I am a US citizen living in Mexico and working online for a company that is headquartered in Oakland, California. On Feb 14, 2021, I married a Mexican citizen and the wedding took place in Mexico. I gained Temporary Resident status in Mexico on Feb 18, 2021 and spent a total of only 10 days in the USA in 2021. My wife is employed as a pathologist in Mexico. I plan to file my return with the IRS as “Married Filing Separately” and my wife will file her own return with the government of Mexico (She will not file a US return). She just began the US Immigration process last year, so she does not yet have an SSN or Tax ID in the US.
Because I am now the spouse of a medical doctor, I have health/medical insurance through IMSS in Mexico. My 2021 AGI is about $20,800. My 2020 AGI was $12,182 (filed Single as a resident of Oklahoma). My company does not withhold taxes as I work as an independent consultant. On Sept 29, 2021 I made an estimated tax payment of $310, which was 100% of the Estimated Annual Payment due based on the prior year’s return.
Questions:
Having health/medical insurance through IMSS in Mexico, will I be exempt from any penalties for not carrying insurance through a US insurer?
If I claim the Foreign Earned Income Exclusion, do I need to also file a return for the State of Oklahoma?
If I claim the Foreign Earned Income Exclusion, do I need to also file taxes with the foreign government of my Tax Home?
If I claim the Foreign Earned Income Exclusion, do I need to pay SS and Medicare?
If I claim the Foreign Earned Income Exclusion, do I need to return any stimulus money that I received? If so, will I need to pay interest and penalties on that stimulus money?
If I claim the Foreign Earned Income Exclusion, is my conversion from a US-based IRA to a US-based Roth IRA counted as foreign income?
Having health/medical insurance through IMSS in Mexico, will I be exempt from any penalties for not carrying insurance through a US insurer? There are no penalties for not have medical insurance.
If I claim the Foreign Earned Income Exclusion, do I need to also file a return for the State of Oklahoma? Yes, your gross income exceeds the OK filing threshold for MFS which is $7350. Here is an OK reference.
If I claim the Foreign Earned Income Exclusion, do I need to also file taxes with the foreign government of my Tax Home? You will need to ask the tax authorities in Mexico about their filing requirements
If I claim the Foreign Earned Income Exclusion, do I need to pay SS and Medicare? Yes, you will pay SE taxes on all profits even if income is excluded from the income taxes. Here is the IRS reference.
If I claim the Foreign Earned Income Exclusion, do I need to return any stimulus money that I received? If so, will I need to pay interest and penalties on that stimulus money? No. The foreign income exclusion does not affect your stimulus payments.
If I claim the Foreign Earned Income Exclusion, is my conversion from a US-based IRA to a US-based Roth IRA counted as foreign income? No, the US income is not Foreign Earned Income.