Hello community. I am a US citizen with a Japanese residency, living in Japan, and married to a non US citizen. She has never lived in the US and we have to plans on returning to the US. I am a retir

[Devdog99]

Let me add some more onto here. I am a retired Veteran receiving pension. My wife has her own business in Japan and pays Japanese taxes. Her only connection to the US is being married to me. She does not have a SSN obviously nor an ITIN. How do I process my taxes?  Thank you. 

[SusanY1]

Your wife appears, at least for this tax year, to be a "Nonresident alien (NRA)" based on what you have described - that you currently live with her outside of the United States and have no plans to return to the United States.

Unless you qualify to file as Head of Household (See Filing Head of Household with a nonresident alien spouse.), you will file your return Married Filing Separately (MFS) or Married Filing Jointly (MFJ).

If after clicking on the link about Head of Household (HOH) for NRA spouses, you determine you will file using HOH status this year, your wife doesn't have to be listed on your 2019 tax return, she won't need an ITIN yet, and you can stop reading.      

If you do not qualify to file HOH, then you must file either using the Married Filing Separately (MFS) status or the Married Filing Jointly (MFJ) status (if you married before December 31, 2019.  Your wife will need an ITIN to file with either status, and you will mail your return and the ITIN applications together.

Since you are currently residing outside of the United States, you have until June 15, 2020, to get all of this accomplished.  

Below I am going to include a lot of information for you - take your time to read carefully and also read the information in the links I will attach.  There are a number of steps to take, and they are only required this first year. 

Married Filing Jointly with a nonresident alien spouse

If you choose this option, you will need to include ALL of your spouse's worldwide income on your tax return.  The income will be subject to U.S. tax.  However, you may be able to take credits for any taxes your spouse paid on the foreign income.  To file jointly with your spouse, you will follow these steps:

1. Prepare your return as you normally would in TurboTax.  Enter your spouse's name and ignore the errors regarding missing SSN/ITIN. ("continue without fixing")
2. Select "File by Mail" rather than e-File in the last step of your return.
3. Print your return.
4. Leave the space for your spouse's tax ID blank.
5. Attach a statement to your return that includes the following:
   • The full name and address of each spouse.
   • Your social security number.
   •  A written statement that indicates that you are a U.S. citizen married to a nonresident alien and that you are both electing to be treated as residents for tax purposes.
   • The signature of each spouse.
   • Be sure to date each signature separately - using U.S. date formats if written numerically.  (month/day/year).
6. Fill out Form W-7 (You can find it here: Form W-7) and attach this form, as well as all necessary documentation, to the tax return.
7. Mail the return to the address specified in the instructions for Form W-7 (found here Form W-7 instructions).  Do not mail your return to the address in the TurboTax instructions.

Married Filing Separately with a nonresident alien spouse

If you do not elect to treat your spouse as a resident for tax purposes, you do not have to include your spouse's income on your return. However, you will have a lower standard deduction, and you may not be able to claim certain other tax benefits. You do still need to apply for the ITIN.

To file using this status, follow all of the same steps above except step 5, attaching the statement to make the election to be treated as a resident alien.

A few special notes:

1. Electing to treat a spouse as a nonresident alien for tax purposes does not affect the spouse's immigration status. 
2. Once the election to treat a spouse as a nonresident alien for tax purposes is made, the spouse must continue to report all of his or her worldwide income in future years unless the election is revoked, whether the filing status is MFS or MFJ.
3. The election is a once-in-a-lifetime election. If the election is ended, revoked, or canceled, the NRA cannot reinstate it in the future. Even if later married to another U.S. taxpayer.