Married Filing Taxes Jointly Or Separately With Nonresident Spouse?
It is that time of year to file your taxes and many couples are confused about their filing status during the immigration process. If you are married to a nonresident alien, the way you file your income taxes is actually your decision. I will discuss your options for filing taxes jointly or separately with nonresident spouse.
The Internal Revenue Service (IRS) allows you the ability to treat your foreign spouse as a resident alien and file your taxes jointly or you can waive that provision and file separately. Since you are legally married, you are not allowed to file under the single status.
If you decide to file your taxes without your spouse (filing separately), your tax liability may actually be lower than if you file jointly, however, you lose the option to claim important tax credits.
So What Are My Filing Status Options With My Non Resident Spouse?
There are two filing statuses available to sponsors who wish to file without the nonresident spouse.
Married filing separately
- you receive the same standard deduction as a single taxpayer, which is $6,100 as of 2013.
- IRS will tax your income at the same rate as a single taxpayer.
Head of household
- filing status for unmarried taxpayers who pay the costs to maintain a home for a dependent.
- grants an $8,950 standard deduction as of 2013
- you must be unmarried or considered unmarried by the IRS.
- if spouse was a nonresident for any part of the year, the IRS considers you unmarried for the purposes of meeting head of household status.
- must provide more than half the costs to maintain a home for a dependent other than your spouse (parent or a qualifying child)
What Tax Credits Do I Qualify For With A Nonresident Spouse?
Depending on your income for last year, you may qualify for a number of tax credits that are available. Choosing your filing status will definitely change what you qualify for so check with a tax accountant before you make your final decision
If you choose to treat your nonresident spouse as a resident alien for tax purposes and file using the married filing separately status, you will not qualify for certain tax credits.
These tax credits include:
- earned income credit
- child and dependent care credit
- education credits and adoption credit
Married Filing Jointly With A Nonresident Spouse
If you decide to treat your nonresident spouse as a resident and file a joint return, your spouse will be required to claim all income, including earnings from outside the U.S., which will probably increase your tax liability.
In many cases, if you spouse has earned an income outside of the U.S., sponsors choose to not include their nonresident spouse on their taxes to reduce their tax liability.
To file a joint return with your nonresident spouse, you will need to attach a statement to your tax return explaining your decision.
Your nonresident spouse must have an individual taxpayer identification number which can be obtained by completing form W-7 and attach it to your tax return.
Filing Status If Your Spouse Already Has A Green Card
If your spouse currently has a valid green card, is a naturalized US citizen or is otherwise considered a resident, your filing status will be straightforward. Even if you both live outside the U.S., as long as your spouse has the status of a resident alien, they will be taxed the same way as a US citizen.
What this means is that their world-wide income is taxed for both of you. Earned income for both you and your spouse will be subject to taxation. Note that any investment income, even if earned in another country by your foreign spouse is subject to U.S. tax and US reporting requirements.
This can be difficult for many foreigners to understand because the U.S. is one of the only countries that taxes worldwide income even if you no longer live the U.S.
The good news is that if you choose to file “married, joint” you will get a higher standard deduction and a personal exemption for each of you. Also, if you each qualify for the foreign earned income exclusion, you can exclude up to $100,800 (for 2015) per person per year of foreign income.
Note: If your spouse is a citizen of another country (while also a resident alien in the U.S.), and you happen to live in that country, special rules may apply. In the event the U.S. has a tax treaty with that country, you should take a look at the treaty and/or consult a tax accountant in that country.