[ Offshore Tax ] Filing Status when married to a Non-American.
Find out what is the filing status when married to non-American.
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DERREN JOSEPH:
So, we are hoping to address some of the following issues. So, the first issue, when one spouse is an American expat living abroad and the other is a foreign national, a non-resident alien with no intention of applying for a US green card or pursuing US citizenship, when is it better to file jointly and when is it better for the US spouse to file separately?
That's a great question, we get out all the time. I know some people file single when they're married but that's kind of like misrepresenting yourself on your tax form right. So, if it is you're married to a non-American your options are really married filing separately or married filing jointly or head of household. If the kids have social security numbers so the head of household is also an option. So, the reason why my filing jointly is attractive is that you get the ease of e-filing depending on what system your tax team is working on but more importantly the tax code and the tax tables in terms of income tax they are created or construed in such a way that those who file jointly get preferential tax treatment to those who file separately. So, basically depending on how you earn your income you can actually pay less when you pay less in taxes if you file jointly as opposed to separately based on the same earned income. We can debate whether that's right or wrong but that's just the way it is. The code is constructed in such a way it encourages you to file jointly and there are certain tax credits. So that's in terms of the actual tax rates and under certain tax credits that are only available when you file jointly as opposed to when you file separately. So, the tax code kind of puts pressures on you to file jointly. So that's the upside now the downside is that when you file jointly with your non-us spouse uh you need to include their income. So, it'll be a Section 6013G election and you'd wonder well hold on, why would my non-US spouse ever be interested in getting into the US tax. That's a good question and we get that all the time. The reason being and I think you know this because you kind of hinted at it in the question the way you phrased it. It's a good idea if the intent is to pursue US residency. So, if at some point in time you think that your non-US spouse would join you in moving to the US then it makes sense to file jointly because then you know they have a tax id and they have a footprint, they no longer because otherwise they simply don't exist in terms of you know, if they want to get a cell phone plan, if they want to lease a car, they have no credit score, they have no proof of income they have nothing they simply don't exist and it'll take a while for them to create a digital footprint in the US so by filing jointly it's a good step strategically if your non-us spouse hopes to join you in moving to the US. If it is not the case which you have clearly said it's not the case then you're right, it's best to file separately rather than bring your non-us spouse's income into the US tax net so that's an option another way of getting the preferential tax rates that come with filing jointly is if you have US kids with social security numbers and that I know that's a big issue because some of my clients who have had kids in the past year or two with the issues with the US embassies abroad it's been a bit challenging to register births abroad and get socials and et cetera. So, assuming that you do have social for the kids you can file head of household and that gives you better tax treatment than married filing jointly. So, I hope that answers your question.
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