SusanY1
Expert Alumni

Deductions & credits

While there are never any guarantees regarding audits, the IRS tends to be somewhat forgiving when a taxpayer makes honest mistakes and then works to correct them.  Simply filing a late or amended return generally does not trigger an audit.


When you file an FBAR/FinCEN 114 late, there is a space to indicate why it is being filed late.  In this case "not aware of requirement" or similar option is appropriate.

For the Form 8398s for prior years, I suggest that you attach a similar statement to the form before mailing.  Explain that your wife is a nonresident alien who does not live in the USA but that as a joint filer treated as a resident, you're submitting the reports of her assets using the resident rules.  

If you remedy the situation before the IRS asks you to, you're generally not subject to the penalty.  The penalty is for noncompliance, not late compliance. 

Do not add your wife's foreign interest and dividends to the foreign earned income section.  Instead, you can add these to the appropriate sections for those items in TurboTax, even though there is no 1099.  When you are in those corresponding entry areas of the program, choose "I'll type it in myself" when prompted to enter the data.  

If your wife paid taxes on this income, be sure to enter that information in the section for the foreign tax credit as well.  



 

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