Should I file jointly, separately, or as head of household with non-resident spouse

[taxpuzzler]

Summary of our situation for 2023:

- I'm a resident alien, while my spouse still qualifies as a non-resident alien on J-1 research scholar status.

- We live together in CA with two children, one of which qualifies as a dependent (US citizen).

- As a J1 non-resident my spouse avoids FICA taxes, which is a tax saving of ~8%

- I earn ~2x my spouse's salary

We apparently have three filing options:

1. File separately: me as resident, my spouse as non-resident

2. File separately but with me as head of house hold. This is possible because a nonresident spouse counts as unmarried.

3. File jointly, in which case my spouse opts to become a resident alien too

Option 1. (separate) is the most straightforward. My spouse continues to avoid FICA tax. However I end up with higher tax brackets and only a 13k tax reduction.

Option 2. (HoH) would also let us keep the FICA reduction, qualify for dependent care credits, improve my tax brackets, and increase my tax reduction to 20k. But a complication is that we can't easily prove that I paid for the majority of the house upkeep, because the rent payments were from my spouse's account (it's university housing and she's the research scholar). I can show I paid more overall for family support, including all child care for two kids (though only one qualified), but the latter isn't listed as a "house upkeep" item. Essentially we're married and sharing bill payments, but for HoH the assumption seems to be that we shouldn't be.

Finally, for Option 3 (joint) we get all the benefits of Option 2 regarding benefits and tax brackets, and 27k tax reduction. But it's my understanding my spouse would then need to pay FICA tax over her salary.

Option 2 seems to be the best, but apparently not possible as we can't prove it on paper. Option 1 vs 3 comes down to whether the tax advantages of filing jointly would beat the FICA taxes my wife avoids.

Any insights or suggestions for our situation would be very welcome!

[Spino]

It seems like you are sorting out the possibilities. However, it sounds like you are probably going to end up in the US long term, in which case option 3 might actually work out well. Generally social security is a good deal for taxpayers in spite of all the criticism it gets. Of course, you're hearing that from a 67 year old with a wife who is now receiving SS at 65 while I wait for age 70. I never thought about it this way when I was a graduate student!

In fact, my wife's earnings essentially stopped once we had our twins, giving us 3.

One other comment--you will probably never be audited, but option 2 does require that you have a reasonable basis for believing you did pay more than half if you take the child deduction, and putting down your rationale on paper before you file would be a good document to show if you did get questioned about it later. There are two issues--first, did you correctly pay your tax, and second, if you didn't was it fraud. You may be incorrect or later judged incorrect, but you certainly don't want to be accused of fraud.