Green Card Holders and Resident Aliens
If your husband or wife is a resident alien or in possession of a green card, he or she will have to declare all of their income to the IRS, including that which is derived from assets and investments.
In this situation you can choose to file your taxes jointly or to go it alone. What you choose to do will depend on your circumstances and the advice of your cross-border financial adviser. However, filing together may mean that you receive a more generous personal exemption and a higher level of deduction.
Whatever the case, the process can be quite an administrative burden, so if you have a reliable and trusted expat financial adviser in place, you may wish to consult them in this regard.
Non-Resident Aliens and Non-Green Card holders
If your husband or wife earns all of their money abroad and is not the dependent of an American resident, they may be exempt from US taxes. However, your foreign spouse will need a Social Security Number (SSN) or International Taxpayer Identification Number (ITIN) in order to qualify for exemption.
An SSN can be secured through the Social Security Office and an ITIN is available through the relevant US Embassy or Consulate. Once you have received your number you may be able to take advantage of benefits such as ‘head of household’ relief to recognise the needs of your dependents.
Resident Alien for Tax Purposes
Lastly, even if your spouse does not have full American residency or a Green Card, they may be able to identify as a resident alien for tax purposes. If this is the case you can file taxes as a couple in much the same way that you would if your spouse was a Green Card holder or Resident Alien.
If you meet either the ‘green card test’ or the ‘substantial presence test’ in a calendar year (Jan 1 – Dec 31) you can be treated as a resident alien for tax purposes. There is lots of information on the IRS website.
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This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.