US Tax return, unique situation

Hello everyone,

Many thanks in advance for any help that you can provide.  Everyone has been great helping me apply for my spouse visa and then ILR, which is currently pending.

A little background:  My wife (UKC) and her parents moved to the US in 1992.  She was given a SSN and lived there legally for a time, but eventually they ran out of money and stopped applying for the correct visas, etc.  She spent years in the US living and working illegally.  She NEVER filed a US tax return and always worked cash in hand jobs.  In 2008 she left under her own will and returned to the UK.  In 2011 were were married in the UK and I have been working here on a spousal visa ever since. 

I flied my 2011 tax returns as single and did not declare that I had been married.  Tax year 2011, I had NO income in the UK, but did have income in the US, which I declared.  The only thing I did not declare was my marriage.  I knew I was doing it wrong, but was busy and didn't have time to figure out what information my wife needed to be on my US return that year.

I haven't filed since.  I never filed for tax year 2012.  I filed for an extension to October but never filed the return.  I just had too much on my plate with moving, starting a new job, and applying for ILR. 

I may have some down time soon and I want to catch up and get things straight.  I have some money put aside to pay any penalties or taxes that I might owe, but I don't think that I own any substantial amount of money. 

So I need to file my 2012 returns and declare my marriage.  My wife and I made about £40,000 combined in 2012, with her making more than me.  How should I file and what forms do I need to file for my wife to get proper documentation?  Can I use her SSN from her childhood in the US or should I get her an ITIN?

THEN I must file my 2013 returns.  We made about £55,000 combined in 2013, again with her making more than me.  I don't think this is enough for me to owe US income tax I might be wrong. 

I have always had savings, stocks and shares in the US and need to declare capital gains, dividends and interest payments.  I don't think that affects anything though.   


Any questions that you all can answer will be a big help. 

THANKS!

 

Most folks in your situation (USC married to a UKC, UK resident) would use the "married filing separately" filing status. This avoids the need for the UKC to get involved with the US tax returns.

So you need to amend your 2011 return, changing the filing status from single to married filing separately, then file 2012 and 2013 also as MFS (and pay the late filing penalty for 2012).

Many of your other questions have been discussed on this board in the past so hopefully a read through the forum history will set you on the right path.

The only filing choices are probably married filing separately (most common) or married filing joint (which you would likely want to avoid). Head of household is not an option w/o dependents, and single is absolutely not appropriate. Normally with MFS you can take an exemption for your UK spouse, as long as they have no US-source income.  If you do claim an exemption, she would need an ITIN - but the old SSN may suffice (that's one for a professional to answer). Given her situation, you might want to think long and hard about that.

Politicfool is spot on - amend the 2011 filing and file for 2012 and 2013. And don't forget FBAR filing if you meet the threshold for that.

Given her situation, you might want to think long and hard about that.

Completely agree - and I'd just add that the benefit of taking a spouse exemption may be minimal or even nil if the OP's income has mostly been taxed in the UK and thus the US tax liability is wiped out by FTC in any case. You could use tax preparation software and see how the math works out both with and without the exemption.

Hello everyone,

Many thanks in advance for any help that you can provide.  Everyone has been great helping me apply for my spouse visa and then ILR, which is currently pending.

A little background:  My wife (UKC) and her parents moved to the US in 1992.  She was given a SSN and lived there legally for a time, but eventually they ran out of money and stopped applying for the correct visas, etc.  She spent years in the US living and working illegally.  She NEVER filed a US tax return and always worked cash in hand jobs.  In 2008 she left under her own will and returned to the UK.  In 2011 were were married in the UK and I have been working here on a spousal visa ever since. 

I flied my 2011 tax returns as single and did not declare that I had been married.  Tax year 2011, I had NO income in the UK, but did have income in the US, which I declared.  The only thing I did not declare was my marriage.  I knew I was doing it wrong, but was busy and didn't have time to figure out what information my wife needed to be on my US return that year.

I haven't filed since.  I never filed for tax year 2012.  I filed for an extension to October but never filed the return.  I just had too much on my plate with moving, starting a new job, and applying for ILR. 

I may have some down time soon and I want to catch up and get things straight.  I have some money put aside to pay any penalties or taxes that I might owe, but I don't think that I own any substantial amount of money. 

So I need to file my 2012 returns and declare my marriage.  My wife and I made about £40,000 combined in 2012, with her making more than me.  How should I file and what forms do I need to file for my wife to get proper documentation?  Can I use her SSN from her childhood in the US or should I get her an ITIN?

THEN I must file my 2013 returns.  We made about £55,000 combined in 2013, again with her making more than me.  I don't think this is enough for me to owe US income tax I might be wrong. 

I have always had savings, stocks and shares in the US and need to declare capital gains, dividends and interest payments.  I don't think that affects anything though.   


Any questions that you all can answer will be a big help. 

THANKS!

 

I suggest that you think about taking legal advice. Your joint savings currently include amounts (that you cannot even calculate today) that represent some amount of unpaid US tax; some by your wife and possibly some by you. You may also owe UK tax on US investment income.

Under the UKs Proceeds of Crime Act; unpaid US or UK tax represents the proceeds of a crime (as holding onto monies that represent unpaid tax is a criminal offense). It would not matter if the crime was committed by Al Capone's friends in the 1920s or by your wife rather more recently or in which country the offense took place. The monies are tainted.  An English solicitor could act on your behalf with English legal privilege and instruct if necessary a US lawyer who in turn could instruct a qualified accountant. You can then both potentially enter into traditional voluntary disclosure with the IRS. 

I suggest that you think about taking legal advice. Your joint savings currently include amounts (that you cannot even calculate today) that represent some amount of unpaid US tax; some by your wife and possibly some by you. You may also owe UK tax on US investment income.

Under the UKs Proceeds of Crime Act; unpaid US or UK tax represents the proceeds of a crime (as holding onto monies that represent unpaid tax is a criminal offense). It would not matter if the crime was committed by Al Capone's friends in the 1920s or by your wife rather more recently or in which country the offense took place. The monies are tainted.  An English solicitor could act on your behalf with English legal privilege and instruct if necessary a US lawyer who in turn could instruct a qualified accountant. You can then both potentially enter into traditional voluntary disclosure with the IRS. 

Completely disagree. The OP has made some tax filing errors and is in the process of correcting them, and as a practical matter the worst case situation is paying whatever penalties the IRS may impose for the late/incorrect filings/payments.

While you may be right, strictly speaking, that a UK prosecutor would be entitled to go after such a person under the law, they also have prosecutorial discretion; there are all kinds of laws on the books, and everyone has probably broken one or another of them at some point, but obviously most of us don't get hauled into court. I'd argue there's very little chance of a prosecutor making a case like this one a priority. The IRS would have to first refer the taxpayer for criminal prosecution (unlikely) and then if the Justice Dept decided to prosecute (also unlikely), a US prosecutor would then have to decide to get a foreign counterpart involved (even more unlikely), who would then also have to choose to prosecute - by which time the OP would have sorted his affairs in a way that is satisfactory to the IRS, so what would be the point.

You are a tax professional and you must know these things, so it seems that you are gratuitously trying to scare the OP, and you should stop doing so.