First of all, what you put on your W-4 has no bearing on how your tax filing status. A W-4 is used by an employer to determine how much tax to withhold from your pay. If you indicate Single on a W-4 it only means that federal income tax is withheld using the Single withholding tables. It does NOT mean you can file as Single, unless you are single as of December 31.
If you are an H1B Alien and meet the substantial presence test, you are treated as a resident alien for tax purposes. Resident aliens are taxed in the same manner as U.S. citizens on their worldwide income, and nonresident aliens (with certain narrowly defined exceptions) are taxed only on income which is derived from sources within the United States and/or income that is effectively connected with a U.S. trade or business.
Since you were married on December 31 you have to file as either Married Filing Joint or Married Filing Separate. Filing Single is not an option. You could be eligible for Head of Household, you can use the IRS Online tool to see: What is my filing status? If not, you have two choices in filing your taxes.
Option 1
Treat your spouse as resident alien for tax purposes. If you do this, you will need to include your spouse's worldwide income in your US tax return and it will be subject to US taxes. To do this follow these steps.
- Attach a statement to your tax return, signed by both spouses, that states that one spouse is a nonresident alien and the other is a U.S. citizen or resident alien, and you are choosing to both be treated as US residents for the tax year.
- List the name, address and Social Security number (or Individual Taxpayer Identification number) of each spouse. If your spouse has a social security number you will use it. If not, you will need to apply for a number using Form SS-5. If your spouse is not eligible to apply for a Social Security number, complete a Form W-7, Application for IRS Individual Taxpayer Identification Number (ITIN) (http://www.irs.gov/pub/irs-pdf/fw7.pdf). This form will be attached to your tax return. Turbo Tax does not support the Form W-7. You can complete it outside of Turbo Tax. You will have to print, sign and mail your return in if you are using Form W-7.
- For the first year you make the choice, you have to file a joint return. In later years you can file joint or separate returns. Married Filing Jointly will give you a higher standard deduction and has other benefits that are not available using a married filing separately status, but you do have to include your spouse’s worldwide income in joint income.
Option 2
Treat your spouse as a nonresident alien for tax purposes. You will not have to include your spouse’s non-US income on your U.S. tax return. You will have to use the filing status of Married Filing Separately.
https://www.irs.gov/Individuals/International-Taxpayers/Nonresident-Spouse-Treated-as-a-Resident
If everyone on the tax return has a social security number or ITIN, you should mail your return to the address listed in the 1040 instructions. Tax returns with a Form W-7 should be mailed to the Austin TX address.
A tax return accompanied by one or more W-7 forms cannot be submitted electronically. You can submit it in person at any IRS Taxpayer Assistance Center that performs in-person document reviews; most major cities have such assistance centers, and there is at least one center in every state.
You can also submit tax returns with W-7 forms by mail to:
- Internal Revenue Service
- ITIN Operation
- P.O. Box 149342
- Austin, TX 78714-9342
According to the IRS, it takes 6 to 10 weeks to obtain an ITIN. An ITIN will expire at the end of the year if it is not used on a federal tax return in the last 3 years.
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