BulldogTom Posted February 22, 2012 Report Share Posted February 22, 2012 Client's spouse was a non-resident alien for about 6 months of 2011, at which point she joined her husband in the US. He was working abroad and returned in about April. He is a US citizen, as are both of their children. They have been living in Japan for several years, but returned to the US for the birth of their children. Can I get a quick rundown on how the credits work for part-year non-resident aliens. I always thought that if you were a resident alien for any part of the year, you were deemed to be so for the entire year. But then I read the question on the EIC for about "any part of the year". So, my client has foreign source income that I was going to exclude on the 2555, but he may qualify for EIC if his spouse does not disqualify him based on her immigration status. If she disqualifies him, then we will take the Foreign exclusion. Thanks for any help. Tom Lodi, cA Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 22, 2012 Report Share Posted February 22, 2012 It doesn't matter if one of the spouses was abroad and the other was here and the children were here for more than 6 months and their main home was in the US. All you have to do is to file married filing jointly and include their global income. They must sign a statement that the non-resident spouse choses to be considered a resident and all global income is included. This is what the rule reads: If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. You can use that filing status only if one spouse is a U.S. citizen or resident alien and you choose to treat the nonresident spouse as a U.S. resident. If you make this choice, you and your spouse are taxed on your worldwide income. If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter "No" on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). If you need more information on making this choice, get Publication 519, U.S. Tax Guide for Aliens. Quote Link to comment Share on other sites More sharing options...
TaxCPANY Posted February 27, 2012 Report Share Posted February 27, 2012 It's a bit more nuanced, Bulldog. Your clients have the option to elect under IRC Sec. 6013(g) to both be treated as US residents for the full year. (This also entitles them to claim IRC Sec. 911 exemption of income earned overseas, and/or Form 1116 Foreign Tax Credits for taxes paid (to Japan).) It really only requires an explicit election, as an appendix to Form 1040 -- that ATX includes, easily. In your clients' case, I can't see a downside UNLESS they've earned 'fabulous' amounts in excess of the IRC Sec. 911 & 907 exemptions of "earned income" and "housing allowances." If your client's spouse earned massive amounts prior to her immigration, you should weigh the benefits of excluding that income from US taxation, as counterweight. VTY, TaxCPANY Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 28, 2012 Author Report Share Posted February 28, 2012 It turned out to be not as big of a deal as I thought. They will file joint, and as she has no foreign source income in 2011, we are not exposing them to any tax liability. What I was after was EITC. But, because the clients have a rental home, their investment income is too high to claim EITC. By bringing in the income from Japan, we were able to pick up the 8812 credits. They were happy. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
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