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Electing To Treat A Nonresident Spouse As A U.S. Resident



If you meet the conditions of the substantial presence test, you are considered to be a U.S. resident for U.S. International tax purposes.  If you qualify as a U.S. resident under the substantial presence test, you may be able to have your nonresident spouse treated as a U.S. resident for tax purposes even if your spouse does not qualify under the substantial presence test.

What are the Benefits of Treating a Nonresident Spouse as a Resident?

If you elect to treat your nonresident spouse as a resident for U.S. taxation purposes, in the year that you make that election, both you and your nonresident spouse will be taxed on your worldwide income.  IRS – Nonresident Spouse Treated as a Resident.  In the year that you elect your nonresident spouse as a U.S. resident, both you and your nonresident spouse will be treated as U.S. residents for the entire tax year for the purposes of U.S. federal income tax and U.S. federal income tax withholding.  The nonresident spouse may still elect to be treated as a nonresident alien for the purposes of other taxes, such as Chapter 3 withholding or Social Security or Medicare tax withholding.  Americans Abroad – US Tax Implications of a Non American Spouse.

Treating your nonresident spouse as a resident for tax purposes allows you and your spouse to file a tax return jointly, giving you access to the many benefits of jointly filed tax returns, including a higher standard deduction for joint taxpayers.  Another benefit of making this election is that you and your nonresident spouse may be able to exclude foreign earned income from your taxable income.  You may also be able to claim a foreign deduction or credit on any foreign taxes paid to the foreign spouse’s country of residence.

What are the Disadvantages of Treating a Nonresident Spouse as a Resident?

One of the implications of treating a nonresident spouse as a resident for tax purposes is that, for the tax year of the election, neither spouse can claim tax treaty benefits of the foreign spouse’s country of residence.  Another potential downside of the election is that once it is made, it continues for future tax years until you take steps to change the election, or it is revoked by the IRS.

How Can I Elect to Treat a Nonresident Spouse as a Resident?

In order to treat your nonresident spouse as a resident, you and your spouse must file a joint tax return.  In addition to completing a joint return, you must also attach a written statement to the return which contains specific information.  In particular, this written declaration must state that you are either a U.S. citizen or a U.S. resident for tax purposes on the last day of the tax year.  You must also write that your spouse is a nonresident, but you are electing to treat your spouse as a U.S. resident for the purposes of U.S. taxation for the entire tax year.  In addition, the written statement must contain the name, address, and identification number of each spouse.

Can I Elect to Treat a Nonresident Spouse as a Resident Retroactively?

In general, you should elect to treat your nonresident spouse as a U.S. resident at the time you file your joint tax return.  The election should be made in the year for which you wish to make the election.  However, if you fail to do so, you may make the election at a later date by filing an amended return.  You can claim this special status by filing a joint amended return within 3 years from the date that you filed your original return, or within 2 years from the date that you actually paid your income tax for that year, whichever is later.  The form used for these purposes is the Form 1040X, Amended U.S. Individual Income Tax Return.  IRS – Amended US Individual Income Tax Return.

A Tax Attorney Can Help You and Your Nonresident Spouse with Your Tax Situation

If you are a U.S. Citizen or U.S. resident for taxation purposes, and you wish to treat your nonresident spouse as a U.S. resident, you may need the assistance of a knowledgeable tax attorney to help you evaluate all aspects of your situation.

In accordance with Circular 230 Disclosure

William D. Hartsock has been successfully helping clients comply with U.S. International Tax Laws and deal with issues related to worldwide taxation since the early 1980s. Mr. Hartsock offers free consultations with the full benefit and protections of attorney client privilege to help people clearly understand their situation and options based on the circumstances of their case.

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