US taxes for a married nonresident spouse can be challenging. If you have a married unrestricted spouse, you can file separately or together – all of which are potentially harmful. Find out how to understand your tax filing options today! Filing taxes is easy when you have your spouse’s social security number.
However, things get complicated when you choose married filing separately. The household status will depend on how much you earn and whether you want to have a file joint status. Resident aliens make the process even more challenging.
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Then there are the medicare tax withholding purposes associated with filing taxes.
Common Tax Questions
In many cases, Americans marry foreigners while living abroad or working as digital nomads. A newly married nonresident alien comes to tax questions. US taxes for a married nonresident spouse may wonder the filing options. There are many filing options for singles or married couples who do not belong to a country. However, you might have questions like:
- Is it possible to file tax returns without having an SSN?
- Can we file taxes together?
- Can tax planning help couples who are married with foreign spouses?
If these questions pertain to you, we will provide you with the questions you have in this article. One critical decision is how to treat your foreign spouse. The income tax purposes are for your tax planning. These are the essential points to consider:
- If you plan to have your foreign spouse, use a green card, and eventually apply for U.S. citizenship, you should treat them as U.S. residents and join the file, as it would be in your long-term best interest.
- If your spouse has a self-employment income, you can treat them as nonresidents and file separately. Then, his income is not subject to U.S. and self-employment tax.
- If your nonresident spouse has foreign income from assets, you file as married, filing separately or as head of household. However, this rental and capital gains income is not subject to U.S. income tax. If you jointly file, you must report the payment on a U.S. tax return.
If you live abroad with a non-American spouse living overseas, you may have wondered how this impacts your U.S. tax filing situation. As with most circumstances involving taxes, the more variables you add, the more complicated it becomes! This article will present your various tax obligations (and options) about a non-American spouse as simply and precisely as possible.
Filing U.S. Taxes 101
If you are filing US taxes for a married nonresident spouse, here are a few questions. Are you a married American living abroad pondering if your foreign spouse must file or pay U.S. taxes? There are advantages and disadvantages to filing U.S. taxes separately or jointly with your foreign spouse. The post below will explain how to file and pay U.S. taxes with a foreign spouse’s worldwide income.
Is Your Foreign Spouse a Green Card Holder?
The IRS clarifies on its website that as a Green Card Holder, you must report your worldwide income and file a U.S. tax return. Even if you are living abroad, it is the same law while a U.S. citizen overseas.
Generally, US Green Card Holders and U.S. citizens are the same.
If your spouse receives their Green Card, they are considered a U.S. tax resident. Therefore, they are subject to a total income tax, no matter where they live. Plus, they can accept the advantage of expat tax benefits like the Foreign Tax Credit and the Foreign Earned Income Exclusion.
So, in this situation, your foreign spouse – also a Green Card Holder abroad – can file U.S. taxes jointly or separately with you through the MyExpatTaxes tax software. Your spouse may seek to file jointly with you in this scenario since this will give you a higher standard deduction.
Is Your Foreign Spouse a Nonresident Alien?
If your foreign spouse does not have U.S. residency or citizenship, you can declare them as a nonresident alien for filing tax purposes. As a result, you both will have a higher standard deduction and pay less tax. Most often US taxes for married nonresident spouse will fall into this category.
Yet, if your foreign spouse is the breadwinner outside the United States and is not dependent on you (a U.S. citizen), they are not obligated to file a U.S. tax return.
Married Filing Jointly
If you elect to use married filing jointly on a U.S. tax return, this communicates to the IRS you will make your foreign spouse a U.S. resident alien. Therefore, if you want to decrease your tax liability, it is a good idea if your foreign spouse has low-to-no income.
Plus, it will assist you both in applying for detailed exclusions and deductions on your collective income.
However, when you select the file jointly, you must report your foreign spouse as a U.S. taxpayer by acquiring a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
Getting a Social Security Number
Since the IRS doesn’t issue Social Security Numbers, you must reach the Social Security Administration (SSA) by using the following:
Form SS-5-FS, Application For A Social Security Card, may be received from and filed with the Social Security Administration.
Or better yet, apply at your local U.S. embassy or consulate.
Obtaining an Identification Taxpayer Identification Number
An Identification Taxpayer Identification Number ITIN is for people who are not eligible for a SSN but must file U.S. taxes because they are either resident or nonresident aliens. Therefore, this is perfect if you have a foreign spouse and both want to file married jointly for your U.S. taxes.
Yet, possessing an ITIN does not grant you access to work in the U.S. or receive Social Security benefits.
Individuals need to file U.S. taxes with an ITIN for the following reasons:
- If you are a student and must report grant and scholarship receipts
- You are a foreign U.S. resident and must claim dependents
- Filing a joint return with a spouse who has an SSN
- You depend on a spouse who is a nonresident alien visa holder
- You are declaring a tax treaty as a U.S. nonresident
- If you are functioning as a contractor for a foreign company and must report US-earned wages
Suppose you have a U.S. passport. Here you will observe a section stating all American expats and Green Card Holders must report worldwide income to the IRS.
