Can You Claim a Foreign Spouse on Your Taxes?

Navigating U.S. tax obligations when married to a non-U.S. person. The rules can seem intricate, but options exist for compliance and potential tax advantages. This article explores these options and provides guidance on the necessary steps.

Determining Your Filing Status Options

When married to a foreign spouse, the choice of tax filing status affects tax liability. Taxpayers cannot file as Single if legally married, even if their spouse is a nonresident alien. Marital status is determined as of December 31 of the tax year. Three filing statuses may be available: Married Filing Jointly (MFJ), Married Filing Separately (MFS), and Head of Household (HOH).

Married Filing Jointly (MFJ) is often the most advantageous status, offering a higher standard deduction and more favorable tax brackets. For the 2024 tax year, the standard deduction for married couples filing jointly is $29,200. To use this status with a nonresident alien spouse, an election must be made to treat them as a U.S. resident for tax purposes. This election subjects both spouses to U.S. taxation on their worldwide income.

Married to a nonresident alien, a U.S. citizen or resident can choose Married Filing Separately (MFS). This is the default status if no election is made to treat the foreign spouse as a U.S. resident. When filing MFS, the U.S. spouse reports only their own worldwide income; the foreign spouse’s income (unless U.S. source) is not reported on the U.S. return. While simpler, this status results in higher tax rates and limited access to certain deductions and credits.

A U.S. taxpayer married to a nonresident alien spouse may qualify for Head of Household (HOH) status. To be considered unmarried for HOH purposes, the U.S. taxpayer’s spouse must have been a nonresident alien at any time during the year, and the taxpayer must not elect to treat them as a U.S. resident. The taxpayer must pay more than half the cost of maintaining a home for a qualifying dependent. This status offers a higher standard deduction than MFS and more favorable tax rates, similar to MFJ, while keeping the foreign spouse outside U.S. tax liability.

Making the Election to Treat a Nonresident Alien Spouse as a Resident

To file Married Filing Jointly with a nonresident alien spouse, an election must treat the spouse as a U.S. resident for tax purposes. This election (Section 6013(g)) means both spouses are treated as U.S. residents for the entire tax year the election is in effect. One spouse must be a U.S. citizen or resident, and the other a nonresident alien, at the end of the tax year.

Both spouses need a valid taxpayer identification number (TIN). If the foreign spouse does not have a Social Security Number (SSN), they must obtain an Individual Taxpayer Identification Number (ITIN). An ITIN is a tax processing number issued by the IRS for individuals who need a U.S. TIN but are not eligible for an SSN. Applying for an ITIN involves submitting Form W-7, Application for IRS Individual Taxpayer Identification Number.

Form W-7 must be completed with personal information and the reason for applying, such as filing a joint U.S. tax return. Along with Form W-7, applicants must submit original or certified copies of documents proving identity and foreign status. A valid passport is often preferred, as it can serve as stand-alone proof of identity and foreign status. Other acceptable documents include national identification cards, foreign driver’s licenses, or civil birth certificates, though these may require a combination of two documents.

To avoid mailing original identification documents, applicants can apply for an ITIN in person at an IRS Taxpayer Assistance Center (TAC) or through an IRS-authorized Certifying Acceptance Agent (CAA). CAAs can review and authenticate documents, returning the originals immediately to the applicant. If submitting by mail, Form W-7 and the supporting documents must be sent along with the tax return for which the ITIN is needed. ITIN processing time can range from seven to fourteen weeks.

The election is made by attaching a signed statement to the joint tax return for the first effective year. This statement must declare that one spouse was a nonresident alien and the other a U.S. citizen or resident on the last day of the tax year, and that both choose to be treated as U.S. residents for the entire tax year. The statement must also include the name, address, and identification number (SSN or ITIN) of each spouse. Once made, this election applies to all subsequent years unless revoked or terminated due to specific events like death, legal separation, or insufficient record-keeping. An election can be revoked by either spouse by filing a statement of revocation with their tax return.

Reporting Income and Deductions

Once a filing status is determined and an election to treat a foreign spouse as a resident is made, income and deduction reporting becomes clearer. When the election to treat a nonresident alien spouse as a U.S. resident is made for Married Filing Jointly, both spouses must report their worldwide income on the U.S. tax return. This includes all income earned anywhere in the world, regardless of where it was sourced or received. The combined income is then subject to U.S. tax rules.

For those filing Married Filing Separately, the U.S. spouse reports only their own worldwide income. The nonresident alien spouse’s income is not reported on the U.S. return, unless it is U.S. source income. U.S. source income earned by a nonresident alien spouse may be subject to U.S. tax and requires filing a separate Form 1040-NR, U.S. Nonresident Alien Income Tax Return. This approach keeps the foreign spouse’s foreign-sourced income outside the U.S. tax system.

Filing Married Filing Jointly allows both spouses to claim the full standard deduction and qualify for various tax credits. The higher standard deduction for joint filers (e.g., $29,200 for 2024) can reduce taxable income. Access to credits like the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC) may also be available. If filing Married Filing Separately, the U.S. spouse’s standard deduction is lower, and eligibility for certain credits might be limited. If the nonresident alien spouse has U.S. source income and takes deductions, the U.S. spouse might be required to itemize deductions rather than claim the standard deduction.

Community property laws influence how income is reported, particularly in states or countries with such provisions. Nine states have community property laws, where income earned by either spouse during marriage is considered jointly owned. This means each spouse reports half of the total community income on their separate tax returns. However, for U.S. citizens or residents married to nonresident aliens, Internal Revenue Code rules (like Section 879) may override community property principles for certain income types, allocating earned income to the spouse who performed the services. This can affect how income is split and reported, even if the couple resides in a community property jurisdiction.

Applying Tax Treaty Benefits

Tax treaties are agreements between the United States and foreign countries designed to prevent double taxation and clarify tax rights. These treaties can impact the tax obligations of individuals, including those with a foreign spouse. They often reduce or exempt certain types of income from U.S. tax, such as pensions, interest, or dividends earned by residents of the treaty countries.

The applicability of tax treaty benefits depends on the residency status chosen for the foreign spouse. If an election is made to treat the nonresident alien spouse as a U.S. resident, both spouses are considered U.S. residents for federal income tax purposes. In this situation, neither spouse can claim treaty benefits as a resident of a foreign country for the tax year the election is in effect. However, some treaties contain “saving clauses” that permit certain specified income to still benefit from treaty provisions, even if the individual is treated as a U.S. resident.

To claim tax treaty benefits, taxpayers need to attach Form 8833, Treaty-Based Return Position Disclosure, to their tax return. This form notifies the IRS that the taxpayer is taking a position that a U.S. tax treaty overrides or modifies a provision of the Internal Revenue Code. Consult the specific tax treaty between the U.S. and the foreign spouse’s country of residence to understand the benefits and limitations that may apply to their income types and circumstances.