Expats With a Foreign Spouse: Your Guide to Filing US Taxes

No one really wants to think about taxes while on their honeymoon. If you marry a foreign national, it’s important to consider the impact on your US taxes (when the time is right) — the filing process, tax returns, and more.

In this article, we’ll go over some of the most common tax questions we get from our US expat clients married to foreign spouses:

• Does my foreign spouse need to file a US tax return? 
• Should we file jointly or separately?
• How do I file my US tax return jointly with my foreign spouse?

US expat with a nonresident alien spouse taxes: Key takeaways

• Whether or not your foreign spouse needs to pay US taxes depends on several factors, including their residency status, where their income is sourced, and how you choose to file taxes—jointly or separately.
• Both joint and separate filing statuses have their pros and cons. Consider both the short-term and long-term effects of your choice before you make the final decision.
• If you decide to file taxes jointly, your foreign spouse must use a Social Security Number (SSN), which they might have from previous work in the US, or obtain an Individual Taxpayer Identification Number (ITIN). They’re more likely to be eligible for the latter as a nonresident alien.

Tax implications of having a foreign spouse as an expat: 3 potential scenarios

Let’s take a closer look at the three scenarios you may face when determining if your spouse’s income is subject to US taxes. 

Scenario #1: Your foreign spouse’s US residency status

• If your foreign spouse is a US Citizen or has a Green Card

All US citizens and Green Card holders must file their US tax returns yearly. US citizens & green card holders retain this requirement, even if they physically live overseas. Why? It’s because of the US citizenship-based taxation system. 

Regardless of where they live, American expats, including Green Card holders taxed in the same way as citizens, must declare their worldwide income to the IRS. If your spouse is a US citizen or Green Card holder, they’ll likely have to file a US tax return every year. 

To avoid double taxation, they could take advantage of IRS tax relief programs, like the Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC).

• Your foreign spouse passes the Substantial Presence Test

Even if your spouse isn’t a green card holder or citizen, they still may be considered a US tax resident if they pass the Substantial Presence Test. 

To meet the test, your foreign spouse must be present in the US for at least 31 days during the current year. On top of that, they must also have spent 183 days in the US throughout three years. 

This timespan must include the current year and the two immediately prior, prorating days from earlier years as follows:

• Count all the days that they were present in the current year 
• Add ⅓ the number of days they were physically present in the US during the previous year 
• Add ⅙ the number of days they were physically present in the US during the second prior year 

If the sum of these days in the US equals 183 or higher, your foreign spouse is considered a US tax resident and may need to file a US tax return. 

Scenario #2: Your foreign spouse has US-sourced income

Some types of passive income originating from the US qualify as US-sourced income, regardless of where the person receiving the payment currently lives. That can include rental income, interest, or dividends. 

If your foreign spouse receives any form of US-sourced income, they must file a return to declare it with the IRS, even if they’re not a US citizen. 

Example:

Say you are an American citizen married to a Brazilian partner who doesn’t hold a green card. They only spend about three weeks in the US each year.

However, your Brazilian spouse has various investments in the US, such as a home in San Diego, California, and an apartment in Chicago, Illinois, that generates rental income. 

In this case, while your foreign spouse may not be a resident of the United States, their income qualifies as US-sourced income because it is physically situated there. Your Brazilian partner must file a US tax return (Form 1040NR) to the IRS and declare any income the US-based properties generate. 

Scenario #3: You and your foreign spouse elect to file jointly

If your foreign spouse is a nonresident, you can declare your spouse as a US resident for tax purposes by making a special election with the IRS on your tax return.

You can benefit from the higher standard deduction that comes with filing jointly as a married couple, and other tax advantages that we’ll discuss a bit later. 

Example:

Say you’re a US citizen married to a French citizen who doesn’t have any income. If you elect to file your taxes jointly, you’ll be eligible for a standard deduction of $25,100 instead of $12,550. 

