Effect of filing Married Filing Separately tax return on AOS based off marriage

[sekharan]

I am an international student on an F1 Visa (have been so since I arrived in the U.S. less than 5 years ago). This makes me a non-resident alien in the U.S.

I got married to a U.S. Citizen in 2011 but I continued on my F1 Visa and my spouse did not file for change in my status (and hence I assume I continue to be a non-resident alien in the U.S. for tax and immigration purposes?)

This allowed me to file as Married Filing Separately (MFS) since our marriage. This did reduce my personal exemption but I didn't have make FICA deductions (non-resident alien students are exempt), and on the whole I had to pay ~20% less tax than had I filed jointly.

Now, in 2013, I am proceeding with our I-130 + I-485, and I have this uneasy feeling that my filing of MFS might not have been in the best of my interest although it's completely in accordance with IRS rules.

I ask this question as the VISA officer at our greencard interview might want to probe while I filed MFS and not jointly: my answer that I saved tens of thousands of dollars in taxes doing so might not leave a favorable impression on him.

Does anyone on this forum have a personal experience filing MFS and completing their greencard application successfully?

Should I go ahead and amend all my tax returns and make all of them into a joint filing if it's going to be "better" for my greencard application?

 

[TheRealCanadian]

I ask this question as the VISA officer at our greencard interview might want to probe while I filed MFS and not jointly: my answer that I saved tens of thousands of dollars in taxes doing so might not leave a favorable impression on him.

I see no reason to ask the officer. And saving thousands of dollars in taxes is a perfectly acceptable answer.

 

[sekharan]

I see no reason to ask the officer. And saving thousands of dollars in taxes is a perfectly acceptable answer.

Thanks for your answer.

I might have left out a detail that might be pertinent: My wife does not have any income for 2012 (and negligible income for the years before that)

If I would have filed jointly with her, we could have used our joint tax returns to show that she (we) earn enough over the last 3 years for the I-864 and not require joint sponsors.

However, in my attempt to save thousands in taxes, I filed MFJ and hence she can no longer file the I-864 without requiring additional supporting joint sponsors.

Both of us arranged for the joint sponsors, and it was not a pleasant experience for her, and lately one of the joint sponsors (who is also an EA and on her side of the family) is telling her that my filing MFS will affect my application at the greencard interview.

My own CPA and attorney told me to disregard this but my wife is extremely upset and has been requesting me to amend my returns for a while.

I hope there is someone out here who has files MFS and still got his family based greencard (though marriage) approved.

 

[ananga73]

Gentleman,

Accept TheRealCanadian's answer. The people at USCIS are human beings and the explanation that a broke azz student will save a few hundreds or thousands of $$ by filing MFS will be perfectly understandable to them.

Of course I would expect that you have other proofs of marital union besides the taxes. You're overreacting. People get approved with one even two pieces of evidence so if your marriage is genuine, you really have nothing to worry about.

Additionally, having someone who filed MFS assure you that his process went smoothely does not mean jack! Two different sets of people may provide the same evidence and one gets shafted but the other passes through smoothely.

Feel free to amend your returns and throw away a few hundred or thousand dollars if it will make your wife feel better. Of course you know Rule No. 1 of a successful marriage: Always make madame happy, whatever it takes.

Best.

Thanks for your answer.........

I hope there is someone out here who has files MFS and still got his family based greencard (though marriage) approved.

 

[Jackolantern]

With your F1 visa, you would normally be classified as nonresident, and your USC spouse would be a resident. If the interviewer asks about it, just explain that because of your different statuses of nonresident and resident, it would have been more complex and costly to file jointly. Stop worrying about it. You have a legitimate reason to file separately.

Now, in 2013, I am proceeding with our I-130 + I-485,

How close are you to your 2-year anniversary? If you haven't already completed 2 years of marriage, consider delaying your I-485 filing so that you'll have completed 2 years by the interview date. The interview will be at least 2 months after the I-485 filing, so don't file before 1 year and 10 months of marriage, if you have enough remaining months left on your F1 to last that long.

Completing 2 years of marriage before the interview means upon approval you'll get a 10-year green card instead of a 2-year card (which would require another round of paperwork and a possible interview after it expires).

