jeffreyhy

She cannot claim her husband as a dependent on a married-filing separately return if he is working, and it appears that he is. She could claim him as a dependent if he has no income, and is not claimed as a dependent on someone else's tax return. So in this case you are correct. Doubtful, unless she's earning well above the foreign-earned income exclusion amount. Probably not and definitely not. $95,100 in 2012. Regards, JEff

jeffreyhy

In this case it's the Bureau of Consular Affairs that's looking for the tax returns, not USCIS. It would be USCIS if this were an adjustment of status situation, but it isn't.

It's not a legal requirement, it's a policy and procedure requirement. Both BCA and USCIS use the most recent tax return as evidence of current income, unless there has been a change in circumstance other than the passage of time since the last income tax return was filed. True enough, in this case there is a significant change in circumstance - they will both be leaving their current jobs so their current income will cease.

Regards, JEff

JAJ

If married, you never file single. But you can file married/separate, or head of household (if eligible) and and later on amend your return (either to switch to married/joint, or claim a dependent exemption) as soon as your husband arrives in the U.S. and gets a Social Security Number.

It's only necessary to worry about an ITIN if the additional exemption makes a difference to your tax return, and it won't if the tax payable is zero. For most people living in high tax countries, it doesn't.

Usually, non-resident alien spouses don't want to have their income included on a U.S. return which in turn normally rules out filing married/joint until they actually become U.S. resident.

Not everyone has a spare passport they can send away to an office in the U.S.

theOAP

That is true if she is married to a US Person, or an NRA with US source income, but she's not (as far as we know). A US Person TP with an NRA spouse, both resident in the UK, can claim the NRA spouse as a dependent, whether the NRA spouse is working or not, if the NRA spouse has NO US source income and can not be claimed as a dependent on someone else's return.

See above.

theOAP

IMHO, if a US Person decides to include their NRA spouse on a US tax return, thereby subjecting that NRA spouse to the grip of the IRS, the NRA spouse should have the right to seek a divorce on the grounds of cruel and unusual punishment.

Again, MHO only.

jeffreyhy

A US Person with a NRA spouse cannot make the decision unilaterally. Both spouses must sign a statement declaring the the NRA choses to be treated as a US resident for tax purposes.

Regards, JEff

theOAP

Sorry Jeff, the post was meant to be sarcastic.

Yes, you're correct. There is a definite procedure for establishing a 1040 filed as married/joint with an NRA. It's outlined in Publication 54. Once the agreement to file as joint is formally established, it can be revoked, but only once and can not ever be used again.

Unfortunately, as can be found in posts on the UK Yankee site, many Americans abroad think that the normal rules (MFJ/MFS with both being US Persons) apply, and file MFJ one year with an NRA spouse (without the formal procedure); then file MFS the next year (with the NRA spouse not filing a return, even though they're above the threshold), then back again to MFJ in a following year. So far, there have been no posts discussing any repercussions from this from the IRS. According to strict adherence to the rules, either the non-official filing of the MFJ return leaves the filer open to an incorrectly filed form, or (if the IRS accepts the signature of the NRA spouse on a 1040 as the application/acceptance of a formal procedure) the return in following years (MFS) leaves the NRA open to penalties because they haven't filed a return for that year.

Complicated, and I would like to hear JAJ's thoughts on this. Is it a case of the IRS possibly overlooking the fault, or would the taxpayer or their NRA spouse be open to penalties in the future if discovered?

The inclusion of the NRA spouse on information returns (FBAR, 8938, etc.) has lead to some marital disputes and breakups. ACA (American Citizens Abroad: not Obamacare) have files confirming this. If, in future years, an NRA were to discover they had failed to file a return after filing MFJ in a previous year and the IRS would like a penalty please, it could also cause some marital strife.

I'll stick by my statement, unless a large sum of tax is do ($20,000, $30,000) the kindest thing an American abroad can do for their NRA spouse is not file MFJ, especially if the difference is in the area of $500 to $1,000. It's not worth it for future years (unless they intend to live in the States), and the NRA spouse can have private pensions, stocks and shares ISAs, win the lottery, etc., without worry.

jeffreyhy

I agree.

This is another situation where the general advice for the common situation - in this case the common situation is that the USC is living and working in the US - should not be blindly repeated for the less common situation where the USC is living and working abroad.

Regards, JEff

JAJ

I'm surprised no-one pointed this out, but you can normally file as single if you are still formally married, but with a legal separation decree. Also, it's status as of December 31 of the given year that normally counts.
www.irs.gov/publications/p17/ch02.html

JAJ

It might need a tax court to determine what the definitive outcome would be. One view is that since the appropriate election for the NRA to be treated as U.S. resident was not filed, the MFJ return was the incorrect filing status for the U.S. spouse. On an audit, the IRS could substitute the correct status (MFS or HoH as appropriate) and levy penalties + interest for any underpaid tax.

Once the statute of limitations takes effect (normally 3 years) then the issue would be closed even if the return filing status was incorrect. UNLESS the IRS took the view that the return was fraudulent, but there is a high threshold for proving that.

There is no evidence that the IRS are treating an incorrectly filed MFJ return as a de-facto declaration of U.S. resident status by a non-resident spouse and I'm not aware of any evidence that the tax courts would back up such a stance. But perhaps there is further evidence out there - by which I mean some real evidence, not speculation about what the IRS might do some day if they were so inclined.