Non resident alien spouse income from her sister

[Worldtrlver81]

Greetings Tax Community!  

Hoping to find clarity. 

Last year I married a Filipina citizen.  She remains a non resident alien and lives in the Philippines.  I'm electing to file married and jointly.  I'm also electing to treat my wife as a US Citizen for tax purposes. 

Her Filipina sister is also a non resident alien, who lives in Taiwan, gives my wife a monthly living stipend.   My wife is raising her sister's baby and her sister gives her a child care stipend. There is no contract and my wife is not her employee.  My wife claims no income for Philippines taxes. 

In addition together they are building a house in thr Phillipines. Her sister sends my wife money to pay the contractors.  The house is not in my wife's name.  

Would any of these overseas non us income sources be considered taxable?

[DavidD66]

The money your wife's sister sends her to pay contractors would not be taxable income.  The money your wife receives for the care of her niece would be taxable income if it is to compensate your wife for taking care of the child.  It would not be taxable if you sister-in-law sends your wife money to cover the expenses for her child (i.e. the child's support).  

[Worldtrlver81]

Thank you for the clarity. I've been struggling with this for a while.   My foreign sister in law sends child care expenses only, not necessarily a wage in compensation for the service.  It's common practice in the Philippines for family members to help raise children , while they work overseas.  

Does the irs require proof of relationship like a marriage certificate?  I believe I need to disclose my foreign spouse bank details to the irs. 

[Worldtrlver81]

If this amount is taxable, how do I report the income as this is in foreign currency and exchange rates are always changing?

[SusanY1]

You can use any "reasonable" method to account for the currency exchange.   You can look up daily rates if you want to track each payment separately (I would only do this if it's a lot of money and it will make a significant difference which I suspect is not the case.)  

The easiest way, is likely to use the IRS average annual exchange rate and convert the total sum received during the year.  

[Worldtrlver81]

Thank you so much this helps so much!

[Worldtrlver81]

Thank you for all the help!

Two more questions:

1. Would any of this money sent to my wife need to be included in my adjusted gross income if it not taxable?

2.  Are tax extensions automatic as we are applying for a tax ID number, since my wife does not have a social security number?

Thank you again!

[MinhT1]

1. Money which is not taxable is not reported on your tax return.

2. You have to apply for an ITIN for your spouse. There is no automatic extension. If you cannot file by April 15, 2025, you need to file an extension here.

Please read this TurboTax Help topic on How to file your tax return with a W-7.

You cannot e-file. You have to file by mail or in person.