 

[newacct]

I am an international student on an F1 Visa (have been so since I arrived in the U.S. less than 5 years ago). This makes me a non-resident alien in the U.S.

I got married to a U.S. Citizen in 2011 but I continued on my F1 Visa and my spouse did not file for change in my status (and hence I assume I continue to be a non-resident alien in the U.S. for tax and immigration purposes?)

This allowed me to file as Married Filing Separately (MFS) since our marriage. This did reduce my personal exemption but I didn't have make FICA deductions (non-resident alien students are exempt), and on the whole I had to pay ~20% less tax than had I filed jointly.

Now, in 2013, I am proceeding with our I-130 + I-485, and I have this uneasy feeling that my filing of MFS might not have been in the best of my interest although it's completely in accordance with IRS rules.

I ask this question as the VISA officer at our greencard interview might want to probe while I filed MFS and not jointly: my answer that I saved tens of thousands of dollars in taxes doing so might not leave a favorable impression on him.

Does anyone on this forum have a personal experience filing MFS and completing their greencard application successfully?

Should I go ahead and amend all my tax returns and make all of them into a joint filing if it's going to be "better" for my greencard application?

I agree with the other people that filing MFS is not a problem.

However, I have doubts about your tax reasoning that MFS is better. First of all FICA tax was only 5.65% (4.2% SS tax + 1.45% Medicare tax) in 2011 and 2012, so I don't see how you came up with 20%. And second, if you were to file jointly, you would be using the Nonresident Spouse Treated as Resident election; and this page says that when you do that, "In addition, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax." which means (at least I interpret to mean) that you still don't have to pay FICA tax.

 

[ananga73]

I was also initially doubtful however he may be correct because note that deductions might make his effective tax rate very low circa 20% of AGI such that avoiding FICA of 5.65% of gross would amout to about 25% savings.

I agree with the other people that filing MFS is not a problem.

However, I have doubts about your tax reasoning that MFS is better. First of all FICA tax was only 5.65% (4.2% SS tax + 1.45% Medicare tax) in 2011 and 2012, so I don't see how you came up with 20%. And second, if you were to file jointly, you would be using the Nonresident Spouse Treated as Resident election; and this page says that when you do that, "In addition, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax." which means (at least I interpret to mean) that you still don't have to pay FICA tax.

 

[sekharan]

How close are you to your 2-year anniversary? If you haven't already completed 2 years of marriage, consider delaying your I-485 filing so that you'll have completed 2 years by the interview date. The interview will be at least 2 months after the I-485 filing, so don't file before 1 year and 10 months of marriage, if you have enough remaining months left on your F1 to last that long.

Completing 2 years of marriage before the interview means upon approval you'll get a 10-year green card instead of a 2-year card (which would require another round of paperwork and a possible interview after it expires).

This is very good advice, but I need the EAD as my OPT is going to expire soon.

Does the renewal cost money or any fees?

I was also initially doubtful however he may be correct because note that deductions might make his effective tax rate very low circa 20% of AGI such that avoiding FICA of 5.65% of gross would amout to about 25% savings.

I am a self-employed contractor and hence pay all the FICA myself. Since FICA is deducted pre-tax and then there is the usual taxes, my whole tax outlay will be ~40% if I file MFJ.

I am yet to find a competent EA or CPA who is confident in my special MFS situation, so I will probably end up filing MFJ anyways as I can do it myself and will save atleast the $200 an EA would have charged me to file MFJ.

 

[Jackolantern]

After reading this thread again I have a different view of the situation. Given that your spouse has little to no income and you have no foreign income, I remain very skeptical of the claim that you saved money by filing separately, and a tax-savvy interviewer probably would feel the same.

I think you're assuming that filing jointly would mean having to pay FICA taxes, while filing separately would exempt you from those taxes. But as far as I know, filing jointly with a US citizen or resident doesn't make you lose the FICA exemption of your F1 status. Do you have a source that confirms you would lose the exemption by filing jointly?

However, in my attempt to save thousands in taxes, I filed MFJ and hence she can no longer file the I-864 without requiring additional supporting joint sponsors.

