Most beneficial for spouse living/working outside US - filing separate or jointly?

[reyuna132]

I married a Canadian last year. I live and work in the US, he lives and works in Canada. We have no children/dependents. I know it depends on the specifics, but generally speaking would it be more beneficial for us to file separately or jointly? He has a regular full time job, I work part time and freelance. Would he have to use the same filing status when filing Canadian taxes?

[DS30 · Accepted solution]

In most situations, it is better to file as married filings jointly.

TurboTax - Married Filing Separately vs Married Filing Jointly

However, if your spouse is a nonresident alien (NRA), this can become more complicated because if you decide to file jointly (or even claim a spousal exemption for your NRA spouse while filing as married filing separately), your NRA spouse would need either a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).

Additionally, if you are including your NRA spouse on a jointly filed income tax return, your NRA spouse would have to include worldwide income (in USD) on your jointly filed return (although your NRA spouse may be able to have all or a portion of that NRA spouse's foreign earned income excluded under the Foreign Earned Income Exclusion and would be able to claim a Foreign Tax Credit on any foreign income that was not excluded under the Foreign Earned Income Exclusion).

So if your NRA spouse is not planning on getting either a SSN or ITIN, then your only option is to file married filings separately and take any spousal exemption on your return.

Regarding your FBAR requirement if you hold joint foreign financial accounts with your NRA spouse -

If you have foreign bank accounts, you may be required to file a Report of Foreign Bank and Financial Accounts (FBAR) if are a US citizen or resident and::

1. you had a financial interest in or signature authority over at least one financial account located outside of the United States; and
2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

Foreign financial accounts consist of all foreign financial accounts that you own separately or jointly or for which you have signatory authority over (such as a foreign business account that is owned by the business but for which you can sign checks or redirect funds).

To be directed to the US Treasury Government Website to prepare a Report of Foreign Bank and Financial Accounts, click FBAR (TurboTax does not support this form)