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I am a U.S. citizen, but my wife is not. If I own a foreign company, I am subject to Section 965 Transition Tax, Form 5471 and Self Employment Tax regardless of where I live.

If we are living outside of the U.S., will my non-U.S. wife's business income be subject to Section 965 Transition Tax, Form 5471 and Self Employment Tax simply because I am married to her? What if I am employed by her company?

  • Some info is missing - does your wife have a green card? do you file joint returns? why are you subject to self-employment tax just because you own a foreign company? why kind of "company" is the foreign company? etc. – Jack Fleeting Aug 3 at 20:27
  • @JackFleeting She does not have a green card. We file joint tax returns while we live here in the US. If I owned the company and worked for it, I would be self-employed. Similar to e-resident.gov.ee/start-a-company, but in Latvia – aidan.plenert.macdonald Aug 3 at 23:17
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If she is no longer a US resident, then she should not be liable for US taxes.

My wife is a US citizen and I am not. She works for a company I own (more importantly, she owns less than 10% of it). She does not pay self-employment tax to the USA.

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Let's start at the end: you should really talk to a tax professional before you make any decisions.

Your wife is a non-greed-card holding resident alien; she can become a nonresident alien once you move abroad, but even that isn't as intutitive as it seems. Once she is a nonresident alien, she may want to stop filing jointly with you, or maybe elect to contintue to do so - there are some benefits to that. Check out this, for starters.

The fact that you own a company and work for it doesn't mean you are self-employed. On the contrary - you are probably an employee; it's possible to be self employed under those circumstances if the company is treated as a partnership/LLC for US tax purposes, but that, too, isn't simple to determine.

Really, talk to a professional....

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