You have a misunderstanding about the I-864. Regardless of whether you file married-separately or married-jointly, income from the intending immigrant (you) can be counted for the I-864 if it's from legally authorized employment in the US and is expected to continue after the green card (in your case that would mean having an offer to continue beyond the OPT, because OPT jobs are usually internship-type jobs that aren't really expected to continue after the 1 year is done unless such an offer is made). The choice of filing jointly or separately doesn't affect whether a joint sponsor will be needed.

Note that the I-864 has separate questions for the income on the tax return, individual income of the sponsor, and income of the intending immigrant. The last two are added together to determine whether your income is sufficient.

I suggest that you file jointly with the option "Nonresident Spouse Treated as a Resident", and you'll probably lower your tax bill, given the higher standard deduction of filing jointly and the more favorable tax brackets.

 

[Jackolantern]

This is very good advice, but I need the EAD as my OPT is going to expire soon.

Does the renewal cost money or any fees?

Yes, extending the 2-year card will involve more fees, more paperwork (similar to what you provide for the initial green card to prove your marriage is bona fide), and possibly another interview.

 

[sekharan]

Yes, extending the 2-year card will involve more fees, more paperwork (similar to what you provide for the initial green card to prove your marriage is bona fide), and possibly another interview.

What are those extra fees?

If that's more than a few hundred (upto a thousand) dollars, I can get my current company to apply for my H1B to keep me in status till my 2 year anniversary is over next year.

After reading this thread again I have a different view of the situation. Given that your spouse has little to no income and you have no foreign income, I remain very skeptical of the claim that you saved money by filing separately, and a tax-savvy interviewer probably would feel the same.

I think you're assuming that filing jointly would mean having to pay FICA taxes, while filing separately would exempt you from those taxes. But as far as I know, filing jointly with a US citizen or resident doesn't make you lose the FICA exemption of your F1 status. Do you have a source that confirms you would lose the exemption by filing jointly?

Let me share what I know. I am not a CPA/EA and hence my understanding probably is wrong, but here goes:

CA is one of the few Community Property States: if filing jointly, the federal tax laws delegate the tax rule to the state rule, which says that spouses filing jointly should treat their income as of a joint entity : Publication 555

Since I don't see a way to treat a joint entity as both a resident and a non-resident, I have a decision to make: what should be the tax status of this joint entity?

Of course, a resident cannot arbitrarily choose to file as a non-resident, hence, the joint entity has to be a resident, and hence require to pay taxes as a resident on all the income.

 

[Jackolantern]

What are those extra fees?

Currently $590. See http://www.uscis.gov/i-751 However that could escalate into the thousands with appeal fees and lawyer fees if your I-751 is denied as a result of USCIS not being convinced of your bona fide marriage. If you get a 2-year card, make sure to preserve various joint documents over the next couple of years so you can present solid evidence for your I-751 and get the 2-year card extended to a 10-year card without issues.

If that's more than a few hundred (upto a thousand) dollars, I can get my current company to apply for my H1B to keep me in status till my 2 year anniversary is over next year.

In the first post of the thread you said you got married in 2011, which would make your 2-year anniversary arrive this year. If you actually got married in 2012, making your 2 years complete in 2014, it would not be a good choice to delay the green card filing for the sake of completing 2 years because 2014 is so far away.

Anyway, H1B probably is not an option for you, because first-time H1Bs cannot be issued before October 1, unless the employer is a quota-exempt entity such as a university or nonprofit research organization. H1B would also mean having to pay Social Security and Medicare.

Since I don't see a way to treat a joint entity as both a resident and a non-resident, I have a decision to make: what should be the tax status of this joint entity?

File married-jointly as residents, using the IRS provision for "Nonresident Spouse Treated as a Resident". You'd get the benefit of the higher standard deduction and more favorable tax brackets, without having to pay Social Security and Medicare.

http://www.irs.gov/Individuals/International-Taxpayers/Nonresident-Spouse-Treated-as-a-Resident

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident. This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year.

If you make this choice, you and your spouse are treated as residents for your entire tax year for the purpose of your federal individual income tax return, and for the purpose of withholding U.S. federal income tax from your wages. However, for the purpose of Chapter 3 withholding you may still be treated as a nonresident alien. Refer to Withholding of Tax on Nonresident Aliens and Foreign Corporations (Chapter 3 of the Internal Revenue Code) in Tax Withholding Types. In addition, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax. Refer to Aliens Employed in the U.S. – Social Security Taxes.