled all three ways (MFS, joint using exclusion, joint using Foreign Tax Credit to determine which is the best way to file).

You may also have to file the FBAR (if you have foreign accounts over $10,000) and/or Form 8938 (if you have joint accounts in excess of $100,000).

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