2009 Taxes with Turbo Tax

I worked in the U.S. until May 1st last year. I also had a couple of distributions I have to pay taxes on (401k, etc). It looks like Turbo Tax can't figure out my situation because my wife has never lived in the U.S.and I now live here. She is Hungarian (no social security number) and just finished her doctoral studies in Leeds.

Anyone have any advice about this sort of thing?

As a side note, I moved to the U.K. on the 15th of May last year.

 

You may get a better answer if you both elect to file jointly.  If this is not the better answer you will file separately.  Of course you are still months too early to file if you plan on claiming the foreign earned income exclusion.

As far as I know, I can't file jointly as she doesn't have a SSN. This stinks, because I could probably get the earned income tax credit if I could. Oh well.

What is the deal with the foreign tax credit? I really don't know anything about this.

I've never used tax software, but from some of the threads I've read here Turbo Tax has a problem with Form 1040, line 3. This is assuming your trying to file as Married filing separately. Try typing NRA on the blank at the end of line 3. (You have a nonresident alien wife. Mine loves being called that.)

As guya said, your way too early to use Form 2555, The Foreign Income Exclusion. You have several options. You could apply for a special extension of time (Form 2350) in order to qualify, or use Form 1116, or go ahead and file, paying the tax due, and once you qualify for 2555, filing a 1040X and claim your refund. I did it the last way, and it's fine. But then, I'm a Luddite.

Form 1116 is quite useful, although technically challenging. Some file 1116 instead of 2555, especially if their earned income is above $91,400. If you have interest from UK savings, for example, you'll be filing one for passive income anyway. It's main feature is carryover/carryback which can be quite a friend in future years. Filing 1116 with Turbo Tax should be simple, if you choose to go that way. As I said, most file for the extension.

Sorry, of course you're using Turbo Tax, not an actual Form 1040, so disregard all my ramblings about line 3. If you're trying Married filing separately, anytime Turbo Tax asks for your wife's social security number, try NRA.

Hopefully some Turbo Tax users can help you further. 

As far as I know, I can't file jointly as she doesn't have a SSN. This stinks, because I could probably get the earned income tax credit if I could. Oh well.

What is the deal with the foreign tax credit? I really don't know anything about this.

You can get an ITN number for your spouse, if you want to file jointly and need the tax credits. This is not a SSN, and doesn't allow them to work in the US, but does give them a number... if you need that. Just go to IRS website: www.irs.gov for the form.

Thanks so much. That helps.

What happens if I do get my wife one of those numbers? Does she suddenly have to pay and/or deal with U.S. taxes for the rest of her life?

I don't actually think I can get the foreign tax credit from what I've read, but that's another issue.

If you both jointly elect under section 6013(g) to file joint returns then yes your spouse becomes a US person subject to US reporting, FBARS, foreign trust reporting etc.

This election could be revoked in any later year by either spouse, but then you could never elect again to file jointly with the same non-resident alien spouse.

I think I've decided to opt out of Turbo Tax. They require a SSN for my wife, and I really don't want to get her one. I think I'll use the accountant I used when I was still in the states.

I know I can't get the Foreign Tax credit. The requirements from the IRS website are as follows: http://www.irs.gov/businesses/small/international/article/0,,id=96817,00.html

    * A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year
    * A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
    * A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months

None of these requirements apply to me this year. I don't know about timing.

I've sent an e-mail to my accountant explaining I'm married to a Hungarian/EU national and live in England with no present plans to move to the U.S. I hope I can pull this off without getting my lady a tax number.

Here's hoping.

You can use form 2350 to apply for an extension of time to file in order to qualify for the foreign earned income exclusion.  I did it last year for 2008 taxes and got an extension until January 2010.