Alien Spouse & Children - Potential Filing Advantage

ELECTION TO BE TREATED AS A RESIDENT

 In general, a person who is a nonresident alien at the end of the tax year and who is married to a U.S. citizen or resident may elect to be treated as a U.S. resident for income tax purposes, if both spouses so elect. To qualify for the election, you, as a U.S. citizen or resident spouse need to be a U.S. citizen or resident only at the close of the tax year.  This means that a married couple moving into the U.S. may make the election for the year of entry to the U.S.

 As a result of the election:

• you and your nonresident alien spouse agree to be subject to tax on your worldwide income;
• you may claim a personal exemption for your spouse;
• you may claim deductions for items that were paid by your spouse which would not otherwise be deductible by you if you filed a separate income tax return;
• your income would be subject to tax at the rates for married taxpayers who file joint returns;
• any exempt income of your nonresident alien spouse from a public international organization remains tax exempt;
• your nonresident alien spouse may not, for U.S. income tax purposes, claim the benefits from any U.S. income tax treaty.

 In effect, if the election is made, you may be subject to income tax at a lower tax rate than if no election were made and you filed a separate income tax return.

 The election is made by attaching a statement to your joint income tax return for the first tax year for which the election will apply. The statement must contain a declaration that you are making the election and the names, addresses and taxpayer identifying numbers of both you and your spouse. In addition, both you and your spouse must sign the election statement.

 The decision to make this election depends on your income, both U.S. and foreign, and normally requires that at least two alternative tax filing situations be prepared to determine whether the election should be made.

CREATIVE SOLUTIONS TO CROSS BORDER TAX ISSUES

Mark T. Serbinski  Certified Public Accountants and Serbinski Partners PC, Chartered Accountants specialize in situations involving the taxation of U.S. citizens living abroad and Canadians living or working in the United States.   Please contact us for a complimentary initial review of your particular situation on a confidential basis.  ^{(Click here for details of our Complimentary services.)}

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