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IRS ? Husband works in Chile and wife USA

Posted: Sat Jan 12, 2013 3:49 pm
by momof3
Well that is my hope. I just interviewed for a remote position based out of the USA and will meet with my new boss this week to fill out paperwork. I will be using the 1099 (self-employed) tax form since the income is contract based, some short, some long, some gaps of no work in between. I followed the husband to Chile for his work assignment. He is paid locally and has all of his paperwork in order. As US citizens we still have to file taxes every year, everywhere we live on the planet (sigh) even if the hubby can not reap any government benefits during that time such as putting away money for Social Security, IRA etc.
Before I go sign anything... has anyone had experience with this before? 2 incomes one from Chile and one from the USA? No doubt we will file separately (for the 2013 tax year) for sanity's sake, but I am wondering whether I should attempt deductions (mortgage, kids) as I would normally do or not risk confusing Uncle Sam and just give him his cut.

Re: IRS ? Husband works in Chile and wife USA

Posted: Sun Jan 13, 2013 12:16 pm
by Zenth
No real reason to file separately and overpay. Income earned outside of the USA may be excluded from taxation. You put it down, then subtract it. Don't use off the shelf tax prep software for this. Hire an accountant who has similar clients and is familiar with all your responsibilities concerning foreign bank accounts, investments, etc.
Start now, they're going to get busy real soon.
It's not that bad once you have done it once.

Re: IRS ? Husband works in Chile and wife USA

Posted: Wed Jan 16, 2013 7:00 pm
by momof3
I haven't earned a penny yet. Tomorrow I sign the paperwork for the 1099. In a past life I used EFTPS to make quarterly payments to Uncle Sam and will do so again. I am just concerned that until I do find someone with a clue or get one myself I don't wan't to overpay. I really don't trust that I will get my rightful refund simply because of the odd circumstance, unless somebody (Hello forum members, anybody?) is already doing this so I can learn from their experience.

Re: IRS ? Husband works in Chile and wife USA

Posted: Wed Jan 16, 2013 7:36 pm
by admin
O.k., as always, this is unofficial U.S. Tax advice.

If you are in Chile, and meet all the overseas requirements (e.g. 180 days in the country), then you have the foreign earned income exclusion even if you are being payed in the United States. Your work is being done from Chile as far as the IRS is concerned. Are they paying you over $98,000 (or whatever it is the year you file)?

The one gotcha, is the self-employment tax. If you opt to pay to the Chilean pension system voluntarily, you can opt out of paying self-employment tax in the states.

That is all before taking various biz deductions and whatever.

Just some thoughts. Perhaps there is more to your situation.

Definitely do not let some auto program try to do expat taxes for you. The computer will explode with the logical inconsistencies in the expat tax code.