Filing US Taxes If Your Foreign Spouse Lacks an SSN or ITIN
- Why Does Your Spouse Need an SSN or ITIN for Tax Filing?
- Filing Options for US Expats with a Foreign Spouse
- How to Apply for an ITIN (Form W-7)
- Alternative Filing Options Without an ITIN
- Tax Implications and Considerations
- Impact of Tax Treaties and the Foreign Tax Credit (FTC)
- Filing Taxes with a Foreign Spouse? Greenback Is Here to Help!
If your spouse is not a US citizen, they may not have a Social Security number (SSN) or an individual tax identification number (ITIN). This can complicate your tax filing requirements. Here’s what you should do.
Key Takeaways
- An SSN or ITIN helps your foreign spouse file taxes, claim deductions, and avoid processing delays.
- Applying for an ITIN involves submitting Form W-7 with supporting documents and takes about seven weeks to process.
- You can file taxes even if your spouse does not have an SSN or ITIN, but this may have downsides.
Why Does Your Spouse Need an SSN or ITIN for Tax Filing?
The IRS uses tax identification numbers (TINs) to identify taxpayers and process tax returns. For US citizens, this is typically a Social Security number. Noncitizens may have to use an ITIN instead. Without an SSN or ITIN for your spouse, you may face challenges in filing your taxes.
Without an ITIN, your spouse may not be able to choose the right filing status, potentially leading to higher taxes. Many tax credits and deductions also require valid TINs for all individuals listed on the return. This could stop you from claiming those benefits. Not having a TIN can also result in processing delays or even lead to the IRS rejecting your return.
Filing Options for US Expats with a Foreign Spouse
When married to a foreign spouse without an SSN or ITIN, you have two primary filing status options: “married filing jointly” and “married filing separately.”
Married Filing Jointly with a Foreign Spouse
Filing jointly allows you to combine incomes and potentially benefit from a higher standard deduction and more favorable tax brackets. However, to file jointly, your nonresident alien spouse must be treated as a US resident for tax purposes. To file this way, you must:
- Make the election: Attach a statement to your joint return declaring that one spouse is a nonresident alien and both choose to be treated as US residents for tax purposes. This statement must be signed by both spouses.
- Obtain an ITIN for your spouse: If your spouse isn’t eligible for an SSN, apply for an ITIN by submitting Form W-7 along with your tax return. The ITIN application requires proof of identity and foreign status.
Making this election will give you the highest possible standard deduction. In 2024, the standard deduction for married couples filing jointly is $29,200. It also allows you to claim certain tax benefits like the Earned Income Tax Credit. However, it also requires both you and your spouse to report your worldwide income which is all subject to being taxed.
Filing jointly is usually the most beneficial option, especially if your spouse has little or no income. However, you should carefully consider whether reporting worldwide income might increase your tax liability. Consult a qualified tax expert to determine the best approach for your situation.
Married Filing Separately Without an SSN/ITIN
Filing separately can simplify your taxes, especially if your spouse has significant foreign income. However, this will lower your standard deduction. For 2024, the standard deduction for those filing separately is $14,600, much lower than the $29,200 available for those filing jointly. You may also lose access to some tax benefits.
But while this filing status offers less favorable deductions, it can be a useful option for those who want to protect their spouse’s foreign income from US taxes. When filing separately without an SSN or ITIN for your spouse, enter “NRA” (nonresident alien) in your spouse’s SSN field. If your spouse has any US-source income, they may need to file Form 1040NR as a nonresident alien to report it separately.
How to Apply for an ITIN (Form W-7)
To apply for an ITIN, you will have to take the following steps.
- Complete Form W-7: Provide personal information and the reason for applying.
- Gather necessary documents: Submit original or certified copies of documents proving identity and foreign status, such as a passport.
- Submit the application: Mail the completed Form W-7, tax return, and supporting documents to the IRS. Alternatively, apply in person at an IRS Taxpayer Assistance Center or through an IRS-authorized Acceptance Agent.
- Wait for confirmation: Allow seven weeks for the IRS to process your application and issue the ITIN.
If your ITIN application is rejected, review the rejection notice for specific reasons. Common issues include incomplete forms or insufficient documentation. Make sure all information is accurate and resubmit with the necessary corrections.
Alternative Filing Options Without an ITIN
Head of Household Filing Status
If you have a qualifying dependent and meet specific criteria, you may file as head of household, which offers a higher standard deduction than married filing separately. This status requires that you pay more than half the cost of maintaining your home and have a qualifying person living with you for more than half the year.
Claiming a Foreign Spouse as a Dependent
In certain situations, you can claim your nonresident alien spouse as a dependent if they have no gross income and aren’t a US citizen or resident. This allows you to use the head of household status. However, your spouse must have an ITIN, and you must provide over half of their support.
Tax Implications and Considerations
Choosing to file jointly or separately has long-term tax implications. Filing jointly requires reporting both spouses’ worldwide income, which may lead to higher tax liabilities but offers access to more credits and deductions. Filing separately limits certain benefits but may be advantageous if your spouse has significant foreign income.
Impact of Tax Treaties and the Foreign Tax Credit (FTC)
Tax treaties between the US and other countries can affect your tax obligations, potentially helping you avoid double taxation. The Foreign Tax Credit lets you offset taxes paid to a foreign country against your US tax liability on the same income. The Foreign Earned Income Exclusion and Foreign Housing Exclusion may also help you reduce or erase your US tax bill.
Filing Taxes with a Foreign Spouse? Greenback Is Here to Help!
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