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IRS tax issue for mixed marriage

kc430 (43 posts) • 0

Me, American. She, Chinese. Living in Kunming last several years. Expect to stay another few--or longer.

Been sending tax to IRS under the category “married filing separately”. Been thinking of changing it to “married filing jointly”.

Why would I ever want to do that? Well, how about saving money.

Let me count the ways. 1) Would reduce amount of tax outright. 2) This past year my income tripped over a threshold, which will result next year in a significant increase on my health insurance. If I file jointly the increase will be minimal. Savings on these first two combined would add up to more than $5000. 3) Filing jointly now would be viewed favorably if my wife every applies for a US green card.

There is a gotcha I know about. My wife’s Chinese income would be taxed by the IRS. But that’s OK as we would actually pay less tax than before.

Then there are the gotchas I don’t know about. I don’t know if my wife’s Chinese bank accounts would require annual FBAR and FATCA reporting, which the IRS demands on foreign (non-USA) accounts over a certain threshold. As for myself, I don’t have, and never intend to open, Chinese or other foreign accounts.

What about the Kunming apartment we jointly purchased (both our names appear on the paperwork). Would that affect anything related to the IRS if we file jointly? Dunno.

And of course there have to be gotchas I can’t imagine in my wildest dreams.

I know, these are questions for a properly certified and fully credentialed expert professional.

But it never hurts to tap into the Kunming expat community.

Anyone had personal experience with this issue? Please share.

michael2015 (592 posts) • 0

China & USA share tax information, banking information etc.

The USA mandates annual tax returns - even if you owe them zero, still mandated to file annually.

By filing in the USA - this may benefit your US taxes - but your wife will still have to file in China and getting China to recognize your wife's taxes paid in the USA on income derived here will be problematic - not to mention the issue of her citizenship and the USA's right or lack of to tax a foreign national NOT domiciled in the USA.

Absolutely would discuss this with an expert in international tax law - specializing in both China and US tax law - get them to walk you through the process at least once (china tax laws are fluid).

PS - don't forget to add your wife to you social security as both your wife and your primary beneficiary - don't delay.

Xiefei (506 posts) • +1

You can marry filing jointly by getting her an Individual Taxpayer Identification Number (ITIN). Using that as a non-resident alien, she should not be subject to FBAR or any of those requirements, but figuring out which taxes are owed will be really complicated. I looked into it myself a few years back and just dropped it. Definitely worth consulting an international tax expert.

Also, not sure why you're avoiding setting up any accounts in China. If you're using accounts in her name, the IRS may decide that you "have control" over the account, and you could get in trouble for not reporting on FATCA and FBAR.

Finally, if you plan to be away from the US for a while, you can save a ton of money by buying an international insurance plan, rather than a US plan.

kc430 (43 posts) • 0

Got the ITIN for her a few years back. This actually gave a tax break when filing separately, I could deduct her as a dependent. Then they changed the tax laws in 2018, that loophole gonzo.

kc430 (43 posts) • -1

He, Harry. She, Meghan.

Zow! Talk about a mixed marriage with tax complications.

The child soon to be born to the Duke and Duchess of Sussex will be a dual citizen of U.K. and U.S., liable for taxes under both jurisdictions. If the child wants to renounce U.S. citizenship (and U.S. tax liability) must wait until age 18.

Crazy idea this. Theoretically, the child when grown up could be both a member of British royalty and President of the United States.

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