Hi!

My fiancée and myself were both on H1B before we left the US in Sept. 2010. We both earned and paid taxes in the Oct.-Dec. 2010 period in a foreign country (me in Italy and my fiancée in Romania). So I have some questions common to both of us and some for my fiancee's case, which is a bit more special (see below).

Questions for both cases:
1) If I understood correctly, we need to (separately) file dual-status 1040 and 1040-NR.
2) I also just read that when one leaves the US should file a 1040-C and ask for a certificate of compliance PRIOR TO DEPARTURE! Since I just found out about this, obviously we did none of that. Is submission of 1040-C really needed? If so, what can we do to rectify the situation?
3) Do we have to declare the earnings on our 1040-NR or 1040? Also, what do we have to file/declare so that the IRS won't claim taxes on these incomes (since we already paid taxes on them in the foreign country)? Do we need to file a 2555-EZ (Foreign Earned Income Exclusion) form?

Questions for my fiancee's case:
My fiancée works in Romania also as an independent contractor for a US company (as part-time). She works at home (online) and she has received a 1099-MISC from the US company.
4) Does this situation change her dual-status filing?
5) Does she need to pay taxes in the US for the money earned in Romania as independent contractor? Or can she pay the taxes in Romania and file a 2555-EZ form (and attach proof of her tax-payments in Romania on those earnings)?

Thanks a lot for the time and help!

Note that, since you are OUTSIDE of the U.S. you have until 15 June 2011 to file (automatic 2-month extension).

The Form 1040-C is NOT required.

You each CAN file a dual-status return, in which case you report ONLY the U.S.-sourced income. You have no need for Form 1116 or 2555 on a dual-status return, because you will NOT claim the Italian income on your return OR the Romanian income on your fiancee's return.

If you both filed a resident return (Form 1040) for your 2009 return, you have the option of filing that way for 2010. In that case, you DO report the foreign income and you DO submit Form 1116 to request the Foreign Tax Credit.

Neither of you meet the criteria for Foreign Income Exclusion at this point in time. You MAY qualify if you remain in Italy or Romania and delay your filing until sometime in August.

Final note: If you opt to file dual-status, do NOT complete it yourself. The dual-status is NOT for amateurs; get professional help!

If you need professional help filing your return, email me at [email protected] or [email protected].

I thought the automatic 2 months extension is granted only to US citizens or residents. We're neither.

With Form 1040-C I'm really confused. I've got several opinions: some say I have to submit one to prove my non-resident alien status for the dual-status submission; other, like yourself say I do not. What's pretty clear on the IRS website is that I should have done it before leaving US.

Forms 2555 and 2555-EZ should be only for US citizens or residents, isn't it? So we can't use any of these forms, since we're neither citizens or residents (of US) at the moment.

Some tax-treaty exemption should be used in my fiancee's case, since the Romanian law might require her to pay taxes on the work she provided on Romanian territory (on the US source income as well).

And you're probably right. We might go for some professional help in my fiancées case at least. We'll definitely need to submit an extension for her. Many thanks for the offer and for your time.

I thought the automatic 2 months extension is granted only to US citizens or residents. We're neither.

With Form 1040-C I'm really confused. I've got several opinions: some say I have to submit one to prove my non-resident alien status for the dual-status submission; other, like yourself say I do not. What's pretty clear on the IRS website is that I should have done it before leaving US.

Forms 2555 and 2555-EZ should be only for US citizens or residents, isn't it? So we can't use any of these forms, since we're neither citizens or residents (of US) at the moment.

Some tax-treaty exemption should be used in my fiancee's case, since the Romanian law might require her to pay taxes on the work she provided on Romanian territory (on the US source income as well).

And you're probably right. We might go for some professional help in my fiancées case at least. We'll definitely need to submit an extension for her. Many thanks for the offer and for your time.

You are correct about the Form 2555.

ANYONE outside of the United States gets the extension to 15 June 2011.