Spouse is not a US tax resident but has SSN. Impact of filing jointly and singly on her tax status.

[cmartinez86]

Hi!

My spouse is currently not a US tax resident (lives outside the US and is not a US citizen) but has a SSN as she was a tax resident 5 years ago while living in the US under a work visa. I understand that if we file jointly she would then become a US tax resident but if I file individually she will not become one, and hence she wouldn't need to file her tax return? Furthermore, when filing individually I should be able to e-file given that she has a SSN?

Thanks!

[cmartinez86]

Hi, one additional point, I live in Florida. Thanks!

[MariaDG1]

Hello cmartinez86.  Thanks for joining our event today. 

If you are married you cannot file as single.  You can file married jointly, married separately, or in some cases head of household.  It is true that in order to use married filing jointly you have to elect to have your spouse treated as a resident for tax purposes.  This means that all her income worldwide will be subject to US tax, but you should also be able to claim a credit for foreign tax paid.  Depending on the tax rate where she lives that could significantly reduce, or even eliminate the taxes you owe here.  And you would still be able to retain the benefits of a joint return.  

You can also file married separately, and you are correct that you would not need to report any of her income.  But be aware that many credits aren't available with this filing status, and you tax rate may be higher.  You can find more info here. 

If you have a qualifying child, you may be able to file head of household, regardless of whether that child is a us citizen. 

You should be able to efile with your spouse's ssn. 

Here is some further helpful information. 

[cmartinez86]

Thank you Maria for your clear reply! One follow up question, if we file jointly and declare my spouse a US tax resident, she well then be a tax resident forever unless we suspend that decision, which can only be made once in a lifetime? In the hypothetical case we suspended that, but years later she moved to the US, she would become a resident again based on the greencard or substantial presence test, right? Thanks!

[MariaDG1]

Happy to help! That is nearly correct. Once you make the election it continues until you revoke it.  Once you revoke it, neither of you can ever choose to make the election again, either together or with any other spouse.  To revoke it you file a statement with the IRS containing specific information outlined in IRS Publication 519  And yes, if she meets the requirements to be a resident in the future, then she will file as a resident at that time. 

However, the election may be suspended for certain tax years if neither spouse is a US resident for the entire year (ie. you abandoned your citizenship and residency).   Also the election is terminated if the marriage is terminated, or if either spouse dies (in the year following; it remains in effect for the entire year in which the death or divorce occurred).

One additional detail.  In the year you make the election you must file jointly, but in subsequent years you can choose to file separately if needed.