California State Tax for Non Resident Alien Spouse

[notarobot1]

Me - Resident Alien for Tax Purpose, has SSN

My Spouse - Foreigner only occasionally visits me, no SSN, no U.S. income

My situation -

I moved in to my primary residence at California in Dec, 2022. My spouse visited me in California but only for less than 30 days vacation. My primary residence is separate property (INTERSPOUSAL TRANSFER GRANT DEED signed).

Question - 

Would she be considered as California Non-Resident who still needs to file California state tax? (considering she has close binding to me.)

California is community property state

[ErnieS0 · Accepted solution]

Your spouse would not have to file a California income tax return because she has no income anywhere — unless you chose to file married filing jointly.

She does not have to report half your income as community property.

See Community Property for Americans Married to Nonresidents

You can file a joint tax return if you are a U.S. citizen and are married to a nonresident spouse. And you can use TurboTax and file a regular Form 1040. Your wife will be treated as a resident alien, meaning all your joint worldwide income is taxable to the U.S.

See Nonresident Alien Spouse

[notarobot1]

Thanks ErnieS0 !

Understood, since my spouse doesn't have a SSN so I can only file married filling separately but that makes sense since she only visits U.S. for vacation every year and has no U.S. income.

Another curious follow-up question - You mentioned "choose to file 'married filling jointly", but is there a California state law requiring one has to file as 'married filling jointly' if one meets certain criteria ?

[MaryK4]

If you file a federal married filing jointly return, you would also have to file a California joint return unless either spouse was an active member of the United States armed forces or any auxiliary military branch during the year or a nonresident for the entire year and had no income from California sources during the year.  @notarobot1 

[notarobot1]

Got it! Thanks MaryK4.

Confusing are getting more clear now for our 2022 California state tax. 

One more quick follow up -

My spouse - Assume she will pass the IRS Substantial Presence Test in 2023, but no income for whole year 2023

Me - Work and earn salary in California whole year in 2023

Follow-Up Question - Will this situation require her to file for 2024 Federal tax and California State tax since she would be sharing my salaries under the California tax requirements of "Community Property (Wages/Salaries)" law?

@ErnieS0 @MaryK4 

[ErnieS0]

Your spouse will be treated as a resident alien if she meets the substantial presence test.

If 2023 is the first year she qualifies to be treated as a resident for tax purposes, she would file a dual-status return — if she were filing separately.

Taxation of Dual-Status Aliens

You would make out better filing jointly if she has no income. You can elect to treat your spouse as a resident in the first year of residency.

Additionally, the community property adjustment for federal taxes is quite complicated.

The US allows a U.S. resident to file together with a nonresident spouse and treat the spouse as a U.S. resident.

[notarobot1]

@ErnieS0 Just another quick follow-up, what about my stock market dividend and interest gain? Again, she was here in CA only for short vacation..Does she need to file return just on these for 2022 (I am not sure if she needs to split these gains with me due to community state tax law..) ? 

[ErnieS0]

In your original question, you asked whether your spouse has to file a tax return. I assumed that meant you are filing as married filing separately for federal and California taxes.

If you are filing joint returns, all worldwide income would be captured.

If you are filing separately, I’m assuming you are reporting all the dividends and interest on your return since you said your spouse had no income, in which case, she would not have to file a California return.