Removing wife from US taxes

Never mind....found something on the H&R Block site..

Can my spouse and I change our filing status from married filing jointly to married filing separately?
Answer

Yes, even if you’ve filed jointly for years, you can change your filing status to married filing separately on a new return whenever you wish. You won’t pay a penalty for changing your filing status. However, when choosing your filing status, you should calculate your federal and state returns using each filing status before making any changes. Then, you can see which return results in the larger refund or the smaller balance due.

If you change your filing status from joint to separate, you’ll usually pay more tax. That’s because many of the following items are reduced or not allowed when married filing separately:

    Credits
    Deductions
    Exclusions

So, you should do your research before changing your filing status from joint to separate.

So I guess I'll just file jointly for 2021 and take her off for 2022. Brings my US tax down to 0. I guess it would work out better in the future to keep my wife on the taxes....but I really don't want to mess with the double taxation rules....we don't have enough money coming in for it to make much difference. This will keep my wife's future income from having to be declared on my US taxes. I like a simple life......

Being UK resident means she does not have to report her OAP to the IRS so even when when filing MFJ in the US then that income is not included (other income such as interest is included). So if you are better off including her when you file then continue to file MFJ if it suits you better.

Being UK resident means she does not have to report her OAP to the IRS so even when when filing MFJ in the US then that income is not included (other income such as interest is included). So if you are better off including her when you file then continue to file MFJ if it suits you better.

Right now she has just started a personal pension from her divorce 20 years ago. That wouldn't count as OAP I wouldn't think. With the way the banks are going I won't be able to put any money into fixed rate accounts since they really don't seem to like dealing with Americans, so everything is likely to be in her name pretty soon.....that could end up being a decent amount of interest...especially with the rates going up like they should. That money would have to go down on the US taxes...and then I'd have to figure out how to get that back from the UK taxes. I was trying to avoid having to deal with the double taxation rules etc.

Right now she has just started a personal pension from her divorce 20 years ago. That wouldn't count as OAP I wouldn't think. With the way the banks are going I won't be able to put any money into fixed rate accounts since they really don't seem to like dealing with Americans, so everything is likely to be in her name pretty soon.....that could end up being a decent amount of interest...especially with the rates going up like they should. That money would have to go down on the US taxes...and then I'd have to figure out how to get that back from the UK taxes. I was trying to avoid having to deal with the double taxation rules etc.

As a UK resident HMRC will be the primary taxing authority so the HMRC taxes paid on her her private pensions and interest income must be claimed as US tax credits against her US taxes, using form 1116, not the other way round as you describe.

The only way for you to definitively decide whether or not it is better financially to exclude her from your US tax returns will be to calculate the taxes both as MFJ and MFS. 

As a UK resident HMRC will be the primary taxing authority so the HMRC taxes paid on her her private pensions and interest income must be claimed as US tax credits against her US taxes, using form 1116, not the other way round as you describe.

The only way for you to definitively decide whether or not it is better financially to exclude her from your US tax returns will be to calculate the taxes both as MFJ and MFS. 

Not sure what you mean. My wife took £7000 (no tax on it) from her pension in January and has then arranged for $500 (£6k yearly) a month to go into our account until that pension drains in 8-10? years or so. She would not have to pay tax here in the UK since she will be well under the tax threshold. Would I not have to declare that money as income on my US taxes?

For me, taking my wife off my taxes isn't just about money....it's about making the whole tax reporting easier....as long as it doesn't cost too much to make it easier/simpler. It likely would have cost me a good $400 in taxes this year if I was going to file separately. I can live with that if it makes the process simpler. 

Or am I screwed up with my thinking?

Not sure what you mean. My wife took £7000 (no tax on it) from her pension in January and has then arranged for $500 (£6k yearly) a month to go into our account until that pension drains in 8-10? years or so. She would not have to pay tax here in the UK since she will be well under the tax threshold. Would I not have to declare that money as income on my US taxes?

For me, taking my wife off my taxes isn't just about money....it's about making the whole tax reporting easier....as long as it doesn't cost too much to make it easier/simpler. It likely would have cost me a good $400 in taxes this year if I was going to file separately. I can live with that if it makes the process simpler. 

Or am I screwed up with my thinking?

If you file MFJ then your wife’s private pension income will be taxed by the IRS and since she pays no HMRC tax then there are no foreign tax credits in either direction. (In your post above you said you needed to figure out how to get that IRS tax back, but you can’t)

$400/year extra when filing MFS to keep things simple and having her out of the IRS picture all together sounds like good value to me.

If you file MFJ then your wife’s private pension income will be taxed by the IRS and since she pays no HMRC tax then there are no foreign tax credits in either direction. (In your post above you said you needed to figure out how to get that IRS tax back, but you can’t)

$400/year extra when filing MFS to keep things simple and having her out of the IRS picture all together sounds like good value to me.

Thanks. Always like to check just to keep myself from doing something tooooo stupid.

Thanks. Always like to check just to keep myself from doing something tooooo stupid.

I actually pay a lot more than $400 per year to keep things simple for my wife when I die. If it were just me I’d do my taxes myself but there is no way she could manage it so I employ a dual qualified tax account to do our taxes knowing that when it is just my wife needing to do this she will have someone who knows us well.

I actually pay a lot more than $400 per year to keep things simple for my wife when I die. If it were just me I’d do my taxes myself but there is no way she could manage it so I employ a dual qualified tax account to do our taxes knowing that when it is just my wife needing to do this she will have someone who knows us well.

Yep, same issue here. If I were to kick off tomorrow my wife wouldn't know what to do...I've tried a few times and she has written some things down....but I'm afraid she might just close her eyes and hope things go away. I even told her to get on this site if nothing else and just ask for some advice....

Yep, same issue here. If I were to kick off tomorrow my wife wouldn't know what to do...I've tried a few times and she has written some things down....but I'm afraid she might just close her eyes and hope things go away. I even told her to get on this site if nothing else and just ask for some advice....

In the folder that holds our wills I have a printed sheet entitled “What to do when I’m gone”. Once a year I update it and go over it with my wife. It includes a list of all the contact information plus how to do FBAR reporting as I still do that myself. I’m less worried about the mechanics of the FBAR because our son has to do this himself as well. He also does his own US tax return using my copy of TurboTax but it is dead simple because the only income he has is from his UK job which he excludes using FEIE. He has no US income at all so his UK taxes are handled by PAYE.

Yeah, I've kind of done the same for my wife. A couple of years ago we sat down and I had her write out the steps I thought she should take...she knows it's still there....she just isn't interested. I still need to get my pension payments going straight to my UK bank instead of to our old credit union in the US, but I'm just trying to keep things simple...even if it costs more to do so. Makes my life easier as well.