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I usually file my taxes using turbo tax. Last year I moved to a foreign country and I tried to file my tax again using turbo tax, but I feel like it's confused about some parts:

  1. Turbo tax doesn't seem to like the fact that my wife is a foreigner and doesn't have a social security number. It keeps bugging me to input a valid Ssn for her. I input all zeros for now. Not sure what to do.

  2. Turbo tax forces me to fill out a 2555 form that establishes bonafide residency. Is this really necessary? Most of it is OK, but again in here it bugs me about wife's Ssn.

  3. My previous state is California, and for my present state I input Foreign. When I get to the state tax portion turbo doesn't seem to realize that I have input foreign and it wants me to choose a valid state. However I think my first question is do i have to file a California tax now that I am not it's resident anymore? I do not have any assets in California. No house, no phone bill etc

  4. If you have a better way to file tax based on this situation could you please share with me?

FYI I am filing Married Filing Separately.

Thanks

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If you live outside the US, then you probably need to deal with foreign tax credits, foreign income exclusions, FBAR forms (you probably have bank account balances enough for the 10K threshold) , various monsters the Congress enacted against you like form 8939 (if you have enough banking and investment accounts), form 3520 (if you have a IRA-like local pension), form 5471 (if you have a stake in a foreign business), form 8833 (if you have treaty claims) etc ect - that's just what I had the pleasure of coming across, there's more.

TurboTax/H&R Block At Home/etc/etc are not for you. These programs are developed for a "mainstream" American citizen and resident who has nothing, or practically nothing, abroad. They may support the FBAR/FATCA forms (IIRC H&R Block has a problem with Fatca, didn't check if they fixed it for 2013. Heard reports that TurboTax support is not perfect as well), but nothing more than that.

If you know the stuff well enough to fill the forms manually - go for it (I'm not sure they even provide all these forms in the software though).

It is my opinion, though, that you should get a US-licensed
CPA/EA who is practicing in the country of your residence and
can do it for you.

Now, specifically to your questions:

Turbo tax doesn't seem to like the fact that my wife is a foreigner and doesn't have a social security number. It keeps bugging me to input a valid Ssn for her. I input all zeros for now. Not sure what to do.

No, you cannot do that. You need to think whether you even want to include your wife in the return. Does she have income? Do you want to pay US taxes on her income? If she's not a US citizen/green card holder, why would you want that? Consider it again. If you decide to include here after all - you have to get an ITIN for her (instead of SSN). If you hire a professional to do your taxes, that professional will also guide you through the ITIN process.

Turbo tax forces me to fill out a 29something form that establishes bonafide residency. Is this really necessary? Again in here it bugs me about wife's Ssn

Form 2555 probably. Yes, it is, and yes, you have to have a ITIN for your wife if she's included.

My previous state is California, and for my present state I input Foreign. When I get to the state tax portion turbo doesn't seem to realize that I have input foreign and it wants me to choose a valid state. However I think my first question is do i have to file a California tax now that I am not it's resident anymore? I do not have any assets in California. No house, no phone bill etc

If you're not a resident in California, then why would you file? But you might be a partial resident, if you lived in CA part of the year. If so, you need to file 540NR for the part of the year you were a resident.

If you have a better way to file tax based on this situation could you please share with me?

As I said - hire a professional, preferably one that practices in your country of residence and knows the provisions of that country's tax treaty with the US. You can also hire a professional in the US, but get a good one, that specializes on expats.

  • Hey thanks a lot for the very good answer. I actually finished the Federal portion and it's 95% OK. I don't have any asset in the foreign country, just income and bank account, both of which I have entered into Turbo Tax. My only confusion is just about wife's SSN, and what's weird is that I filed as Married Filing Separately so why is it even asking about my wife? Where can I find the definition of "resident" or "partial resident" for California? I doubt I'm even partial though as I spent at most 45 days in CA last year. Thanks again. – rabbid Apr 2 '13 at 7:01
  • @rabbid be careful. Some things that may not be taxable in your country of residency will be taxed by the US, and vice versa. It is not just copying your payslip as if it was W2. Re CA - check the FTB site. They're very possessive and might come after you even if its just for 45 days. – littleadv Apr 2 '13 at 7:17
  • I upvoted it :) thanks again for your great answer. I'll look around for local professionals that can help me. What online materials do you recommend me to read in the meantime that can help me answer my questions? – rabbid Apr 3 '13 at 7:41
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    @rabbid you can start with this: irs.gov/publications/p54 Don't forget to take some tylenol, you're bound for a headache – littleadv Apr 3 '13 at 8:02

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