Author Topic: newly married to UK citizen -- filing status??  (Read 273 times)

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Offline grupt

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newly married to UK citizen -- filing status??
« on: March 09, 2017, 01:43:12 PM »
I got married right at the end of the year, to a UK citizen.  I've lived in the UK for a long time now; I report my UK income (and then exclude it via 2555) as well as some US self-employment income.  My wife worked for a US company until end of September; she returned to the UK several years ago and worked remotely for them.  She never filed returns; as best I can tell, the company deducted the right amount of tax for her.  She was on an "investor" visa (E2, I believe) -- no green card. 

Now that we're married, the question is what status to use.  If we file jointly, we both benefit for 2016.  Can I continue to file jointly for future years, benefiting from the lower taxes while not reporting her UK income?  That would be nice, but it seems like the kind of thing the IRS would want to prevent. 

We could file jointly for 2016 but then separately for subsequent years -- but what that would mean in practice is that she won't do a return -- possibly a red flag of some sort. 

Offline nun

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Re: newly married to UK citizen -- filing status??
« Reply #1 on: March 09, 2017, 01:52:14 PM »
For mixed marriages, US citizens to UK citizens, it's usually best to file separately so that the UK spouse can avoid having to file a US tax return.

Your post has a few red flags about your wife's previous tax situation that you might like to clear up first.

Offline guya

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Re: newly married to UK citizen -- filing status??
« Reply #2 on: March 09, 2017, 08:38:21 PM »
Your wife has delinquent US income tax & information returns; as these may affect her ability to ever enter the United States in the future, I suggest she sees a lawyer soon.

I assume you never owe a penny yourself, because you claim the foreign earned income exclusion &/or foreign tax credit & file your own FBARs & 8938 - your wife has a more complex problem.

Offline grupt

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Re: newly married to UK citizen -- filing status??
« Reply #3 on: March 09, 2017, 08:49:54 PM »
Thanks for replies.  I'm aware that my wife might have to file returns for previous years.  She is unlikely to owe anything; I looked at what was being deducted -- I think the company she worked for got things right.

I, however, *do* have to pay US tax.  I exclude my income earned from my regular job in the UK (it's below the limit for the 2555) -- but I also have self-employment income via a (sole-proprietor) company I set up in the US. 

This is where it might be advantageous to file as married/jointly, especially as my wife was earning US income in 2016.  It will be advantageous in respect of her US income for 2016 as well. 

What I think I've figured out is that I can go ahead and file jointly for 2016, and then tick "married filing separately" for 2017 onwards (when she will no longer have any US income).  I'm assuming that it's *not* possible to tick "married filing jointly" when one's spouse is not a US citizen and one is not reporting the UK income -- that seems like an abuse of some sort.  (But if I'm wrong -- well, happy me.) 

Offline guya

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Re: newly married to UK citizen -- filing status??
« Reply #4 on: March 09, 2017, 09:12:38 PM »
Why is the self-employed income not reported in the UK? There is nothing in UK law that permits you not to declare the income to HMRC and avoid paying UK tax & NIC on any profits.

You may wish to use HMRCs offshore disclosure facility: https://www.gov.uk/guidance/offshore-disclosure-facilities


Offline grupt

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Re: newly married to UK citizen -- filing status??
« Reply #5 on: March 09, 2017, 09:53:31 PM »
The work is done for a single US-based client who wanted a US EIN, so that he can include the expense in his own deductions.  I don't doubt that there's a way to avoid double taxation (& thus declare it to HMRC); that's an angle I haven't dealt with yet.  The issue I'm working on now is filing status for US taxes. 

It's probably an odd situation: a US person living on the UK who has to file US taxes to deal with US-based (self-employment) income, getting married to a Brit who was working in the USA until the end of last year. 

So: file as married/jointly for 2016?  I'm struggling to perceive a reason not to. 

Offline nun

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Re: newly married to UK citizen -- filing status??
« Reply #6 on: March 10, 2017, 12:05:05 AM »
The work is done for a single US-based client who wanted a US EIN, so that he can include the expense in his own deductions.  I don't doubt that there's a way to avoid double taxation (& thus declare it to HMRC); that's an angle I haven't dealt with yet.  The issue I'm working on now is filing status for US taxes. 

It's probably an odd situation: a US person living on the UK who has to file US taxes to deal with US-based (self-employment) income, getting married to a Brit who was working in the USA until the end of last year. 

So: file as married/jointly for 2016?  I'm struggling to perceive a reason not to.

You have a major misconception. If the work was done in the UK...even fora US client.....then it is UK income and you must pay UK income and payroll tax ie National Insurance etc. Your posts make it sound as if you have a delinquent UK tax bill and you have over paid US tax.

Filing separately is used to avoid tax complications for the non-US spouse like PFIC issues