US CITIZENS FILING 1040 FOR FIRST TIME AFTER THEIR WEDDING TO NON-US CITIZEN FOREIGN NATIONAL SPOUSE AND CONFUSED ABOUT TO CHOOSE MFS OR MFJ Option on 1040 US TAX RETURN?
1040 Married Filing Separate [MFS] or Married Filing Joint [MFJ]
Brief Tax Implication Reporting
All American citizens, If you are legally married as of 31st Dec prior to the US 1040 tax filing deadline date, you cannot file your 1040 as Single filing status anymore. We know from speaking to many US tax filers, they were tempted to file Single because they could not E-file the US 1040 tax return online without valid ITIN for their newly wed foreign spouse.
Kindly note With ITIN application is a process for your foreign spouse, you or your US CPA cannot e-file the 1040 tax return and the filing would be paper filing only along with ITIN application paperwork. The paper/postal filing is only for the ITIN application year, on receipt of ITIN you can shift back to E-filing from next year.
Listed below are your options:
Option 1 – Married Filing Separate [MFS] and filing for ITIN for your Non-US Citizen spouse
With MFS filing status, US Citizens/Green Card holders would just need to report their spouse’s name on 1040 tax return and apply for the ITIN as spouse of US Citizen dependent category, and US Citizens do not have an obligation to report their foreign spouse income nor have a Foreign Bank Account Reporting (FBAR) filing requirement of their Foreign Spouse.
With MFS filing there would not be any US tax benefit for US Citizens, as their standard deduction is only for one person (i.e, US Citizen with valid SSN) [$12,200] for example for the 2020 tax year.
Only US Citizen with SSN will sign the 1040 tax return even when ITIN application is applied for a foreign spouse, the foreign spouse do not have to sign on 1040 tax return only on the ITIN Form W7 signature is required.
Option 2 – Married Filing Jointly [MFJ] and filing for ITIN for your Non-US Citizen Spouse
With MFJ filing status, In addition to US Citizen/Green card holder income, the tax filers would also need to report their foreign national spouse’s name on 1040 tax return along with the 6013(g) election ( Your CPA would select this statement or you can generate in on US tax softwares) – stating that they want to treat their Foreign Spouse as if a resident of the United States for US tax purposes and also have an obligation to report his/her income (including Foreign bank Account Reporting under FATCA Compliance).
Under MFJ filing, all foreign income for both the taxpayers converted to USD and are eligible to claim the foreign tax credit for taxes paid in their country of residence – overall no US income tax for your non-citizen spouse if all of his/her income is the foreign country based for example the United Kingdom and not USA based income). With MFJ the US Citizens/Green card holders do have a US tax benefit as their standard deduction is doubled up [$24,400 for 2020 tax year and many thresholds allowance are higher as well] and also have a significant impact on taxable income numbers as the MFJ filing reduces US tax filers total gross income and overall US income tax liability (if any) and increases any refund due if applicable.
1040/1040NR US TAX FILING DEADLINE DATE FOR 2020 TAX YEAR AND SUGGESTION IF ITIN APPLICATION IS FILED WITH 1040
15th April 2021 (Initial deadline) or
15th June 2021 (automatic extension for US citizens/Foreign Nationals living outside of the USA) or
Next option with a Form 4868 extension filed, Tax filers can get additional time until 15th October 2021,
Please note, due to the Pandemic, the ITIN processing time is 3-4 months (normally it’s 6 to 8 weeks).
US Tax filers do not have to wait until ITIN is approved or worry about the 1040/1040NR tax filing deadline date due to ITIN processing delays.
As far as American tax filers have postal proof of mailing on or before above dates for the 1040/1040NR US tax return and ITIN application mailed out along with the tax return to the ITIN Operation office to this IRS ITIN Mailing address, the IRS accepts the 1040/1040NR tax return was filed in time.
More FAQ related to ITIN for the spouse of US Citizen category for your easy reference check this blog.
Our team specialises in international expatriate U.S. personal tax return service. If you need assistance with ITIN Renewal/US 1040 filing for refund claim/FATCA Compliance work/FBAR FINCEN114 Filing, ITIN/ Form W7 Application/E.I.N/Form W8BENE or Certified Acceptance Agents [C.A.A] services/1040NR U.S. tax filing for refund claim of excess 1042S / 8288A/ 8805/ W2/ 1099. We are happy to assist our clients in a timely, efficient, and cost-effective way.
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