Is there anything less thrilling than the prospect of dealing with taxes? Well, probably quite a few things. However, when you're married to a non-U.S. citizen, it becomes an unavoidable topic of discussion. The process of filing taxes as a married couple can be a bit more complex, especially when you factor in your residency status, location, and other variables. So, if you find yourself in this situation, here's a guide on how to navigate the maze of tax filing when married to a foreign spouse.
Key Points to Remember:
1. Filing Options for U.S. Citizens with Foreign Spouses:
- U.S. citizens married to foreign spouses can choose to file jointly (Married Filing Jointly) or separately (Married Filing Separately).
- If you have children with U.S. tax identification numbers, you might be eligible to file as Head of Household.
- If your foreign spouse possesses a U.S. tax identification number, you can also opt for the Married Filing Jointly status.
2. Tax Obligations for Foreign Spouses:
- Whether or not a foreign spouse is required to file a U.S. tax return depends on their residency status in the United States.
- If the foreign spouse is a U.S. resident (e.g., possesses a Green Card or meets the Significant Presence Test), they must report their worldwide income on U.S. tax returns, regardless of where it was earned.
- If the foreign spouse is a nonresident alien, they only need to report U.S.-sourced income, such as income from U.S. rental properties, U.S. businesses, or U.S. investments.
3. Significant Presence Test:
- The Significant Presence Test determines whether a foreign spouse qualifies as a U.S. resident for tax purposes.
- If a person spends an average of 120 days or more in the U.S. each year over a three-year period, they are generally required to file a U.S. tax return.
- Careful tracking of the number of days spent in the U.S. can help avoid meeting the Significant Presence Test requirements.
4. 6013g Election for Foreign Spouses:
- Foreign spouses can elect to be taxed as if they were U.S. citizens, known as a 6013g election.
- This election is often made before a couple relocates to the U.S., primarily to aid the foreign spouse's immigration application.
- It requires the foreign spouse to file U.S. tax returns and pay taxes on their worldwide income.
5. Filing Requirements and Thresholds:
- When married to a foreign spouse, you are considered married for U.S. tax purposes, which can lower the income threshold for filing a tax return.
- Even as little as $5 of income may require you to file a tax return when married to a foreign spouse.
6. Getting SSN or ITIN for Your Foreign Spouse:
- To claim the higher standard deduction for filing jointly with your foreign spouse, you'll need to obtain either an SSN (Social Security Number) or an ITIN (International Taxpayer Identification Number) for them.
- You can apply for an SSN at a Social Security Office or U.S. Embassy/Consulate, or opt for an ITIN by preparing a W-7 form.
7. Claiming Your Overseas Spouse:
- Whether you file your expat taxes jointly or separately is your decision, based on what benefits your financial situation the most.
- The flexibility exists to change your filing status in the future if your circumstances evolve.
So, while taxes may not be the most romantic topic for discussion, understanding the rules and options for U.S. citizens married to foreign spouses is essential to ensure you meet your tax obligations and make the most informed choices for your financial situation.
