My family members live in Japan. What options I should choose? Plan to file jointly or Plan to file separately? Do I have any dependents? Yes or No?

[Opus 17]

Please clarify.  Are they US persons living abroad (citizens, green card holders, or resident aliens who lived at least 183 days in the US) or are they non-resident aliens (not US citizens and did not live in the US more than 183 days and do not pass the substantial presence test.)

[yosuke1975]

They are non-resident aliens.

[Vanessa A]

What is your status?  Are you a resident alien or a non-resident alien or a Dual Status Alien ? In order to file form 1040 (instead of 1040NR) using TurboTax, if you are not a US Citizen, then you would need to either meet the Substantial Presence Test or the Green card Test.  

 If you are filing as a resident alien or US Citizen and you are married, your only filing options are Married Filing Jointly or Married Filing Separately, unless you lived separately from your spouse for the last 6 months of the year and have dependents that lived with you that you supported and provided more than half of the cost of upkeeping the home, then you may be able to file Head of Household.

If your dependents are non-resident aliens in Japan, then you would not be able to claim as dependents on your return. 

If they do not have an SSN and you choose to file Married Filing Separate , you will need to still enter their information and then choose that your spouse was a nonresident alien at any time during the year. 

If you file as Married Filing Separate, then you would only include your income. 

 If your spouse chooses to be treated as an US Citizen for tax purposes, and you want to file as Married Filing Joint, you would need to include their income on your return as well (even if it is under the table) and they would be taxed on it. If you choose filing jointly, you will need to print and mail your return along with the W-7 and any other required documents to

IRS

ITIN Operation

P.O. Box 149342

Austin, TX 78714-9342

 US. Tax Guide for Aliens

Claiming a Non-Citizen Spouse and Children on Your Taxes

[Opus 17]

If you are a US person for tax purposes, then very briefly:

You can file as married filing separately.  Report only your own income.  You can't claim dependents.  You will need to use a fake SSN for your spouse (try 999-88-9999), then print your return, erase or use some white out on the SSN, and write "NRA" in its place.  Mail your return, you can't e-file in this situation.

Or, you can file as married filing jointly.  To do this you make an election (choice) to treat your spouse as a US person for taxes.  That means you must report all your spouse's world-wide income and pay tax on it.  If your spouse also pays taxes in their home country you can claim an offsetting credit for the foreign taxes.  I believe you can claim your children as dependents but only for a $500 credit each, not the $2000 child tax credit.  Your spouse and children need ITINs (international tax ID numbers).  You still can't e-file.  You print and mail your tax return, along with form W-7 ITIN application, to the IRS for processing.

Although married filing jointly usually has lower tax rates and better deductions, the issues with your spouse's foreign income may make it less attractive.  Married filing separately has much less paper work in your situation.