# Foreign tax credit and nra spouse



## alepuppy (Aug 18, 2015)

Hi finally I was able to use file my husband tax report using one of the free on-line site recomended by IRS and looking to the previous tax report done by an accountant that has now retired. Once finished the interview the tax report produced by the on line site I noticed some differences between this year report and those of the previous years. Here are some questions:
1) FOREIGN TAX CREDIT: I have some foreign tax credit for passive income from 2013 and some foreign tax credit for general income from 2014-
This year I owe tax only on general income that was cancelled by the foreign tax credit of 2014 filling form 1116. As regards the foreign tax credit for passive income, even if I filled all the questions, no form 1116 was created to carryover the credit to 2018 while in the previous years those forms where always attached to the tax report even if the credit wasn't used. The question is: do I need a form 1116 to carryover to 2018 tha foreign tax credit for passive income or it is automatically carried over if not used?
2) I am a NRA I have no SSN or TIN number. Without this number the tax report cannot be e-filed. On the forum of the site it is written that in this case I have to print the report and send it by mail. Since I will not be able to send the report withing the 15 of April do I have to file for an extension or since my husband is resident abroad his term is automatically the 16th of June? And when I send it to the IRS should I use regolar post service or a company (SDA or UPS)?
3) my husband income is only some reimbursement for scouting and managin a baseball team and I report this income as other income. On last year report (done by the consultant) on the last page of the tax report there is a page named ELECTIONS where he reported:
a) taxpayer has elected social coverage under the republic of Itay as permetted by the US/ITALY totalization agreement, and further described in the department of Treasury Technical explanation of the Convention for the avoidance of double taxation. Do I need to report this??? It didn't come out on this year report done online.
Thanx always
Alessia


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## Bevdeforges (Nov 16, 2007)

Can't answer all your questions, but I'll make my suggestions and we can hope someone with a bit more experience comes along to fill in.


alepuppy said:


> 1) FOREIGN TAX CREDIT: I have some foreign tax credit for passive income from 2013 and some foreign tax credit for general income from 2014-
> This year I owe tax only on general income that was cancelled by the foreign tax credit of 2014 filling form 1116. As regards the foreign tax credit for passive income, even if I filled all the questions, no form 1116 was created to carryover the credit to 2018 while in the previous years those forms where always attached to the tax report even if the credit wasn't used. The question is: do I need a form 1116 to carryover to 2018 tha foreign tax credit for passive income or it is automatically carried over if not used?


Not at all sure - but are you filing for yourself or are you filing jointly with your US citizen husband?


> 2) I am a NRA I have no SSN or TIN number. Without this number the tax report cannot be e-filed. On the forum of the site it is written that in this case I have to print the report and send it by mail. Since I will not be able to send the report withing the 15 of April do I have to file for an extension or since my husband is resident abroad his term is automatically the 16th of June? And when I send it to the IRS should I use regolar post service or a company (SDA or UPS)?


From this I assume you're filing for your husband - filing as "married filing separately" - but that may not be the case. If you are filing his return as married, filing separately, then you're correct. You can't e-file without having an ITIN for yourself. However, as long as your husband is resident outside the US, you have until June 16th automatically. 

It's up to you whether to send in the return by regular post or via a courier company. Just be very sure to keep copies of everything you file.

If you're attempting to file jointly, then you will need to include a form requesting an ITIN for yourself with the filing. Details here: https://www.irs.gov/individuals/international-taxpayers/general-itin-information



> 3) my husband income is only some reimbursement for scouting and managin a baseball team and I report this income as other income. On last year report (done by the consultant) on the last page of the tax report there is a page named ELECTIONS where he reported:
> a) taxpayer has elected social coverage under the republic of Itay as permetted by the US/ITALY totalization agreement, and further described in the department of Treasury Technical explanation of the Convention for the avoidance of double taxation. Do I need to report this??? It didn't come out on this year report done online.


