Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-05-2019, 12:17 AM
Junior Member
 
Join Date: Feb 2019
Posts: 2
foreign defered annual bonus guidance

My family moved to the USA with me last year. My wife received a deferred annual bonus from her previous job in the UK (for years 2016 and 2017 worked but received in 2018)which was taxed in the UK. But as we were not out of the USA for the entire year we are struggling as to how to classify the income on 2555 as we do not qualify as either bonified residence or physical presence test.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-05-2019, 05:34 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,227
Quote:
Originally Posted by Lemidin View Post
My family moved to the USA with me last year. My wife received a deferred annual bonus from her previous job in the UK (for years 2016 and 2017 worked but received in 2018)which was taxed in the UK. But as we were not out of the USA for the entire year we are struggling as to how to classify the income on 2555 as we do not qualify as either bonified residence or physical presence test.
so,as you said,you did not qualify bona fide residence or physical presence test,,I mean you were not US residents last year, then, I guess you can not file form2555unless you are a US resident/a US citizen or a US resident for tax purposes.form2555 is usually filed by US expats
can use Form 2555 to figure foreign earned income exclusion and housing exclusion or deduction.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 02-05-2019, 07:49 AM
Junior Member
 
Join Date: Feb 2019
Posts: 2
I am a US/UK duel citizen and had self filed taxes while I lived in the UK using the 2555 and 1040. My wife moved to the USA at the end of December 2017 as a legal permanent resident (greencard holder). Her and I are both employed in the USA and did not leave the country last year. She did receive the deferred annual bonus from her previous role from the UK.

If we can not use the 2555 to cover the bonus where would we be obligated to show the payment and then equally the tax that has already been taken from it.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 02-06-2019, 01:45 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,227
Quote:
Originally Posted by Lemidin View Post
I am a US/UK duel citizen and had self filed taxes while I lived in the UK using the 2555 and 1040. My wife moved to the USA at the end of December 2017 as a legal permanent resident (greencard holder). Her and I are both employed in the USA and did not leave the country last year. She did receive the deferred annual bonus from her previous role from the UK.

If we can not use the 2555 to cover the bonus where would we be obligated to show the payment and then equally the tax that has already been taken from it.
I am a US/UK duel citizen and had self filed taxes while I lived in the UK using the 2555 and 1040. My wife moved to the USA at the end of December 2017 as a legal permanent resident (greencard ho lder). Her and I are both employed in the USA and did not leave the country last year. She did receive the deferred annual bonus from her previous role from the UK. =============>>Ok I got you: I guess you had to provide your background info in detail; You are a dual status alien when you have been both a U.S. resident alien and a nonresident alien in the same tax year. Dual status does not refer to your citizenship, only to your resident status for tax purposes in the US;however, regardless of your status for taxation, since your spouse was a US resident for the tax year of 2017, then you may file form 2555 to claim foreign earned income exclusion;but as said, to file form 2555, either you or your spouse must meet the tax home test or meet either the bona fide residence test or the physical presence test, so once you qualify for this requirement then you may claim the deferred bonus income taxed in UK as foreigmntsax credit instead of on form 2555. As you can see, on form 2555, you can figure your foreign earned income exclusion or your housing exclusion or deduction. But in your case as you said, the deferred annual bonus that you received in 2018 was already taxed by UK taxing authority(ies) there in UK then you can not claim it on form 2555 but you may claim it , as foreign tac credit on form 1116; You can choose to take the amount of any qualified foreign taxes paid during the year of 2018 as a credit or as a deduction. On Part II of the form 1116, you need to enter the amount you paid in UK taxes in the local currency and converted to U.S. dollars. In Part III, Line 10. The IRS requires that you attach a computation of this amount . To choose the deduction, you must itemize deductions on SCh A of 1040 on line 6 and 1040 line 8. To choose the foreign tax credit, you generally must complete form 1116 and attach it to your Form1040 (along with Form 1040, Sch 3.

The IRS limits the foreign tax credit you can claim to the lesser of the amount of foreign taxes paid or the U.S. tax liability on the foreign income. For example, if you paid $550 of foreign taxes, and on that same income you would have owed $450 of U.S. taxes, your tax credit will be limited to $450.


If the amount of your foreign tax credit is more than the IRS allows in one year, you may carry forward the remainder to the following year

If we can not use the 2555 to cover the bonus where would we be obligated to show the payment and then equally the tax that has already been taken from it===========>as mentioned above.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Seeking guidance with 2nd marriage Kelmvor Divorce Tax Issues 0 02-10-2015 12:55 AM
General Guidance on Married LLC Situation gdubb85 Limited Liability Company 4 12-22-2013 01:40 PM
What is IRS Form 1042-S Annual Withholding Tax Return for U.S. Source Income of Foreign Persons? TaxGuru Income 0 07-06-2011 05:35 PM
IRS Offers New Guidance on FSA and HRA Debit Cards Samatg Tax News 0 12-23-2010 07:19 PM
S-Corp guidance tridev S-Corporation 1 04-20-2009 06:38 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning