How to File Taxes With a Foreign Spouse

Foreign spouses without U.S. income dosn't need to pay the IRS.

When married to a foreign spouse, you must either file under married filing jointly or married filing separately. If filing jointly, it is important to also determine the amount of your own and your spouse's foreign income (if any), as well as your own and your spouse's U.S. income (if any). If your foreign spouse doesn't have any U.S. income, they are not required to pay taxes to the Internal Revenue Service (IRS). In such case, choose the marriage filing separately for your own tax return.

Instructions

1. Determine your responsibilities as taxpayers. A foreign spouse who has no U.S. income means they had no gross income that needs to be declared to the IRS. You, as a U.S. citizen or permanent resident, must report your worldwide earned income (such as wages and tips and self employment income) and unearned income (such as interest, dividends, capital gains, pensions, rents and royalties), including those with paid taxes in any foreign country.

   Taxes on foreign income that you or your spouse already paid in another country may be eligible for claiming of the foreign tax credit (Form 1116) or you may use the foreign earned income inclusion (Form 2555). The United States has tax treaties with most countries, meaning you will more likely get credit for foreign income taxes already paid in other countries. You will also get the usual standard deductions and exemption deductions based on your filing status.

2. Weigh your options whether you choose to file one joint return (married filing jointly), you want to file separate returns (married filing separately) or you will only file a separate return for yourself as a U.S. citizen or permanent resident.

   If you and your spouse decide to file jointly, you have to declare your worldwide income (including exemptions, deductions and credits) as a couple in your U.S. return. Your non-resident alien spouse will then be treated as a resident alien for tax purposes only. Joint filing assumes you elect to be taxed on all your worldwide income and supply all pertinent and necessary documentation of tax liability. You and your spouse must sign the return for it to be officially considered as a joint return.

   You may choose the marriage filing separately option if your foreign spouse does not choose to be taxed on his or her foreign income.

   Filing separately has higher tax rates and fewer benefits (you won't be able to claim the elderly and disabled tax credit, child and dependent care tax credit and earned income tax credit, among other deductions and credits). Yet, filing separately generally releases you from the burden of any issues or lies made by your spouse in their own tax return.

3. Get your foreign spouse either a social security number (SSN) or an individual taxpayer identification number (ITIN). While it is not necessary for a foreign spouse without any U.S. income to file at the IRS, you, as a U.S. citizen or permanent resident filing your return, can only claim his or her exemption if he or she has an ITIN. You can claim exemptions for your foreign spouse only if he or she had no gross income, is not filing a U.S. return or was a dependent of another taxpayer. This applies to cases where the spouses are both U.S. citizens or permanent residents or if either of the couple is a non-resident alien.

   Apply for an SSN for your foreign spouse at the social security office or U.S. embassy or consulate. Complete Form SS-5 and provide original or certified copies of documents that verify your spouse's age, identity and citizenship. The social security office determines the eligibility of the spouse for getting an SSN. If not eligible, he or she must file a Form W-7 at the IRS to apply for an ITIN.

4. Complete your return (including your foreign spouse's return, if any) and check the correct box for married filing jointly or married filing separately on line 2 or line 3 of each return.

Tips & Warnings

• Taxes can be very technical and tricky, especially in cases of a couple where one is a U.S. citizen or permanent resident, then the other is a non-resident alien. Further complications may add to the confusion when the return involves many attachments and forms for any of the following cases: you are self-employed or an independent contractor with many projects requiring a number of Miscellaneous Income Forms (Form 1099); you are both employed and self-employed; or you get income both in the United States and other foreign countries. In such cases, it is always best to talk to an experienced tax preparer to avoid errors and hassles in your returns.

References

• Internal Revenue Service: U.S. Citizens and Resident Aliens Abroad - Filing Requirements
• Internal Revenue Service: Taxation of Nonresident Aliens
• Internal Revenue Service: U.S. Citizens and Resident Aliens Abroad - Nonresident Alien Spouse
• World Wide Web Tax: What's My Filing Status?
• Harvard University Office of the Controller: U.S. or Non-U.S. Source Income

Resources

• Internal Revenue Service: Instructions for Form 1042-S
• Your U.S. Tax Return Blog: W2 vs. 1099-Misc: Employee vs. Independent Contractor
• Your U.S. Tax Return Blog: U.S. Citizen or Resident with Foreign Income