This is tricky. It can depend on what else (if anything) you are declaring - and whether you're filing just for him or doing a joint return covering both of you. Is there a reason why you aren't reporting his income as "salary income" (i.e. on line 7) and then claiming the Foreign Earned Income Exclusion?

Hard to tell in any event without having a bit more information about what you're filing. (And I can understand if you don't want to divulge everything here on the open forum.)
Cheers,
Bev


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## Costa55 (Apr 13, 2016)

As for the deadline...from what I understand you can use certain couriers and express shipping. Once the package is post-marked on or before the 15th then you're OK. 

_Your return is considered filed on time if the envelope is properly addressed, has enough postage, is postmarked, and deposited in the mail by the due date. _

https://www.irs.gov/taxtopics/tc301


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## Bevdeforges (Nov 16, 2007)

Just a note - you can also use regular postal service. The postmark serves as proof of when you sent it. You don't need to use a courrier service.
Cheers,
Bev


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## Moulard (Feb 3, 2017)

> 1) FOREIGN TAX CREDIT: I have some foreign tax credit for passive income from 2013 and some foreign tax credit for general income from 2014-
> This year I owe tax only on general income that was cancelled by the foreign tax credit of 2014 filling form 1116. As regards the foreign tax credit for passive income, even if I filled all the questions, no form 1116 was created to carryover the credit to 2018 while in the previous years those forms where always attached to the tax report even if the credit wasn't used. The question is: do I need a form 1116 to carryover to 2018 tha foreign tax credit for passive income or it is automatically carried over if not used?


You only need to file form 1116 if you want to claim a tax credit for that type of income. If you didn't file form 1116 for passive income then one assumes that you didn't have enough passive income to warrant claiming any foreign taxes. You cannot carryover foreign tax credits if you did not claim foreign tax. If you need passive foreign tax credits from a year that you did not file a 1116 passive, you can always file an amended return to so that you then carryover those credits. 





> Since I will not be able to send the report withing the 15 of April do I have to file for an extension or since my husband is resident abroad his term is automatically the 16th of June? And when I send it to the IRS should I use regolar post service or a company (SDA or UPS)?


If you are filing from overseas you get an automatic extension an automatic 2 month extension until 15 June. Beyond that you can request an additional extension to October 15 by filing Form 4868.


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## JustLurking (Mar 25, 2015)

Costa55 said:


> ... _Your return is considered filed on time if the envelope is properly addressed, has enough postage, is postmarked, and deposited in the mail by the due date._





Bevdeforges said:


> ... The postmark serves as proof of when you sent it. You don't need to use a courrier service.


Except for non-US postmarks, which unfortunately do not count. From 26 CFR 301.7502-1 (c)(1)(ii):


> *§ 301.7502-1 Timely mailing of documents and payments treated as timely filing and paying.*
> 
> (a)*General rule*. Section 7502 provides that, if the requirements of that section are met, a document or payment is deemed to be filed or paid on the date of the postmark stamped on the envelope or other appropriate wrapper (envelope) in which the document or payment was mailed. ...
> 
> ...


Quintessential and trademark IRS lack of accommodation for US taxpayers abroad there, then. Anyone surprised by this? (I am not.)


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## Costa55 (Apr 13, 2016)

Justlurking with the wrench thrown in  

I was going by this from the IRS per private couriers:
https://www.irs.gov/filing/private-delivery-services-pds

"Taxpayers or Tax Professionals can use certain private delivery services designated by the IRS to meet the "timely mailing as timely filing/paying" rule for tax returns and payments. These private delivery services include only the following:"

As usual, clear as mud, and if you look hard enough you will find a contradiction


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## Costa55 (Apr 13, 2016)

Also found this, because I was recently confused over which delivery address in Austin to send to. Seems like expats should use Dept of the Treasury, but for delivery services it seems to point to a different address 3651 south... 

