Hi, I'm HR and got these question but didn't wanted to answer before getting some pointers from here.


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I'm Mexican under H1B, live in California, work in California. Got married in May 2014 in California.
My Wife lives in Mexico, works in Mexico and pay taxes in Mexico.
She comes and visit every two months for long weekends. She is under tourist VISA (no need to get H4 at the moment).
I do pay part of her living expenses, even thou she lives in Mexico.

How should I fill my Taxes?

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Please let me know your opinions.

Thanks!

Assuming the H-1B visa holder has already filed his 2013 return as a resident alien, he can:

1) File as a resident alien again and file Married Filing Separately (MFS) and NOT claim his wife's personal exemption. He simply names his wife on the return and print NRA where her SSN would go. With many tax softwares, he should be able to file electronically.

2) He files MFS, but wants to claim his wife's personal exemption. Perfectly legal, but in order to do it, she must apply for an Individual Tax Identification Number (ITIN) by submitting Form W-7 with the tax return. There are multiple ways to apply for the ITIN; more on that later. This option makes sense if the wife makes s lot of money in Mexico which, tax-wise, they do not want to declare on his U.S. tax return.

3) If the wife makes a small-to-medium income, she can a joint return with her husband. It requires that she declare HER income earned in 2014 in Mexico with her husband's income, but any added tax would be mitigated by either the Earned Income Exclusion (Form 2555) or the Foreign Tax Credit (Form 1116) or both. This option also requires she apply for an ITIN.

It is probably most advantageous for you to file jointly with your wife, filing Form 1040 with Form 1116 to claim the Foreign Tax Credit. Form 1116 is required because you must claim ALL world-wide income earned in 2013, and the Form 1116 allows you to claim a credit for the income taxes paid to your home country. Form 2555 is also available.

You will need to apply for an Individual Tax Identification Number (ITIN) for your wife by submitting Form W-7, and that process underwent some radical procedural changes in 2013. Instead of the simple notarization process, the IRS now requires that your home country certify the photocopy of your passport as a true copy. This is due to rampant fraud in the ITIN submission process. The notaries simply cannot tell the difference between a fake passport and the genuine passport.



FIRST ALTERNATIVE: For foreign nationals, this certification can be done by the home country embassy in Washington, D.C. or at one of the consulates across the country. Assuming you do NOT want to drive there, you need to call the nearest consulate and arrange to have this process done via the mail. This process, done via mail, can take up to three months to complete.


SECOND ALTERNATIVE: The IRS also has Tax Assistance Centers through which you may be able to have the passport verified as genuine, then submit the tax return and Form W-7 IN PERSON to be forwarded to the ITIN Processing Center in Austin, Texas for processing , without having to get the photocopies certified by your home country consulate.

You go to the TAC with your wife and/or children, her passport, the SIGNED Forms W-7, and the completed and SIGNED tax return with your W-2s.


The IRS official verifies the passports, asks a few questions, completes the certification paperwork, checks the Forms W-7 and tax return, then returns the passports with a receipt for the tax return and Forms W-7, which is sent to Austin, Texas for processing.



You leave the TAC with your wife and/or family, the passports and a receipt for the Forms W-7 and the tax return.



You would get the ITIN about six weeks after you left the TAC.



The tax returns are NOT processed at Austin, Texas, but rather forwarded to the regional IRS centers for processing, so the refund will come about one month AFTER you get the ITIN letters.



The list of the TACs are at the link below:
http://www.irs.gov/uac/TAC-Locations...on-is-Provided

THIRD ALTERNATIVE. A Certifying Acceptance Agent certify the passport if the TACs are not close.

FOURTH ALTERNATIVE: The wife can have a clear color photocopy of her passport certified as authentic by the U.S. embassy in Mexico City, or by one of the consulate office in most big Mexican cities. She will probably need to make an appointment, and the consulates normally cbharge a fee for the service


The FINAL alternative is to mail in the actual passports themselves, something most of my clients are reluctant to do because...


If the IRS gets the passport, they hold it for about TWO months.




If you need my professional help, please email me at the email address in my profile.