My wife is a G4 Visa holder who works for the World Bank. She is not issued a W-2 and is exempt from taxes. How do I use Turbo Tax to file married joint taxes?

[gregory-webb06]

We know we have to mail in the return with a statement, but I do not know how to indicate her salary is exempt, nor even fill out the turbo-tax questions without a W-2

[Anonymous_]

I will page a Champ, @pk. Stay tuned.

[RalphH1]

You could definitely file a joint return with your non-resident spouse, but there’s a chance you’d owe more tax. (Here’s how to do it in TurboTax…) You would attach a signed statement to your return, electing to treat her as a “resident for tax purposes” (non-residents can’t file a 1040).

So having that larger joint standard deduction would come at the cost of also having to include her income. (Yes—it’s normally exempt. But unfortunately that would change if she were considered a resident, as the IRS clarifies here. Then her worldwide income would be reportable to the U.S.)

Of course, it could possibly go the other way (less tax, greater refund), especially if there are child-related credits or something else in your scenario which wouldn’t help on a separate return. So trying it both ways to compare the results would be a great idea. (As would discussing the situation with your legal/immigration contacts to preclude any unintended non-tax issues…)

[gregory-webb06]

@RalphH1 

Thank you, however looking through the "how to prepare in TurboTax," there is a step that says "prepare the return in TurboTax." This is a problem as the World Bank has not provided any W-2 to her (any year throughout her employment) so I can't fill in the fields (like EIN). Even the yearly income would just be me adding her paychecks throughout 2022 manually. She understands this to be because of the tax agreement the World Bank has with the US. How do I report her income without a W-2?

UPDATE: The only information I get from the World Bank is a letter that says this:

The information listed below certifies the employment status of the indicated World Bank Group staff member as recorded in official records. The staff member is exempt from U.S. Federal and State income taxes as provided in the Articles of Agreement of the World Bank Group, as incorporated into U.S. law, inasmuch as World Bank Group income is concerned.

Then it gives the employment details

[RalphH1]

Here’s another TurboTax post about entering income paid by a foreign employer (which of course will not have jumped through any of the U.S. tax hoops). You’ll see a screen where you’ll describe how the income was reported by checking “A statement from my foreign employer,” then another one where you’ll enter her total for the year. And yes, if the bank didn’t give her that total, it would be a matter of your adding up the statements (they would be what you would show the IRS in the event they later requested proof).

However, since you’re seriously thinking about doing this, I should probably mention that (in addition to speaking with with legal/immigration experts about the possible non-tax implications) it would be an excellent idea to show those check statements to a tax pro who could examine them and double-check exactly what is being added.

Foreign pensions and other benefits tend to fit like a square peg into the round U.S. tax hole, and unless none of that applies here (or unless you’re going to just add up the U.S. dollar value of all her compensation of any kind, to be on the safe side), I want to make sure that you don’t have any headaches later because I didn’t bring this up!

Regarding the info they gave your wife, the bank itself doesn’t actually have a direct agreement with the U.S. — they just know that the tax code here considers employees of international organizations such as theirs to be ongoing non-residents, and that the treaty between countries says they won’t be taxed (because they’re ongoing non-residents). But, as I mentioned earlier, she can’t file a 1040 with you in that case (non-residents must file 1040NR if they need to file, which she doesn’t). And the exception in the U.S. code that would allow her to file jointly with you means the non-resident thing is out the window and she gets taxed on her worldwide income, like all U.S. residents (discussed in this link from earlier).

Good luck, Gregory-webb06!