"
CAUTION! A tax return delivered by the U.S. mail or a designated delivery service that is postmarked or dated by the delivery service on or before the due date is considered to have been filed on or before that date. You can use certain private delivery services designated by the IRS to meet the "timely mailing as timely filing/paying" rule for tax returns and payments. See your Form 1040, U.S. Individual Income Tax Return or Form 1040A, U.S. Individual Income Tax Return instructions for a list of designated delivery services.

Revenue Ruling 2002-23, 2002-18 IRB 811 provides that federal tax returns mailed by taxpayers in foreign countries will be accepted as timely filed if they bear an official postmark dated on or before midnight of the last date prescribed for filing, including any extension of time for such filing."

https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad-where-and-when-to-file-and-pay


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## JustLurking (Mar 25, 2015)

Costa55 said:


> Justlurking with the wrench thrown in


Hey! The IRS threw in the wrench, not me. Don't shoot the messenger 



Costa55 said:


> As usual, clear as mud, and if you look hard enough you will find a contradiction.


Quite so. The IRS regards some foreign _private delivery services_ as trustworthy, but no foreign postal service. Although in practice the IRS have sometimes accepted foreign postmarks as proof, even if not actually required to by regulation.

Personally, I get my proof of delivery from inventing a $1 tax liability, enclosing a $1 check with my 1040NR tax return, and if the IRS cashes the check -- and they always do, with almost indecent haste! -- then they can hardly claim not to have received the return that accompanied it. Much cheaper than both private delivery services and my own country's proof-of-delivery service from the post office. In practice, the USPS often doesn't really inter-operate with other countries when it comes to proof-of-delivery anyway, so on the occasions when I have tried to use that I have never actually received solid proof of delivery.

Things were much simpler when you could route things to the IRS through their office in the London embassy. Closed a few years ago as part of IRS "improvement to customer service", though.


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## Costa55 (Apr 13, 2016)

JustLurking said:


> Hey! The IRS threw in the wrench, not me. Don't shoot the messenger
> 
> 
> Quite so. The IRS regards some foreign _private delivery services_ as trustworthy, but no foreign postal service. Although in practice the IRS have sometimes accepted foreign postmarks as proof, even if not actually required to by regulation.
> ...


Ah I see. lol the $1 check is pretty funny, and a good idea. "almost indecent haste" :lol::bowl:

The courier thing is a bit excessive especially considering many of us owe $0, but for now its my safest option. I have saved the tracking history and signed named from the tracking in my IRS folders from previous years so that better be good enough  

Sorry to partially side track the original posters questions.


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## Bevdeforges (Nov 16, 2007)

JustLurking - I think you missed Costa55's citation of the revenue ruling that permits the use of a "foreign" postmark to validate the date a return was sent. (Message #8 above)

Besides, it's somewhat less critical to prove that you filed on time if your tax liability is $0. Late filing penalty is a percentage of the amount due, so not a problem with a $0 return.
Cheers,
Bev


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## JustLurking (Mar 25, 2015)

Bevdeforges said:


> JustLurking - I think you missed Costa55's citation of the revenue ruling that permits the use of a "foreign" postmark to validate the date a return was sent.


Ah yes, right you are! Thank you for the additional note. And an unexpected two cheers for the IRS here, then, for taking a sensible line on this.

Now, standard UK Royal Mail delivery time for 'economy' postage to the US is six weeks from posting. I wonder if I dare push my luck that far with my next year's US tax return ...


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## alepuppy (Aug 18, 2015)

Bevdeforges said:


> Can't answer all your questions, but I'll make my suggestions and we can hope someone with a bit more experience comes along to fill in.
> 
> Not at all sure - but are you filing for yourself or are you filing jointly with your US citizen husband?
> 
> ...


Bev
This is the my husband situation: he is unemployed. 
He is receiving $3000 from an MLB Baseball club as private contract to scout players in Europe but as you may understand the money is pretty much expenses to cover travel and phone calls. He is not receiving any form from the club. Since he is not doing this as a job but more as a hobby, while managing a local baseball team in Italy, the previous accountant was filing this money as other income specifying as a hobby.
He is then receiving € 7200 from the italian team he is managing as coverage of the expenses. This money is not subject to taxation in Italy as it is more a reimbursment but I learned from the 1040 instructions that since it is not a reimbursement on an accountable plan it needs to be reported.

