well it's that time of year again ... tax time! with newly married couples it always raises some questions, especially if your spouse is not an LPR yet. here is a simply guide that will help the average couple!

the question on everyone's mind is: what do we file? separate or joint?

to receive the maximum benefit, most couples should file married joint. as long as you were married by 12/31/2005 you can do this, even if your spouse isn't in the US yet!!! first figure out if your spouse if a resident alien or a non resident alien ...

resident alien vs non resident alien:
*resident alien = green card holder or naturalized citizen
*non resident alien = you are considered a nonresident alien unless you meet one of the two tests: Green Card Test (self explanatory) or Substantial Presence Test.

once you have determined that ... you can now make your choice on how to file!

Possibility #1 -- Spouse has "green card" or is otherwise considered "resident alien"

If your spouse has obtained a green card, is a naturalized U.S. citizen or is otherwise considered a resident alien, the situation is relatively simple. Even if you both live overseas, as long as your spouse has the status of a resident alien, he/she will be taxed as if he/she was a U.S. citizen. This means world-wide income is taxed for both of you. Not only is the earned income of each spouse subject to U.S. taxation, but any investment income, even if earned in a foreign country with the foreign spouse as the sole recipient, is subject to U.S. tax. The good news is that you can use the filing status of "married, joint" so that you get a higher standard deduction and a personal exemption for each of you. Also, if you each qualify for the foreign earned income exclusion, you can exclude up to $80,000 per person per year of foreign income.

Note: If your spouse is a citizen of another country (while also a resident alien in the U.S.), and you happen to live in that country, special rules may apply. In the event the U.S. has a tax treaty with that country, you should take a look at the treaty and/or consult a tax professional in that country.

Possibility #2 -- Spouse is considered "nonresident alien (NRA)" for U.S. tax purposes.

If your spouse has neither a green card nor resident alien status, he/she will be classified as a nonresident alien (NRA). If this is the case, you have 2 choices, each of which comes with its own set of complexities:

Choose to treat spouse as resident alien for tax purposes.
If you go this route, you must understand that you will have to report your spouse's worldwide income (as described above) and it will be subject to U.S. tax. You also should realize this is an active choice you make and there are certain procedures that must be followed to make it effective:

First, you have to attach a statement, signed by both spouses, to your tax return for the first year to which the choice applies. The statement must include a declaration that one spouse is a nonresident alien and the other is a U.S. citizen or resident alien, and you are choosing to both be treated as U.S. residents for the tax year.

You also have to include the name, address and Social Security number (or Individual Taxpayer Identification number) of each spouse.
Second, note that 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. It is also important to realize you must continue to file this way (treating both as U.S. citizens or resident aliens) unless you (or circumstances) end the choice. This can happen if either spouse revokes the choice in writing, either spouse dies, you have a legal separation or divorce, or the IRS ends the choice because it feels you haven't kept adequate records.

You might wonder why you would go to all this trouble, especially if you have to declare the foreign spouse's income. The main reason is you will use the "married, joint" filing status which gives you a higher standard deduction and many other benefits that are not available if you use the "married, separate" filing status. Also, if your spouse does not work or his/her income is excluded as foreign income, you have no additional income on which you owe tax while still getting the benefits of the "married, joint" filing status.

Choose to treat spouse as nonresident alien for tax purposes.
If you decide you don't want to include your NRA spouse's income on your U.S. tax return, you generally will have to use the filing status of "married, separate". 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 a Individual Taxpayer Identification number for your spouse before filing the return.

Furthermore, if you have other qualifying relatives living with you and you meet the other eligibility tests, you can file as "head of household". The tax rates and standard deduction for this filing status are much superior to that of the "married, separate" filing status.

Unlike the "choice" you made with regard to treating your spouse as a resident alien, there is no additional paperwork involved with treating your spouse as a nonresident alien for tax purposes. And if you find that the "married, separate" status has too many negative tax implications, you may decide that in future years you want to file "married, joint" by simply making the choice and attaching the statement described above.

Publication 519 (source)

you can quickly (and roughly) compare your filing options here. Income Tax Estimator


<span style='font-size:10pt;line-height:100%'>NonResident Alien A nonresident alien usually is subject to U.S. income tax only on U.S. source income. Under limited circumstances, certain foreign source income is subject to U.S. tax. See Foreign Income in chapter 4.

The general rules for determining U.S. source income that apply to most nonresident aliens are shown in Table 2-1. The following discussions cover the general rules as well as the exceptions to these rules.


ok now ....

Claiming Exemptions
You can claim personal exemptions and exemptions for dependents according to the dependency rules for U.S. citizens. You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U.S. tax purposes and was not the dependent of another taxpayer. You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. You can claim an exemption for each person who qualifies as a dependent according to the rules for U.S. citizens. The dependent must be a citizen or national of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Get Publication 501, Exemptions, Standard Deduction, and Filing Information for more information.

CAUTION: Your spouse and each dependent must have either a Social Security Number or an Individual Tax Identification Number in order to be claimed as an exemption or a dependent..


i would almost liken it to: 2 US citizens .... one is the income provider, the other is a stay at home parent ... they can file married/separate or married/joint as long as they have a SSN or ITIN. the non-wage earner would be the dependent.

of course there are special circumstances regarding the NRA's foreign income, but if it is the usual salary & wages income it is usually exempt (up to a certain amount) in the US. this does not however exempt the NRA from taking care of their responsibilities in their home country, should their be any. but again ... the NRA usually is subject to U.S. income tax only on U.S. source income.

"Gross income" is generally defined in 26 USC § 61 as "all income from whatever source derived." The Supreme Court has long recognized that the definition of gross income sweeps broadly and reflects Congress’ intent to exert the full measure of its taxing power and to bring within the definition of income "any accession of wealth." Commissioner v. Schleier, 515 U.S. 323, 327 (1995); United States v. Burke, 504 U.S. 229, 233 (1992). Accordingly, any receipt of funds by a taxpayer is presumed to be gross income unless the taxpayer can demonstrate that the accession fits into one of the exclusions created by other sections of the Code. See Commissioner v. Glenshaw Glass Co., [348] U.S. 426, 431 (1955). "[A]ll income from whatever source derived" thus includes income earned or received from any geographic source.

geez - i was worried this would be gone! Phewwwwwwwwwwwwww

heh, I wish taxes were gone.

Hi. I need some clarification. We filed AOS for Sept 20th, but do not yet have the greencard. My spouse has been in the US 167 days for the year 2005--so we don't quite make the 180 mark for non-reseident aliens.

I want to file married jointly. My husband has some U.S. income, but not any overseas income to claim. Do we file nonresident but resident for tax purposes--with that separate letter that Gimy talks about in her post. Or is my husband considered resident for having AOD pending?

Thanks. Kia

I just did taxes online tonight as a matter of fact. The nagging question of Nicole's residency popped up about 5 times. Too bad I couldn't answer "Should have been here for ALL of 2005, but not for YOU!"

Kind of disappointed though because my son went to go live with his mother last year, so I lost $1000 in child care credits.

I was looking for info on filing for taxes and found this GEM of a post...therefore...BUMP!

Oh man, Mags, I was looking to avoid thinking about taxes and then this!

Thanks for the info though. I'm dreading filing this year -- we both have non-US income for 2007, plus US income, and I also have a single-member LLC I set up at the end of the year for my consultancy work. In short: a pain in the behind. Anyone know a good tax specialist in Southern Connecticut?

Yikes, that's a lot of figures to sort through!