Internal Revenue Code allows a US citizen or a resident alien to treat his/her spouse as tax resident of US . This is an option granted to him/her. There maybe various situation in which during a tax year, one spouse is nonresident alien and one is resident alien . Choosing your partner (spouse ) who is nonresident as tax resident of USA may effect your taxation and also certain other legal obligation arise.
Rules That Effect the Choice of Nonresident Alien Spouse as Tax Resident
If you make this choice, the following rules apply.
- For all the tax years , for which you chose your spouse as resident , he/she will be treated as tax resident .You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect.
- For all those years , you must file a joint income tax return .
- You or your spouse cannot claim under any tax treaty not to be a U.S. resident for a tax year for which the choice is in effect.
- Since , the worldwide income is taxable for US tax resident. Both of you will have to report worldwide income for the tax year.
- You may NOT be able to use head of household filing status .
- Your spouse , who is treated as tax resident , must have either an SSN or an individual taxpayer identification number (ITIN).
How To Make the Choice
Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. It should contain the following:
- A declaration that one spouse was a nonresident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year and that you choose to be treated as U.S. residents for the entire tax year, and
- The name, address, and social security number (or individual taxpayer identification number) of each spouse. (If one spouse died, include the name and address of the person making the choice for the deceased spouse.)
At what time Choice to be made ?
You generally make this choice when you file your joint return. However, you also can make the choice by filing a joint amended return on Form 1040X. Attach Form 1040, 1040A, or 1040EZ and print “Amended” across the top of the amended return.
How to End the Choice To Treat Nonresident Alien Spouse as a Resident
Well , there are four major ways in which the choice to treat nonresident alien spouse as tax resident can be ended. These are
(i) Revocation : Any spouse can submit a signed statement declaring that the choice is being revoked enclosing following additional details :
• The name, address, and social security number (or taxpayer identification number) of each spouse.
• The name and address of any person who is revoking the choice for a deceased spouse.
• A list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income.
• If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where the last joint return was filed.
(ii) Death : The death of either spouse ends the choice, beginning with the first tax year following the year in which the spouse died.
(iii) Divorce or Legal separation : A divorce or legal separation ends the choice as of the beginning of the tax year in which the legal separation occurs.
(iv) By Internal Revenue Service for Inadequate records The Internal Revenue Service has the power to end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records.