We are talking about $12,000 total to be reported and I followed his previous 1040 to report that money.

Thanks for any help
Alepuppy


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## alepuppy (Aug 18, 2015)

Moulard said:


> You only need to file form 1116 if you want to claim a tax credit for that type of income. If you didn't file form 1116 for passive income then one assumes that you didn't have enough passive income to warrant claiming any foreign taxes. You cannot carryover foreign tax credits if you did not claim foreign tax. If you need passive foreign tax credits from a year that you did not file a 1116 passive, you can always file an amended return to so that you then carryover those credits.
> 
> 
> If you are filing from overseas you get an automatic extension an automatic 2 month extension until 15 June. Beyond that you can request an additional extension to October 15 by filing Form 4868.



Moulard,
sorry my English is bad.
In 2013 he had passive income and paid taxes in Italy ($ 650). For the excess of taxes he paid in 2013 ($598) above the amount he used to cover the USA taxes ($ 52) a form 1116 was filed. And every year after 2013 the previous accountant was filing a form 1116 to carry over the tax credit ($598) because afger 2013 there was no other income.

The same was done for the general income and taxes paid on that money in Italy in 2012, 2013, 2014 with a form 1116 filed every year with the credit of the year before added to the credit of the year that was filed.

In 2015 and 2016 there was no income to be taxed in Italy or USA and the accountant was filing the form 1116 just to carry over the credit built up till 2014.

This year my husband has to pay some taxex on the general income so he is using some of the credit carried over from 2012 and filing a form for it.

Here is the question:
Regarding the tax credit on passive income filed in 2013 with form 1116 and each following year with a form 1116 (even if no credit was used), is it necessary to file a form 1116 to keep carryng it over to 2018 or if not used it will be carried over automatically???

Said in other words: if u have a foreign tax credit and u filed for it in the year you paid the taxes in the foreign country, do you need to file the forms 1116 each following year, (for the next 10 years), to carryover it if you don't use it to cover the USA taxes???

Thanks Moulard
Alepuppy


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## Bevdeforges (Nov 16, 2007)

Unfortunately for foreign income, there is no one "right" way to report it. (And of course, no foreign income would be reported on either a W-2 nor on a 1099.)

That said, there is no reason not to report the "reimbursement" in total as "earned income" and then just take the FEIE. But if you're not reporting it as "earned income" your husband would be entitled to deduct his "business expenses" which should effectively bring the amount to $0.

Afraid I can't really help you on whether or not you need to keep filing in order to keep bringing forward the existing foreign tax credit - but IIRC, you can only carry that forward for 10 years anyhow.

This is one of the really annoying things about US taxation - in that there is no one "right" answer (especially in situations where you're receiving funds from outside the US), you're pretty much left to your own devices as to which "options" you elect (or not).
Cheers,
Bev


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## Moulard (Feb 3, 2017)

alepuppy said:


> Moulard,
> Said in other words: if u have a foreign tax credit and u filed for it in the year you paid the taxes in the foreign country, do you need to file the forms 1116 each following year, (for the next 10 years), to carryover it if you don't use it to cover the USA taxes???


I don't believe you have to file passive Form 1116 if you are not claiming a tax credit. What you do need to do, however is maintain a Foreign Tax Credit Carryover Worksheet that includes all of your carryover amounts for the past ten years so that in future if you choose to file a Form 1116 you can correctly calculate any carryover. That way next year you could refer to it for correctly completing the carryover worksheet. 

Remember however, it is slightly different with the general Form 1116 because by filing that you are effectively revoking your election to use the Foreign Earned Income exclusion and therefore probably would want to file a general Form 1116 there were US taxes due.


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