Ask Experts Questions for FREE Help !
Ask
    swisslonghorn's Avatar
    swisslonghorn Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Mar 31, 2008, 05:34 AM
    Non-US non-Resident Spouse: Foreign Income Exclusion
    I have been researching this question on the net and on the IRS website but still am answer-less:

    - I am a US citizen residing all year in Switzerland
    - My wife is a non-US citizen and non-US-resident

    - Do I need to include her foreign earned income in our Married Jointly Federal tax filing?
    - Also, if we have rental income, and the answer to the above is NO, do I need to report the rental income if if the income is hers?
    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert
    		  
    #2

    Mar 31, 2008, 06:27 AM
    If you file jointly, then yes, you need to include your wife's income on your tax return. If you file as married filing separately, then you do not need to include her income on your tax return and she should would not need to file a U.S. tax return if she has no U.S. source income.
    swisslonghorn's Avatar
    swisslonghorn Posts: 3, Reputation: 1
    New Member
    		  
    #3

    Mar 31, 2008, 07:06 AM
    Quote Originally Posted by IntlTax
    If you file jointly, then yes, you need to include your wife's income on your tax return. If you file as married filing separately, then you do not need to include her income on your tax return and she should would not need to file a U.S. tax return if she has no U.S. source income.
    Thank you for the prompt answer.
    For tax optimization, would it be possible then to do this:

    - We file Married Jointly
    - We put the rental income under her exclusively
    - She does not work and therefore no wages/salaries
    - Then can we claim the foreign income exclusion of $85k times 2 or would the fact that her income is passive income not allow us to take the foreign income exclusion?

    Your thoughts are appreciated.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #4

    Mar 31, 2008, 09:35 AM
    swisslonghorn:
    Since you are U.S. citizen, you can file only resident tax return as Married Filing Jointly (MFJ) or Married Filing Separately (MFS).

    On MFS, you must report your own worldwide income for the year. If you have foreign wages, then you can exclude earned income up to $87,500 by filing Form 2555. If you paid taxes in foreign county you can claim credit by filing Form 1116.
    Read: Read: Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income

    On MFJ, both of you must report your worldwide income including rent income.
    swisslonghorn's Avatar
    swisslonghorn Posts: 3, Reputation: 1
    New Member
    		  
    #5

    Mar 31, 2008, 09:42 AM
    Quote Originally Posted by MukatA
    swisslonghorn:

    On MFJ, both of you must report your worldwide income including rent income.
    My question then is: can we claim $87.5 times 2 persons, if she claims rental income as her own exclusive income but n o other source of income?

    Our current situation is: I have income, she has none. So when we file, I can only claim 1 foreign income deduction whereas if she had income, we could claim 2 deductions [ $85 or $87k x two, at least up to the rental income she'd have as it will definitely not be $85k ].
    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert
    		  
    #6

    Mar 31, 2008, 06:42 PM
    Rental income does not qualify for the foreign earned income exclusion.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Eligible for Foreign Income Exclusion? [ 1 Answers ]

Hey, I currently have an E2 Visa and I come from Germany. I came to the US on 06/28/07 and I went back over Christmas from 12/24 (=less than 183 days). That would make me a non-resident alien, correct? I was still employed in the US over Christmas and got paid in the US (Holiday and Vacation...

Am I eligible for Foreign Income Exclusion? [ 4 Answers ]

Hi, I am from India and on H1B visa. I was working in US from Aug 2006 to Aug 2007. During the year 2007, I was paid in India as well. For the period, Jan 07 to Dec 07, I was paid about 8000$ equivalent of Indian rupees in India. Can I claim this amount as Foreign Income Exclusion? If so, which...

Foreign income exclusion test [ 3 Answers ]

Dear Sir Please let me know if I am right in claiming foreign income exclusion for 2006. I am a resident alien and I hold a faculty position in a university in USA. In September 2006, I moved abroad after obtaining leave from my present job. 1) I pass the tax home test because I have taken...

Foreign Income Exclusion [ 11 Answers ]

Hi experts I am an Indian national, entered the US on July 16th, 2006 on H1B visa and continued to work in the US for the rest of the year. Prior to that I was working in Singapore for over six years continuously since 1999, of which the last 3.5 years were as permanent resident there (including...

View more questions Search