Should I add my foreign spouse to my US tax return?
It’s an important question and the answer can differ depending on your individual circumstances.
The decision on how to treat your foreign spouse for income tax purposes is an essential part of tax planning. We will cover what it means if your spouse has a green card or is otherwise considered a resident alien, and if your spouse is considered a nonresident alien for US tax purposes.
Your spouse has a green card or is otherwise considered a resident alien
As long as your spouse has the status of a resident alien, they will be taxed as if they are a US citizen – even if living overseas. This means that for both of you, world-wide income is subject to US tax. Not only is earned income taxed for both of you, but also investment income – even if it was earned in a foreign country and the foreign spouse is the sole recipient.
You can use the ‘married filing jointly’ status when filing your tax return and may be able to receive a higher standard deduction and personal exemptions.
If your resident alien spouse is a citizen of another country and living in this country, you should look to see if the US has a tax treaty with the foreign country.
Your spouse is considered a nonresident alien for US tax purposes
When your spouse doesn’t have a green card nor a resident alien status they will be considered a nonresident alien. In this case, you have two choices:
Choice 1: Choose to treat the spouse as a resident alien for tax purposes
- This means that you’ll have to report all of your spouse’s worldwide income which will then be subject to US tax. For the first year you make the choice, you have to file a joint return. But in later years you can file joint or separate returns.
- If your spouse is a nonresident alien and you file a joint or separate return, your spouse must have either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).
Choice 2: Choose to treat the spouse as a nonresident alien for tax purposes
- This means that you’ll use the married filing separately status. However, if your spouse has no income from sources within the U.S. and is not claimed as a dependent of another U.S. taxpayer, you can claim an exemption for your NRA spouse. You need to be sure to obtain an Individual Taxpayer Identification number for your spouse before filing the return.
- Additionally, if you have other qualifying relatives living with you, you may be eligible to file as ‘head of household’ and receive a better standard deduction than if you filed a married, separate return.
- If you decide that the married, separate status has too many negative tax implications, you can always decide in the future to file a joint return.
Electing to File a Joint Return with a Foreign Spouse
Filing jointly with a nonresident alien spouse is a popular choice, and in certain circumstances, can give you a big boost in the standard deduction.
For example, a US citizen married to a Canadian citizen who doesn’t work – by filing separately you would only receive the standard deduction of $12,950. If you decide to treat your nonresident alien spouse as a resident and file jointly, you would receive the standard deduction of $25,900.
If you make the choice to elect a joint tax return, the following rules apply:
- You and your spouse are treated as US residents for all tax years the choice is in effect (until suspended or ended). However, for Social Security and Medicare tax withholding purposes, the nonresident spouse may still be treated as a nonresident.
- You must file a joint income tax return for the year you are making the election.
- Each spouse must report their entire worldwide income until the election has ended.
Generally speaking, neither you nor your spouse will be able to claim tax treaty benefits as a resident of a foreign country during the tax year you are filing jointly. However, tax treaty benefits may be available on certain specified income.
What if I’m way behind on my U.S. tax returns?
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How to make the election to be married filing jointly
Both spouses need to sign and attach a statement to the joint return for the first tax year the choice applies. This statement should contain the following information:
- A declaration that on the last day of the tax year one spouse was neither a U.S. citizen nor a U.S. resident and the other spouse was, and that you choose to be treated as U.S. residents for the entire tax year.
- The name, address, and identification number of each spouse. (If one spouse died, include the name and address of the person making the choice for the deceased spouse.) If your spouse has no SSN or no ITIN, they can get one by filing the proper forms and applications with the IRS.
You can also file a joint amended return on Form 1040X, Amended US Individual Income Tax Return within 3 years from the date you filed your original income tax return, or 2 years from the date you paid your income tax for that year – whichever is later. If you make the choice through an amended return, you and your spouse will need to amend any returns that you filed after the year for which you made the choice.
How to suspend the choice to be married filing jointly
The choice to file a joint return will continue automatically until it is suspended or ended. The choice will no longer apply if neither of you is a US citizen or US resident during any time in the later tax year.
How to end the choice to be married filing jointly
There is the option for both spouses to file separate tax returns in the following years if a revocation of the joint election is made. This revocation must be made in writing, otherwise your spouse will continue to be treated as a US resident alien for tax purposes.
The choice to file a US tax return as married filing jointly will be ended when:
- Legal separation
- Death of either spouse
- Revocation by either spouse
- Inadequate records
If the choice is ended for any of these reasons, neither spouse can re-elect to be married filing jointly in any later tax year – even if they are married to a different individual. This means that the decision to file a joint return is a once-in-a-lifetime choice.
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