First Time Married Filing Jointly with Foreign Spouse

[Topshop30]

Hi, I'm a Malaysian who got married to a US citizen in Sept 2024. We're going to file Married File Jointly. Here's a little background information for context;

I worked in Malaysia until end of July 2024, packed and moved here. I've not worked since.

Arrived US on Sept 4th and got married Sept 27th, 2024. I've got my SSN and we've got the Adjustment of status pending. 

My questions are :

1. What is my status? Non Resident Alien? If we select MFJ and opt in as Resident Alien, do I need to include my foreign income (Jan - Jul 2024) prior to my arrival into the US? I'm paying Malaysia taxes as well and am hoping to avoid a double taxation.
2. Do I need to file FBAR as I still have my bank accounts in Malaysia?
3. Would I also need to file Form 8938 as I've got some local unit trusts that are still active?
4. I've a fully paid apartment which will be used when we are visiting on holiday. Not rented out. Will I need to declare this too?
5. On the substantial presence test of years 2022-2024, I've exceeded just 183 days

Appreciate your advise if Turbo Tax can handle all this for us without going the CPA route. This is pretty confusing!

Thanks!

Lim

[DaveF1006]

Yes. You may file MFJ and yes you do need to include your foreign income. You may file for a Foreign Tax Credit in order to be credited for the taxes you paid in Malaysia.

A U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report. 

1. a financial interest in or signature or other authority over at least one financial account located outside the United States if
2. the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

You will need to file a 8938 if The total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year

Your fully paid apartment does not need to be reported. Also, the substantial presence test states that you are a resident alien if you are present. 

1. 31 days during the current year, and
2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
   • All the days you were present in the current year, and
   • 1/3 of the days you were present in the first year before the current year, and
   • 1/6 of the days you were present in the second year before the current year.

FBAR Regulations

8938 Regulations

[Topshop30]

Hi DaveF1006,

Would the Foreign Tax Credit affect the total deductions for us both significantly?

1. Does the credit offset against the final taxes of 2024? I paid equivalent USD 4500 in Malaysia.

2. Must I include proof of paid taxes from Malaysia in the package?

3. FBAR Filing with Form 1116 is provided by Turbo tax yes?

4. With the substantial presence test, do we still need to send in a statement for opt in as  Resident Alien during filing? Presume my I-94 travel records must be included as proof of substantial presence?

5. Is Turbo Tax Basic able to execute what we need?

Also, given the circumstances above, would you recommend we file online or mail in? 

This is a first for both of us. Thank you so much for your clarification! It does sound at this juncture that we can file using Turbo Tax.

Thanks 

Lim

[DaveF1006]

It depends on a few things. 

1.  It may offset the taxes you paid in Malaysia.  If it doesn't offset, the taxes paid, it will reduce them. 
2. You don't need to have proof of paid taxes to Malaysia to submit to your return. You may need them however if you are examined by the IRS.
3. The FBAR and Foreign Taxes are two different things. If you have Turbo Tax Basic Software, you won't be able to file an FBAR with Turbo Tax Basic. You may file it here BSA E-filing System Website
4. No, you don't need the statement if you both are residents because of Substantial Presence Test.
5. You should be able to prepare this using Turbo Tax Basic Software.

To report the Foreign Tax Credit

1. Go to Federal
2. Deductions and credits 
3. Estimate and other taxes paid 
4. Foreign Tax Credit>start or revisit
5. When it asks We just need to check if you have any uncommon situations indicate I paid foreign taxes on income I earned while working in another country. 
6. At some point in the interview, it will ask if you wish to take a deduction or a credit. If you are able to itemize deductions, you may consider taking the deduction.
7. There will be questions in the next screen asking you the description of the Foreign Taxes paid and the amount.
8. If you find that this has no effect on your tax return, you may circle-back and choose you wish to take a credit.
9. Navigate and record the entries that the program asks for and when you reach the page that mentions Foreign Tax Credit Worksheet, this is where you take notice.
10. The first that you will be asked is what category of income is it, you will say Passive income.
11. Next screen will say Country Summary, select add a country 
12. When it says Other Gross Income - XXXX, Here you put in the Gross Amount you earned in that country. 
13. Then you will navigate through the screens until you come to a screen that says Foreign Taxes Paid - XXXX, here is where you record the amount paid under Foreign Taxes.
14. Finish out the section. 

[Topshop30]

You've been so helpful, thanks so much DaveF1006!!