You must file a U.S. tax return if you are a single filer making at least $12,000 annually. However, ensure you convert your foreign currency into USD to see if you meet the threshold. When you have another filing profile, the threshold changes, and you must understand how you reach it each year.
Can I file single if I’m married to a nonresident alien?
You may be an American and marry an Italian while living and working in Florence. If you are in a similar situation, you may wonder if you should still file single. Unfortunately, you won’t be able to file single if married to a nonresident alien (NRA).
Once the marriage is official, you must file for Married Filing Separately or Married Filing Jointly. Even if you remain abroad, the tax regulations stay the same.
How to get an SSN or ITIN for your foreign spouse to file taxes?
If a married couple has a social security number or a Taxpayer Identification Number, you must have an SSN. You must submit an SSN for a spouse on the form SS5. Generally, if a person cannot receive an S.N., they must use an ITIN issued only when married. The first step is the preparation of the W-7 form.
Decide to File Taxes Jointly or Separately
You can file your worldwide income with the U.S. government as a U.S. citizen in two ways. You can either file taxes jointly or separately, and they both come with specific benefits depending upon your tax obligations.
Married Filing Jointly with a Nonresident Alien Spouse
Often living abroad spouses jointly file, even with a nonresident alien spouse. Under certain circumstances, this can significantly boost the standard deduction.
Let’s suggest you are a U.S. citizen married to a Canadian citizen who does not work. If you filed separately, you could only take a standard deduction of $12,200 on your U.S. taxes.
However, if you regale your nonresident alien spouse as a resident by filing jointly, you would gain the standard $24,400 deduction for married couples.
Before you jump on the married-filing-jointly bandwagon, it might not be in your best interest.
Once you file jointly, your nonresident alien spouse’s tax liability becomes similar to a resident. Therefore, their worldwide income is subject to U.S. taxation. Therefore, your Canadian spouse will have the same U.S. taxation you are, even if you reside in Vancouver.
Minimal Income
If your spouse does not work or makes minimal income, this may be fine, but if your spouse has an expensive job and pays most of the bills. However, it might make more sense to file separately. If you treat your NRA spouse as a resident, many tax benefits would not otherwise be open to a nonresident.
To elect Married Filing Jointly, you will need to:
- Attach a statement that states one spouse is a nonresident alien NRA, and the other is a U.S. citizen. A simple message saying you both choose to be treated like U.S. residents. Both parties must sign this statement.
- Include each spouse’s information, including name, address, and SSN. If you are married to someone without an SSN, you must include their ITIN. If your spouse has no SSN or ITIN, they can obtain it with the proper IRS forms and Applications.
The most suitable position to file jointly is if the nonresident spouse does not work. But to do that, they must have an ITIN.
While you both must elect to file a joint return the first year, you have an option in later returns for you both separate file returns if you make a revocation of the joint election.
If you select to revoke the election, your nonresident alien NRA spouse would file Form 1040 NR and be subject to the same criteria for filing as other nonresident aliens. It’s also important to note that you must elect to revoke this choice of filing in writing—otherwise, your NRA spouse will continue to be treated as a resident alien for tax purposes.
Married Filing Separately with Nonresident Alien Spouse
If your spouse does not file as a resident, you can file as Married Filing Separately. Therefore, this is a default filing status in these US taxes for a married nonresident spouse.
However, if you are married to a nonresident alien, you can also utilize the Head of Household filing status. When married to a nonresident alien, the qualification to file as Head of Household means you must produce more than half of all household monetary obligations. It also suggests your dependents live with you and must have a valid U.S. SSN.
What if you’re married and filing separately without a spouse’s SSN? You can, nevertheless, e-file by demonstrating they are a nonresident alien without an ITIN. Or, you can let someone like an H&R Block expat tax expert file it for you.
Expat taxes for resident and nonresident aliens can be tricky in the best circumstances.
Atypical Last Thoughts
US taxes for a married nonresident spouse should now be more transparent. When determining your tax filing status for a nonresident alien spouse, you must understand the tax liabilities. In a foreign country, you will want to ensure your nonresident alien spouse has an individual taxpayer identification number ITIN if they do not have an SSN.
How much you and your spouse earn will depend on whether you want to file a joint or separate return. Joint or separate returns depend upon the spouse’s entire income. Nonresident alien spouses must declare their combined worldwide income on a joint return.
The filing status of resident alien status will differ from when living abroad. I suggest contacting a tax accountant to help find the proper tax solutions for these scenarios.
Digital nomad visas are a game-changer for remote workers, offering the freedom to work from anywhere with an internet connection. Many countries now provide these visas, simplifying the process of living and working abroad. They benefit travelers and local economies, creating a win-win situation in our evolving work landscape.
If you want to learn more about taxes in Spain, we have written about some of their unique tax laws.
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