In general it is beneficial to file a joint return with your spouse when both of you are working.
A joint return allows an increase in combined deductions and exemptions, and allows the filing of a single return to cover all family members. However, Foreign nationals should exercise due care before filing their tax return with a U.S. resident spouse. The reason is that there are special guidelines to follow in order to file jointly, and because by filing, the nonresident may import certain foreign investments that without the joint return would not be subject to U.S. tax. Below is an introduction into the requirements and rules surrounding joint tax filing where one of the joint filers is a NRA.
First, you must determine if filing a joint return is right for you.
• If the NRA spouse has foreign bank and financial accounts an FBAR is not required as
shown in the table listed on the IRS website below. (https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements) However they are required to file Form 8938, Statement of Specified Foreign Financial Assets, when they have specified foreign assets valued above a certain threshold. (Filing jointly increases that threshold amount.)
• Because of the 8938 requirement, you may choose not to file jointly if either spouse has a very high income, or if there is a foreign family business that has no connection to the United States, you don’t want to have to pay U.S. taxes on the income earned there.
• It is recommended that you consult with a tax professional to determine what your tax liability would be if filed separately or jointly before making the election, so that you can receive the most beneficial outcome.
Second, if after looking at your possible tax liability, you decide that a joint filing is beneficial, the next step is directed by IRC §6013(g).
• IRC §6013(g) informs us that a non-resident alien individual may be treated as a US resident for purposes of filing a joint return by following certain directions.
• This code section only applies to nonresident alien individuals who are married to a current U.S. resident, and who wish to be treated as a U.S. resident for purposes of filing a joint U.S. tax return.
• The election under §6013(g) will apply to the tax return for which this election was filed and for all tax returns filed after unless; revoked by either of the tax payers, one of the taxpayers dies, the taxpayers legally separate/divorce, or termination by the Secretary. (Termination by Secretary may happen if the Secretary determines that either spouse failed to keep proper books or records, failed to grant access to books and records, or similar failure to supply information.
Note: If either spouse chooses to revoke the choice to file jointly or it is suspended, neither will be able to renew the election to file jointly again in a later year!
• In order to make the choice to file a joint return, the following must be filed along with your 1040.
• Attach a statement signed by both spouses to your joint return for the year for which the choice applies. It should contain the following information:
• The statement should declare that one spouse was a nonresident alien and the other spouse a U.S. citizen or resident alien on the last day of the tax year, and that both spouses choose to be treated as U.S. residents for the entire tax year.
• Include the name, address, and identification number of each spouse.
Note: The nonresident alien spouse will need to have either a Social Security Number or an Individual Taxpayer Identification number. To get an SSN for your spouse, apply at a social security office or U.S. consulate. To get an ITIN file form W-7 with the IRS.
• Also, IRC § 6013(g) informs us that should there be a time when neither person is considered a U.S. resident, the choice to be treated as a resident alien will no longer apply.
A common question that we get is, “What about in the case of a foreign gift or Inheritance, will the NRA spouse have to file a 3520?”
The answer to this question is generally no. The general requirement of who must file Form 3520 – (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts) is that the filer be a U.S. person. Under the instructions for filing a 3520, a U.S. person is defined as:
• A citizen or resident alien of the United States (see Pub 519, U.S. Tax Guide for Aliens,
for guidance on determining resident alien status),
• A domestic partnership,
• A domestic corporation,
• Any estate (other than a foreign estate, within the
• meaning of section 7701(a)(31)(A)), and
• Any domestic trust (defined earlier).
(2017 – Instructions for Form 3520)
So as you can see there are many variables that must be taken into account before choosing to elect to file a joint tax return with your nonresident spouse, but it doesn’t have to be painful. Contact your local tax professional and let them do the work, while you enjoy the benefits.