Filing taxes can be complicated, especially when your situation involves international elements. Our comprehensive guide, “Married Filing Jointly Foreign Spouse: A Complete Tax Guide”, will explore the complexities, benefits, and challenges of choosing the “Married Filing Jointly” status when one spouse is a foreign national. Whether you’re a U.S. citizen or resident married to a nonresident alien, navigating the 6013(g) election, or considering alternative filing options, this guide provides the necessary information to make informed decisions. This article will cover eligibility requirements, the 6013(g) election process, the advantages and disadvantages of Married Filing Jointly status, alternative filing options, and key tax considerations like foreign income reporting.
Eligibility Requirements
To file as Married Filing Jointly with a foreign spouse, certain conditions must be met.
- Marital Status: You must be legally married by the end of the tax year.
- Residency Election: If your spouse is a nonresident alien (NRA), you must make a 6013(g) election to treat them as a U.S. resident for tax purposes.
- Identification Numbers: Your foreign spouse must have either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). An ITIN can be obtained by filing Form W-7 with the IRS.
If these criteria are not met, you may need to consider alternative filing statuses.
The 6013(g) Election Process
The 6013(g) election is a key element when a U.S. citizen or resident is married to a non-resident alien, because it allows you to treat your NRA spouse as a U.S. resident for tax purposes.
- To make this election, you must attach a statement, signed by both spouses, to your joint tax return, declaring that both of you agree to be treated as U.S. residents for the entire tax year.
- By making this election, both spouses will then be subject to U.S. taxation on their worldwide income.
- The election remains in effect unless revoked or terminated due to specific circumstances such as legal separation or death.
While many taxpayers do not formally make the election, it is generally not a problem with the IRS. However, if you want to make the election on an amended return, you must do so within 3 years from the date you filed your original U.S. income tax return or 2 years from the date you paid your income tax for that year, whichever is later. If you choose to make this election on an amended return, you must also amend any returns filed after the election year.
It is important to know that the choice to be treated as a U.S. resident is suspended for any tax year after the tax year you made the choice, if neither spouse is a U.S. citizen or resident alien at any time during the tax year. Once made, the election to be treated as a U.S. resident for federal income tax purposes applies to all later years unless terminated. Terminating the election can also have collateral tax implications, so caution should be used. For example, under proposed regulations, a gift of a Passive Foreign Investment Company (PFIC) to a spouse is generally subject to PFIC taxation, unless the giftee spouse is a U.S. person or an NRA who is treated as a U.S. resident by virtue of a 6013(g) election. However, terminating the election triggers PFIC taxation at the point of termination.
Benefits of Married Filing Jointly
Filing jointly with your foreign spouse offers several advantages:
- Higher Standard Deduction: Couples filing jointly in 2024 can claim a standard deduction of $29,200, compared to $14,600 for those filing separately. In 2022 the standard deduction was $27,700 for married filing jointly, and $13,850 for married filing separately.
- Access to Tax Credits: Joint filers may qualify for credits such as the Child Tax Credit or Earned Income Tax Credit more easily than those filing separately.
- Foreign Income Exclusion: If both spouses earn income abroad, they may qualify for the Foreign Earned Income Exclusion (FEIE), which can significantly reduce taxable income. Taxpayers may also qualify to use Foreign Tax Credits to reduce or eliminate their U.S. tax liability.
Drawbacks and Challenges
While there are benefits, there are also potential downsides:
- Worldwide Income Reporting: Both spouses must report all global income, which can increase taxable income if the foreign spouse has significant earnings. The United States taxes U.S. individuals on their worldwide income. Therefore, if a U.S. person and foreign spouse file a joint U.S. tax return together, then both of their incomes are included as taxable income. This is true, even if the foreign spouse resides overseas and earns all their money from foreign sources.
- International Tax Compliance: Additional forms such as FBAR (Foreign Bank Account Report) and FATCA disclosures may be required if either spouse holds foreign assets.
- Permanent Election: Once made, the 6013(g) election is difficult to revoke and applies to all future years unless terminated under specific conditions.
Alternative Filing Options
If filing jointly is not ideal, you should consider these alternatives:
- Married Filing Separately (MFS): This is the default option if you do not make the 6013(g) election. However, it offers lower deductions and fewer credits. For 2024, the standard deduction for those filing separately is $14,600.
- Head of Household (HOH): If you have dependents and meet certain criteria (e.g., paying more than half of household expenses, the dependents live with you) this status may provide better benefits than MFS.
Key Considerations
When filing jointly with a foreign spouse, keep these points in mind:
- ITIN Application: If your spouse does not have an SSN, apply for an ITIN using Form W-7 before filing taxes.
- Foreign Tax Credits: You may be able to claim credits for taxes paid on your foreign spouse’s income in their home country to avoid double taxation. Taxpayers may qualify to use Foreign Tax Credits or apply the Foreign Earned Income Exclusion and/or Foreign Housing Exclusion.
- Professional Consultation: Given the complexities of international taxation, consulting a tax professional experienced in expat or cross-border tax issues is highly recommended. You may want to speak with a Board-Certified Tax Law Specialist that specializes exclusively in these types of offshore disclosure matters.
FAQs
- Can I file as “single” if my spouse is a nonresident alien?
- No, you must file as Married Filing Separately, Married Filing Jointly, or possibly Head of Household.
- What forms do I need to file if we elect Married Filing Separately?
- What if you’re married filing separately without a spouse’s Social Security Number?
- You can still e-file by indicating they are a nonresident alien without an ITIN.
- Can I file jointly if my spouse has no income?
- Yes, and it may be beneficial, but you may also want to consider filing separately.
- What is the standard deduction for married couples filing jointly in 2024?
- $29,200.
- What is the standard deduction for those who are married and filing separately?
- $14,600.
- How do I get an ITIN for my spouse?
- You can apply for an ITIN using Form W-7 with the IRS.
- What is the 6013(g) election?
- It is an election that allows you to treat your NRA spouse as a U.S. resident for tax purposes.
- What happens if I choose the married filing jointly status?
- Both spouses must report their combined worldwide income.
- Can I make a 6013(g) election on an amended return?
- Yes, within 3 years from the date you filed your original U.S. income tax return or 2 years from the date you paid your income tax for that year, whichever is later.