In the long term, you’re roping your spouse into exposure to the US tax system. If your foreign spouse starts to increase their earnings level, they’ll have to pay taxes to the IRS on that income.

If you choose to file taxes separately instead, your foreign spouse will remain a nonresident alien in the IRS’s eyes, and they won’t have to file and pay US taxes.

This is typically the better option if your spouse has significant income levels (e.g. more than the Foreign Earned Income Exclusion limit of around $100,000), if you think they will in the future, or if they have significant assets or investments that will at some point be liable to US capital gains or other taxes, as well as extra filing requirements relating to FATCA and FBAR.

Filing separately or jointly: which is better?

There’s no universal answer that fits every case. It’s worth thinking through this decision long-term, as perhaps your spouse will inherit money, investments, or assets at some point, or their income will increase significantly over time. In any of these scenarios, it’ll be advantageous in the long run to exclude their finances from US tax.

Filing separately is also a good idea if you are earning a very high salary or have significant investments and assets, as you can gift them to your foreign spouse over time to take them out of reach of the US taxman. This would only be a good strategy if your spouse isn’t liable to pay higher taxes on them to a foreign government, so it depends on your circumstances and where you live.

If you file jointly with your foreign spouse, the IRS expects you to file jointly moving forward, as the election is continuous, until you opt out, which you can only do once.

In other words, you can’t just declare your spouse one year and not declare them the next. You only have the option to turn this election on and then off again once.

There are a few situations in which you can stop filing jointly. For instance, in case of legal separation, death of a spouse, inadequate records, or revocation by either of the spouses.

When is it beneficial to file jointly?

There are also a handful of advantages to filing jointly with your foreign spouse.

If your foreign spouse decides to file their taxes jointly with you, you’ll benefit from a higher standard tax deduction. 

As we’ve mentioned above, married couples who file jointly get a standard tax deduction of $25,100. On the other hand, the standard deduction for single or married filing separately filers is only $12,550. 

Married couples can also take advantage of the following tax credits:

• Exclusion for Adoption Expenses
• Child and Dependent Care Tax Credit
• Earned Income Tax Credit
• American Opportunity Tax Credits

How to file taxes with a nonresident alien spouse: The head of household option

If you decide not to declare your foreign spouse as a resident, you might be able to file using the head of household status. 

Your eligibility for using this filing status will depend on whether you are responsible for more than 50% of your household’s expenses, and whether a qualifying person (which can include dependent children, parents, and a few others) lives in your household with you for more than half of the year.

If you file using head of household status, you’ll benefit from a standard deduction of $18,880. You can learn more about head of household status on this IRS page. 

Similar to filing separately, this option allows you to leave your foreign spouse outside US tax liability. However, it gives you a higher standard deduction and lower effective tax rates.

While this article gives you an overview of filing options for American expats married to foreigners, when it comes to minimizing your US tax liability, the devil is often in the details.

How much you both earn, what investments and assets you have (and may have in the future), and the tax regime in the country where you live are all important factors. As such, if you have any doubts or questions about your US tax situation as an expatriate married to a foreigner, we strongly recommend contacting a US expat tax specialist for advice.

How do I file my US tax return jointly with my foreign spouse?

It may seem obvious, but you’ll need to select the Married Jointly Filing status when filing your tax return. The tax return must declare one spouse is a US citizen, while the other is a nonresident alien. Both partners must sign a document attached as an election statement to the return.   

Next, you must register your foreign spouse as a US taxpayer either through a Social Security Number (SSN) – which they’re likely ineligible for – or an Individual Taxpayer Identification Number (ITIN).

If your foreign spouse has neither an SSN nor ITIN, here are the forms you must file to get them:

• Social Security Number (SSN): You’ll need to file Form SS-5-FS to the Social Security Administration (SSA).  
• Individual Taxpayer Identification Number (ITIN): You must file Form W-7 to the IRS to apply for an ITIN. 

You can submit the ITIN application with the US tax return by mail to the IRS. Social Security applications are typically submitted at US social security offices or US embassies and consulates abroad.