You have a choice on filing as either married jointly or separately. It you would be easier for you to file as married filing separately and you would be able to claim a spousal exemption for your nonresident alien (NRA) spouse (if your spouse has no US source income). However, you could get the benefit of the lower marginal tax rate if you file jointly but your spouse would need an ITIN and you would have to include her worldwide income (in USD) on your jointly file return (although her income would be excluded under the foreign earned income exclusion rules, see below)
You have 2 main options for filing your income tax return:
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Option 1 - Married Filing Jointly and you claim an exemption for your NRA spouse. (your NRA spouse will be treated as a US resident alien for US tax purposes and all of your spouse's worldwide income in USD will be subject to taxable as a US citizen or resident alien. Click here for more information about Claiming Non-Citizen Spouse and Children On Your Taxes.
Additionally, if you file as married filing jointly and your NRA spouse lives outside the US and meets the Bona Fide Residence Test, your NRA spouse might be able to claim an IRS - Foreign Earned Income Exclusion that would exclude a portion of your NRA spouse's foreign source earned income (up to $100,800 for 2015). TurboTax will guide you on taking the foreign earned income exclusion when you enter your NRA spouse's foreign source income under Federal Taxes> Wages and Income>I'll choose what I work on (or jump to full list)> Less Common Income (show more)> Foreign Earned Income and Exclusion.
Here are some additional steps for filing married filing jointly if spouse needs an ITIN.
- leave NRA spouse's SSN blank and print a paper copy of your tax return.
- skip error check section if only error is missing SSN for spouse.
- under the file tab, you will need to select "file by mail" and print a copy of your federal income tax return.
- attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies (Nonresident Spouse Treated as a Resident). It should contain the following information:
- A declaration that one spouse was a non-resident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year, and that you choose to be treated as U.S. residents for the entire tax year.
- The name, address, and identification number of each spouse.
- apply for NRA spouse’s Individual Taxpayer Identification Number (ITIN) using Form W-7 (Click ITIN).
- attach a copy of your Form W-7 (along with the necessary supporting documents) to your tax return (For the supporting documents, one option is for your spouse to get a certified copy of his/her passport which will need to be included with your tax return filing.) Click here for IRS website ITIN - Frequently Asked Questions .
- mail your tax return along with your declaration statement, Form W-7 and supporting documents to the IRS. According to the IRS, because you are filing your tax return as an attachment to your (ITIN) application, you should not mail your return to the address listed in the Form 1040, 1040A or 1040EZ instructions. Instead, send your return, Form W-7 and proof of identity and foreign status documents to:
Internal Revenue Service
Austin Service Center
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342
You may also apply using the services of an IRS-authorized Acceptance Agent or visit some key IRS Taxpayer Assistance Center in lieu of mailing your information to the IRS in Austin
- State filing - You will want to file an extension for your state until you receive your ITIN. This is because the application for your ITIN is a federal filing. Most state will not process your return without either a SSN or an ITIN. (However some states will accept state filings with W-7 attachments. You will need to contact your state's Department of Revenue and ask if your state will accept a state tax return with a Form W-7 attached).
When the IRS assigns you an ITIN, update your returns (both federal and state) in TurboTax with this new information and then you should be able to e-file your state return.
Because many states give an automatic extension when you file the federal extension Form 4868, just file a federal extension even if you don't think you will need it for your federal tax return. But check with your state's Department of Revenue to make sure that your state doesn't have a separate state extension filing.
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Option 2 - Married Filing Separately (includes head of household (HoH), if you have a "qualified relative"- see US citizens and Resident Aliens Abroad - Head of Household). Please note that you may be able to claim an exemption for your NRA spouse (You can claim an exemption for your spouse only if your spouse had no US source income, isn't filing a US tax return, and isn't the dependent of another person)
- select married filing separately option in TurboTax under the personal info section.
- leave NRA spouse's SSN blank.
- Under the Personal Information section, choose the box for "NRA spouse" option and select all the questions on the next screen regarding your NRA spouse.
- hand-write "NRA" in all of the places on your tax return that require your NRA spouse's SSN (IRS - Married Filing Separately).
- skip the error check section as long as your only error is missing spouse's SSN.
- mail in your return (you will not be able to efile your tax return so choose "file by mail" in TurboTax).
- mail to IRS address printed with your return.
