# Some questions for 2015



## mwebber (Jun 3, 2014)

I filed my offshore streamline package last year and haven't heard from IRS yet. I guess these are good news, but am still waiting for them to come back, if they have any questions with my employer-sponsored retirement plans. Following advice on these forums and with my tax expert, I decided to play it safe and declared employer contributions to the retirement plan as income. I clearly stated this on line 23 of the 2555 form, so in case there will be questions in the future, I will have evidence that this income was included on the ongoing basis. I still had some room, so this resulted in no taxes to the federal government.

I now have several questions on my tax return for 2015 which I am currently preparing. A key change was that I got married in 2015, so I now have a NRA wife with no social security number, so this again complicates the filing.

1. My wife is NRA. I am thinking to file 2015 tax return as married filing separately. Does this have any implications on the FEIE and other expat-related exclusions? As we live overseas, I do not believe she is eligible for the SS number. 

2. My income in 2015 has increased somewhat (due to bonus and some compensation for the accommodation by my employer) and my early estimates show that FEIE + standard deduction + personal exemption will no longer be sufficient to offset all income, so I may end up paying some taxes. This is not a problem, but I obviously want to minimise my tax payment. I have never taken the housing exclusion as I simply did not need it - can I take it if I have not taken this before? How will IRS may look at this? I read that if any exclusions of the form 2555 are revoked, I may not claim them again during 5 yrs. Does this apply to me if I have not taken this exclusion in any of the prior three years for which I filed the streamline? 

3. If I file as married filing separately with my NRA wife, does it mean I am no longer eligible to take IRA and tuition deductions?

Many thanks for your responses.


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## BBCWatcher (Dec 28, 2012)

mwebber said:


> 1. My wife is NRA. I am thinking to file 2015 tax return as married filing separately. Does this have any implications on the FEIE and other expat-related exclusions?


Congratulations on your marriage! I'm not sure what other expat-related exclusions there are except the (singular) Foreign Housing Exclusion. Were you thinking of something else?

The short answer is no, you'll probably still end up at zero tax owed if that was your previous outcome filing Single. However, if you're earning over the exclusions or if you have non-foreign earned income that's sufficiently large you might see a bit of tax start to creep in that you wouldn't have seen as a single filer. (See below for more.)

If you have a U.S. citizen child please do check whether you can file Head of Household. It's an improvement over MFS.



> As we live overseas, I do not believe she is eligible for the SS number.


That's perfectly fine. The instructions tell you precisely what to do.



> I have never taken the housing exclusion as I simply did not need it - can I take it if I have not taken this before?


You sure can if you qualify. Not a problem.



> I read that if any exclusions of the form 2555 are revoked, I may not claim them again during 5 yrs. Does this apply to me if I have not taken this exclusion in any of the prior three years for which I filed the streamline?


I don't think it applies anyway to the FHE, but even if it did you aren't _revoking_ because you've never taken the FHE before.



> 3. If I file as married filing separately with my NRA wife, does it mean I am no longer eligible to take IRA and tuition deductions?


You may be over the income limit to make a deductible IRA contribution anyway (which is a Traditional IRA). You may be able to make a _nondeductible_ IRA contribution, however, if you have earned income that's not excluded. (Then later convert that to a Roth IRA if you wish.) MFS doesn't change that. Caution: The deadline for 2015 IRA contributions is April 15, 2016.

I'm not sure what tuition deductions you have in mind. It depends. The Child and Dependent Care Expenses tax credit, to pick an example, is not available to MFS filers, as I recall. (HoH is OK, though.)

Note that you can still take the Foreign Tax Credit on unexcluded income if you have creditable foreign taxes.


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## mwebber (Jun 3, 2014)

BBC thanks. I meant FEIE and FHE, of course. I am not aware of other expat exclusions either. 

As stated in my original message, it seems my foreign earned income will be in excess of the exclusion amount for 2015. There will be no significant non foreign earned income as I live outside the US and will probably have a few thousands only in interest, etc. 

I think the revocation issue specifically applies to the foreign housing exclusion - this is what the instructions to form 2555 say. However, the instructions do not say whether you can take this exclusion if you haven't taken it before. My reading is that if you take it once, you need to take it in all future years. No? Not sure what they mean by revoking the exclusions. 

As for the tuition deduction, I mean line 34 on 1040 (tuition and fees) , which is USD 4,000 limit I believe. However, I am not sure if you can take this if you do MFS filing and whether my income permits this (can FEIE be deducted to arrive to MAGI or no?)


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## BBCWatcher (Dec 28, 2012)

mwebber said:


> However, the instructions do not say whether you can take this exclusion if you haven't taken it before. My reading is that if you take it once, you need to take it in all future years. No? Not sure what they mean by revoking the exclusions.


You can hop on the FHE "bus" whenever you want. Once you hop off, you have to wait to hop back on. You can't revoke because you haven't hopped on the bus yet.



> As for the tuition deduction, I mean line 34 on 1040 (tuition and fees) , which is USD 4,000 limit I believe.


That's from Form 8917. No, you can't take that one if MFS. The Lifetime Learning credit and the American Opportunity credit are also incompatible with MFS. You could explore whether you could itemize deductions and take the education expense as a business deduction -- sometimes that's OK.

But are you working a bit too hard here within a Foreign Tax Credit?


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